City eyes 5-cent tax hike this year
By Catharin Shepard
Published in News on April 22, 2009 1:46 PM
Taxes will go up by 5 cents per $100 valuation and city water use charges will increase by 10 percent if the Goldsboro City Council approves the measures included in the proposed 2009-10 city budget.
If the budget is approved, the current tax rate of 65 cents per $100 valuation would increase to 70 cents per $100 valuation and raise about $1,021,475 in tax revenue for the city. Household water bills would increase an estimated $1.60 per month per household, generating an estimated $432,293 in revenue. The sewer rate would not increase.
The proposed increases come at a time when city officials, struggling to cope with the economic downturn, are facing budget cutbacks in the millions.
The proposed budget is "what would keep the city operating at the minimum acceptable level," City Manager Joe Huffman said.
Based on the first draft of the 2009-10 budget, the city will have about $2,770,602 less to work with this year than in 2008-09. The bulk of that amount would be taken from the General Fund, which would lose more than $1 million, and the Utility Fund, which would be cut by more than $1.3 million, according to the proposed budget.
"I recommended it (tax increase) last year. I recognized there was a need for it last year," Huffman said.
But the City Council decided then not to approve the tax increase, he said.
Water use rates could go up because the city expenditure for treatment chemicals and other aspects of providing water service have also increased.
"That's what it takes. We're going to have significant costs just to provide water to the city," Huffman said.
Despite the potential increase, the proposed city budget is balanced as required by North Carolina state law, and might even be more cost-efficient than the 2008-09 budget.
"We're operating probably at a lower cost than last year," Huffman said.
And "it's a tough year," he said. "We've tried to cut costs, we went as far as we possibly felt like we could without stopping services."
Adding to the current financial difficulties, this year the city must begin making the first full payments on the Paramount Theatre, now into its second year of operations following the reconstruction of the historic building, which burned down in 2005. The payments on the theater are $494,085 per year for the debt incurred in financing construction of the theater.
The city also faces $311,500 in debt for the NCDOT signalization project, although federal stimulus funds could be used to reimburse the city up to $4 million for the project. If the federal funding is approved, the city could potentially add $1.6 million back into the General Fund balance and an additional $525,000 could be used for street resurfacing. Among other proposed budget items related to city debt is $420,000 for debt incurred with the extension of sewer service to Annexation Area XI, $801,645 funding for the debt service obligation associated with the City Hall renovation project and $436,306 for the proposed Recreation Center.
The proposed budget would eliminate several staff positions, including human resources safety/training coordinator, finance business operations manager, civil engineer and two permanent part-time positions at the city golf course. The city garage fleet parts specialist position would be frozen. The proposed budget does not include a market adjustment or funding for the merit pay program, but city employees could face a 5 percent increase in their health insurance premiums. The city plans to create one new position for a signal system maintenance supervisor in order to meet the obligations of an agreement executed with NCDOT.
Even after laying off employees and removing many items from the proposed budget, the city still faces a shortfall of more than $2.7 million, partly from the general fund. A large part of the problem is due to a considerable decrease sales tax revenue last year, Huffman said.
"The sales tax really hurt us," he said.
And it's not expected to get better any time soon, according to city projections. State distributed revenues are mostly expected to decrease. Sales tax may decrease by 6 percent this year, falling to $5,771,881. Powell Bill revenues are also likely to decrease, falling 11 percent to $1,027,486. However, utility franchise tax proceeds are expected to increase by 6 percent to $2,693,952.
Despite the economic challenges, some items included in the budget are very important to secure, Huffman said.
"There are some areas where we saw some problems," he said. "We found some real needs."
A recent audit of the fire department revealed a need for new equipment, and the proposed budget includes funding for two new fire trucks and a one-ton pickup truck.
"This is equipment that could really affect life and death here," Huffman said.
The proposed budget also includes funding for painting station bays, concrete aprons and a high pressure mat jack, but does not provide for a new fire station or for making repairs to existing stations, although grant money might be available for repairs or construction of fire stations.
Mayor Al King and the City Council will meet Monday, April 27, at 8:30 a.m. to discuss the proposed budget.
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