Taxes not off table in Mount Olive
By Steve Herring
Published in News on February 27, 2011 1:50 AM
MOUNT OLIVE -- Nothing is off the table where the town's budget is concerned, Mount Olive commissioners said during a Thursday night budget workshop, including the possibility of a tax increase to help the town weather what could be five months of negative cash flow in fiscal 2011-12.
They blamed a decision eight years ago to roll back the municipal tax rate following the last countywide property revaluation as the start of the town's slide into financial crisis.
But the budget wasn't the only thing on commissioners' minds -- they spent nearly half of the two-hour session fuming over what Town Manager Charles Brown called "a huge mess" at the town's new wastewater treatment plant.
Brown, in his opening comments, said that Local Government Commission officials are predicting the town will have negative cash flow of anywhere from $120,766 to $218,842 monthly from August through November.
It is possible the town will have to juggle funds from the water/sewer department to help pay the bills, he said.
"This is not the correct way to do this," he said. "Both of these funds (general and water/sewer) are supposed to support themselves, but given the economic situation that we are facing I think that the best that we can hope for is that we have enough water/sewer revenues to keep us afloat for those five months. I don't know any other way that we can do it."
The good news is that there will be a positive cash flow in both funds at the end of the year, he said.
In 2010, the town suffered cash flow issues for months that sometimes forced it to hold checks because it lacked money in the bank to cover them.
Brown said the proposed budget is tight, but that provisions have been made to ensure that the town can pay its bonded indebtedness and protect as many jobs as possible.
"Those five months that we are going to have negative cash flow that is worrying me already," Mayor Ray McDonald Sr. said. "I don't think that anything is off the table. If we don't fix it, we are going to be in the same fix that we were. I personally tell you I don't plan to sign a check if we don't have money in the bank to pay it.
"So everything as far as I am concerned, and I don't have a vote, is on the table. Every board member has a responsibility to make sure it works. We can't just cross our fingers and hope it will work."
Fortunately, he said, the town has been setting aside some money for items coming due in May and June.
Brown also said he expects Wayne County's property revaluation to eventually help ease the budget situation -- provided the tax rate isn't reduced in an effort to remain revenue neutral. The problem with revenue neutrality, he said, is that it may cover expenses for now, but the town's operating costs are continuing to increase.
Brown said he keeps hearing the property revaluation will result in a 10 to 12 percent increase in property values, which would equal about a 6-cent increase in the tax rate.
Brown said the town has not had a tax increase since sometime before 1982, and in fact has only seen tax decreases since the rate was dropped from 74 cents per $100 value to 69 in 1995, and then 59 cents following the 2003 revaluation.
McDonald acknowledged, though, that raising taxes was not going to be easy or popular, saying that he had recently told a man that he didn't think the board would do it unless it was absolutely necessary.
"I thought was I speaking for all of you that you don't want to, but that there may be circumstances where you might have to raise them," he said.
But thanks to some tough decisions, including the cutting of 10 filled positions last year, Brown said the 2011-12 budget is not going to be as hard to make as last year's -- a good thing, he added, because cutting more people could mean a reduction in services, such as making trash pickup every two weeks instead of once a week.
"It is hard to maintain the level of services with the number of people that we have," he said.
As for the treatment plant, Brown asked the board to think about the issue and hopefully be prepared to act on March 7.
The treatment part of the plant is working well, he explained, but the plans the town received from engineering firm Hobbs and Upchurch reportedly showing the plant as built are wrong.
"That is incompetence basically," Brown said. "The plans are just as wrong as they can be. We have a mess and I don't know any other way to describe it."
Correcting the problems will likely take legal action, he said.
"We cannot go to court without knowing what we have got to have to fix the problem," Brown said.
Commissioners will consider appropriating $7,000 to complete the work so the town can take possession of it, and another $20,000 to re-engineer the plans, he said.
"Right now we have a filter that goes to the spray field that is inoperable, which means the one million additional gallons we were supposed to gain with that plant, we don't have it," Brown said. "We have a traveling sand filter that is inoperable probably due to shoddy equipment, shoddy construction and shoddy engineering.
"It is going to cost money to fix it and intentions are to try to recover it from Hobbs and Upchurch. (Special Projects Director) Maylon (Weeks) and I were discussing one morning that we are no better off than we were before we started, but that is not true -- we are worse off because we have no more capacity, maybe not as much."
The state will not sign off on the plant until the engineer says it will work, but officials with the state Construction Grants and Loans, one of the funding agencies, has, he said.
Brown said that he, McDonald and Weeks will meet this Friday with the attorney the town has hired to represent it in the case. But, he said, once they collect all the information they need to proceed, they will approach Hobbs and Upchurch.