2 cent tax hike okayed

Property taxes in Stokes County are going up, but not by as much as previously expected.

On Monday, the Board of Commissioners approved, on a 3-2 vote with Vice Chair Jimmy Walker and Chair Ronda Jones voting ‘nay’, a plan to raise ad valorem taxes by 2 cents for the 2015-16 fiscal year to help cover expected decreases in revenue and provide needed pay increases for key emergency personnel.

Commissioner’s also agreed to increase the fire tax by half a cent this year with a plan to continue to increase that tax by half a cent per year for the next two years to eventually reach the 1.5 cent fire tax increase requested by the fire commission this year. The future proposed fire tax increases will have to be voted on each year to go into effect. That increase passed on a 4-1 vote with Walker voting ‘nay.’

Under the approved budget, sworn law enforcement officers, jailers, EMS personnel and telecommunicators will get a three grade pay increase, at an annual cost of approximately $548,700, to help combat a growing crisis with employee retention in those departments. All other county employees will get a one grade pay increase, which is projected to cost the county approximately $240,209 each year.

The approved budget will not implement those pay increases until the fourth pay period of the fiscal year, although several commissioners noted they may consider implementing them sooner if the state budget is resolved sooner.

The budget also will convert five contract positions in the Department of Social Services into county positions to lower the cost of the positions and provide more flexibility within the department. The budget also reclassifies an animal control officer and the county fire marshal to provide more flexibility.

Additionally the approved budget will provide the school system with an additional $100,000 in capital funding to address needs at several schools.

The approved budget was recommended by Commissioner Leon Inman after several days of heated debate over salary increases, the state of the county’s fund balance, potential future revenues, and the needs of local fire departments.

Throughout the debate Walker and Jones argued the county needed a higher tax increase, in the range of 4 to 6 cents, to preserve its fund balance and credit rating and to provide enough revenue to properly run the county.

On Friday, Jones made a motion to increase property taxes by 4 cents and the fire tax by 0.75 cents, but that motion failed on a 3-2 vote with Commissioners Inman, James Booth an Earnest Lankford voting ‘nay.’

“I am using a different way of thinking about things,” said Jones. “I am using my knowns and not my unknowns. We have been running on a tax rate that is much lower than in the 70s and even with the cost of doing business rising, our budget is roughly $8 million below like counties. We have a turnover rate well over 20 percent that is primarily driven by pay gaps. We need to do what is fiscally sound.”

On the other side, Lankford proposed considering a budget which would have no tax increases, but would spread some projected costs for next year over a three year time period, reduce the number of vehicles the county manager said the county needed to purchase to operate, spread the increased pay grades for emergency personnel over three years, and provide all county employees a two percent cost of living salary increase.

Lankford balanced his proposed expenses by planing to pull more from the county fund balance than recommended by the county manager and projecting increased revenues by increasing the rate tax collection is calculated at from 96 percent to the maximum allowed of 96.97 percent, savings through refinancing debt, and increasing the amount of projected sales tax revenue.

The approved budget is somewhat of compromise, maintaining all of the county manager’s recommended expenditures, but lowering the required tax increase by increasing projections of some revenues and pulling more from the county’s fund balance.

Inman said he had worked closely with County Finance Director Julia Edwards in preparing his projections, arguing that he was looking at a two year budget which would leave the county with about a 25 percent fund balance by the end of of the 2016-17 fiscal year.

He proposed that by changing the collection rate to 96.97 percent the county would generate about $194,000 in additional revenue, refinancing debt would provide $200,000 in savings, sales tax revenue would increase by $275,000, and noted that the county was expecting to return close to $800,000 in unspent funds to its fund balance at the end of this fiscal year.

Inman also included projections from the North Carolina Senate on additional revenue the county would receive if the senate proposal to redefine how sales tax revenue is distributed becomes a reality. Versions of the proposal are included in both the senate and house budgets, but the governor has stated he is not in favor of the plan. If the proposal becomes reality the county could receive close to $600,000 in additional revenue in the next two years.

“With all of that we would need to take out roughly $2 million from our fund balance this year,” said Inman. “That means that at the end of 2016-17 we would still have almost 25 percent fund balance. You have minimized the tax increase to citizens and have not jeopardized your ability to go out and borrow.”

Walker worried the final approved budget relied on projected revenues.

“I am concerned about a budget that relies on future revenues that we stand a very good chance of getting but there are no guarantees,” said Walker. “We hope we will get the sales tax distribution and sales taxes will go up, but there is no guarantee things will go like that.”

“I am not making up revenue numbers to get this to work,” replied Inman. “These are based on the best projections we could do over the next two years.”

Jones noted that the lowest tax increase she could support was at the 4 cent level.

“I do not feel like the motion on the table will give us enough of a buffer for emergencies,” she said. “The projections are not for sure. I just cannot do bare bones anymore it has been postponed for too long. It might make some of us look good for the constituents, but I don’t care anymore. It is just irresponsible. I don’t see anything that will happen next except a crisis coming up. It will hurt just as much next year as this year to have to raise the taxes.”

Nicholas Elmes may be reached at 336-591-8191 or on Twitter @NicholasElmes.

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