Mount Olive administrator explains why cuts are a must
By Steve Herring
Published in News on September 20, 2010 1:46 PM
MOUNT OLIVE - A $124,000 shortfall in the town budget's general fund and $500,000 in bond payments have prompted town officials to take what they say have been prudent measures to ensure that the town weathers the economic maelstrom, Town Manager Charles Brown said.
"We felt like we were taking prudent action to make sure that the town is prepared to withstand any revenue shortfall created by the state, or revenue shortfall created by the economic downturn," Brown said.
Those efforts have included employee layoffs -- the most recent being last week when an employee of only a few months and another of almost 20 years were let go. Contacted last week about the layoffs, Brown declined comment, citing advice from the town board.
"I did misspeak the last time when I told you about the no comment, that it came from the board," Brown said Friday morning. "It actually came from the mayor who is the other official spokesperson for the town of Mount Olive. I respect his wishes."
Mayor Pro-Tem Kenny Talton said that he, Commissioner George Fulghum and McDonald met and looked at some positions they thought they needed to address.
Talton said Brown knew ahead of time what those positions would be. After about 30 days of no action, Talton said Brown was contacted and asked when he was going to act and the issue was brought to a head.
Talton also hinted that mistakes and miscalculations in the budget have contributed to the town's budget woes.
Talton's mother, City Clerk Arlene Talton, has said overspending has hurt the town as well.
Employee layoffs affect people's lives and their families' life, Brown said.
"It is just not in my nature, maybe a fault, take it whatever they want to take it, but I am not going to have an employee come in at 8 a.m. and tell him at 5 o'clock this afternoon that you are unemployed," Brown said. "Right or wrong -- if that is wrong I will take the fault for it. I simply have more compassion for people. I am going to give somebody a two-week notice like I would expect them to give me. I am also going to take the time to make sure that I have looked at how that layoff is going to affect our finances.
"Everybody says if you lay him off today that expense stops. That is not the way it works. The young man laid off in the police department, the town is responsible for two-thirds of his salary for 18 months (of unemployment) or until he finds a job, whichever comes first. We don't have to pay his benefits, grant you. That (expense) just didn't go away that day. It will go away eventually. We will have to look at how that is going to impact us long-term. We are paying two-thirds of a police salary and still have no officer."
The other employee has accrued sick time, comp time and vacation, and that is expected to cost the town $14,000.
"Does (the layoff) save us money? Long-term, yes," he said. "The day they leave, their last day at work, the money does not stop."
Like every other small town in the state, and probably in the country, Mount Olive faces financial difficulties, Brown said.
He said he sought insight on how other local governments are going to be impacted if the governor allows the temporary one-cent sales tax to expire.
The response from the legislative liaison at the League of Municipalities was a photo of a mushroom cloud.
The liaison also wrote that if the tax lapses, then local governments should expect the state will get more of the state-collected revenues.
Annually, Mount Olive receives about a half million in sales and use taxes; $350,000 in franchise taxes; and $25,000 in beer and wine for a total of about $875,000.
Brown said he has spoken with small town mayors and managers from across the state, all of whom are facing the same problems as Mount Olive.
"They are all scared to death that something big, such as a water line, is going to break, a major expense and will lack the ability to deal with it," he said.
Brown said he sees no end in sight and that he is concerned next year will be even worse. He noted that the town's tax rate of 59 cents per $100 of value is 10 cents less than what it was in 1981.
"What we are attempting to do is deal with a down economy in a year when we have all of a sudden the debt service come due on our $13 million wastewater treatment plant project," Brown said. "One of the things that has money tighter is that we have budgeted to set aside and provide for a fund balance right now of about $579,000 combined in both our water and sewer plants.
"There has never really been a provision for the town of Mount Olive, that I can find, to set that money aside in reserve to deal with things like this. What action we have taken now will allow us to set money aside against the eventuality that something happens to our state revenues or heaven forbid, if the economy were to get worse. I hope it doesn't, but there is always that possibility."
That does not mean the town will have $570,000 in the bank right away, he said. Rather, it means that if revenues come in as anticipated, and there are no unexpected expenditures, then the town could set that amount of money aside in a fund balance to protect it against unforeseen expenditures, he said.
Brown said he could not speak to Talton's comments about budget mistakes and miscalculations.
While Brown agrees that the economy in general, and erosion of state funding in particular, have fueled the town's financial problems, he insists overspending has not.
"All I can tell you is the almost five years that I have been here, we have never spent more than we budgeted for expenditure," Brown said. "Have we had revenue shortfalls? Yes, we have had revenue shortfalls. We have never overspent the budget in the four and one-half years that I have been here.
"The implication the town is spending more money than it is taking in is inaccurate."
Brown said he hopes that his previous comments did not create the wrong impression.
"I think most people would understand that if you are an individual and you are facing the prospect that your income may not be what you thought it might be next year, then I think most reasonable people would make provision to set some money aside or reduce expenses to deal with that situation," he said. "I think that is the best analogy I can give you as to what the town of Mount Olive is working toward."