Spending plan calls for property-tax increase
Published 4:58 pm Tuesday, April 4, 2017
City Manager Bobby Roberson’s proposed $75 million city budget for fiscal year 2017-2018 calls for increasing the city’s property tax rate by 3 cents.
The proposed budget was released Monday. The City Council has final say on the upcoming budget, which begins July 1.
“The increase in the tax rate is necessary to offset the elimination of the EMS Contract with Old Ford/Clark’s Neck,” Roberson wrote in his budget message to the council and mayor. He’s referring to Beaufort County’s decision to cancel the contract between the county and city for the city to provide EMS coverage in specific areas of Washington Township. The cancellation of that contract results in the city losing $300,000 in revenue.
The proposed budget would increase the property tax rate from 52 cents per $100 valuation to 55 cents, which would raise the annual taxes on a house valued at $100,000 by $30, or from $520 a year to $550.
The recommended general fund (day-to-day operations) for fiscal year 2017-2018 is $15.34 million, which is $436,293, or 2.8 percent, less than the current general fund budget.
As it did last year, the proposed budget calls for transferring money from the electric fund to the general fund. The current budget transferred $908,723 from the electric fund to the general fund. The proposed budget calls for $1.1 million to be transferred in the 2017-2018 budget, a $191,277 increase over the current budget.
In recent years, the city worked toward decreasing the revenue transfer from the electric fund to the general fund, with the goal of eliminating the transfer. In fiscal year 2012, the city transferred $973,150 from the electric fund to the general fund. By fiscal year 2015, that transfer fell to $470,000. In fiscal year 2016, that transfer was $654,281.
“It was the desire of the City Council to again reduce the amount of the Electric Fund transfer this year, however, due to substantial recurring loss of revenue from other sources, this transfer is recommended to increase to meet our obligations,” according to Roberson.
Many Washington Electric Utilities customers who are not city residents object to transferring money from the electric fund to the general fund. They contend that at least part of the money they pay on their electric bills is used to subsidize city operations, services and programs.
Some city officials have said the transfer from the electric fund to the general fund is similar to a private power company like Duke Energy paying a dividend to its stockholders. Eliminating the annual transfer — or reducing it — and making the general fund self-supporting likely would require finding revenue sources to replace the transfer amount, cutting expenses or a combination of the two, city officials have said.
In recent years, some usual revenue sources produced less revenue than before, according to the city’s most recent financial audit. One of those revenue sources — the business privilege licenses — was taken away by the North Carolina General Assembly several years ago, costing the city at least $100,000 each fiscal year. The city took in about $123,000 in such revenue during the 2014 fiscal year, according to city officials.
Although the General Assembly promised to provide an alternate revenue source after it took away the city’s authority to generate revenue by issuing business privilege licenses, it has yet to do so.
That loss of revenue and the loss of the $300,000 caused by the cancellation of the EMS contract between the city and county presents a challenge to the city in that it must find sources of revenue to replace what it’s been lost.
“The biggest challenge to me is not spend more than we’re taking in. In essence, they (staff) reduced the allocation from the fund balance to the general fund, but they substantially increased the transfer from the electric fund,” said Councilman Doug Mercer, known for his conservative approach with fiscal matters. “That to me is not doing what we say we want to do. … We’re collecting X number of dollars in the general fund, and we’re spending more than we’re collecting. So, we’re taking money out the enterprise fund, which are supposed to be self-supporting.”
Mercer said he’s somewhat surprised the proposed budget does not include a rate reduction for the city’s power customers. “We’re getting a rate reduction — actually the first of this month — from the ElectriCities group. I personally think we ought to pass at least part of that along to the customers,” he said.
For additional coverage of the city’s proposed budget, see future editions of the Daily News.