05/16/18 — Budget proposal includes tax increase

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Budget proposal includes tax increase

By Steve Herring
Published in News on May 16, 2018 9:39 AM

A 2.65-cent property increase is included in Wayne County's $192 million budget proposal for fiscal year 2018-19.

The increase, which would take the rate from 66.35 to 69 cents per $100 worth of appraised value, would be effective July 1, the start of the new fiscal year.

The increase is needed primarily to cover the loss of low-wealth school funding, additional school resource officers, an increase in teacher supplements and to ease the demand on the budget's fund balance.

Wayne County Manager Craig Honeycutt unveiled his 2018-19 budget proposal during Tuesday morning's Wayne County commissioners' meeting.

Honeycutt is recommending the use of $4.4 million from the general fund balance compared to the $5.6 million this year.

"Even at 69 we are still the lowest in our area," he said. "But again there are major reasons we are looking at recommending tax increase at this time. One of the issues this board has really been looking at, is concerned about and involved in, is trying to do something for the supplements for our teachers.

"Even though we are very far behind our competitors in Johnston County this is the start of a process to increase that supplement by half a percent."

The half percent translates to $500,000 more in the budget.

"It is a good start as we move forward, but again as you are aware supplements are local costs that counties have to pick up," he said.

Johnston County offers an 11 percent supplement --almost double what Wayne County offers, Commissioner Joe Daughtery said.

Daughtery said he does not want to get into a bidding war with surrounding counties, but that Wayne County is going to have to come close to what those counties are offering in order to recruit teachers.

That along with the additional school resource officers are things the country needs to do, he said.

Hopefully commissioners can find additional budget cuts, he said.

"One of the big issues in this year's budget is the loss of low-wealth funding," Honeycutt said. "Last year we lost $2 million. This year it will be about $1.5 million."

Honeycutt said that Commissioners Bill Pate and Joe Gurley met with state Rep. John Bell, who is trying to help the county recoup the funding.

"I believe we are going to get half of that back," he said. "So we will get $700,000 back as part of the funding, but that still leaves us $800,000 short on low-wealth funding. So that is the reason why we have that in there."

Commissioner John Bell chided the board about decisions over the past several years to cut the tax rate to the point that it cost the county the low-wealth funding.

"We should have never cut the taxes down below where the low-wealth formula was kicking in," he said. "I mentioned that, but nobody listened.

"We had it exactly where it needed to be until we made that last cut. We should have never made that cut."

Daughtery agreed.

"We were fortunate to replace it one year," he said. "We may replace some this year, but it only makes common sense that if in fact for every dollar you raise locally in taxes, that you are going to have a matching guarantee of getting from the state for the school system."

Pate said legislators are looking at a long-term fix to the low-wealth formula that makes sense.

The county would have had a tax rate increase this year had Bell not been able to get $2 million in the state budget for the county to make up for the lost low-wealth funding, he said.

Pate said he wants to ensure the county tax rate is above the low-wealth formula, and that Rep. John Bell is optimistic there are good things coming on the state level.

Honeycutt said that commissioners have talked about the effective tax rate that the state uses to determine low-wealth funding.

The rate decreased from 66.9 cents in fiscal year 2017-17 to 66.80 cents in the current year, he said.

"So if we do go to 69 cents, we will be well within, I think, as far as tight low-wealth tax rate," Honeycutt said. "I think this puts in a position not to worry about low-wealth, at least short term."

Another new expense is $750,000 for four new school resource officers and equipment, Honeycutt said.

Pate reminded Honeycutt that state grant funding might be available for the program.

The county will pursue those grants, but whatever is funded will be after July 1, Honeycutt said.

Honeycutt said county employees are one of the county's most important assets and that with that in mind he is recommending a 1 percent across-the-board salary increase with the possibility of another 1 percent merit increase based on a performance review.

The coming year will be a "bridge year" as the county has to fund $1.7 million in debt service until fiscal year 2019-20 when that debt will be retired, he said.

Major capital improvement plans in the proposal include $120,900 for a sewer evaluation; $200,000 to start renovations on the the Will Sullivan building; $385,000 for two new ambulances and $400,000 for vehicle replacements in the Sheriff's Office.

All of the county fire district taxes will remain the same except for Waylin and Saulston.

The Waylin rate will increase from 4.5 cents per $100 of appraised value to 6.5 cents. The Saulston rate will increase from. 6 cents to 7 cents.

Commissioner Ray Mayo asked Honeycutt when he thinks the county might have to look at another tax increase.

The county will look at property revaluation next year that will impact tax revenues, Honeycutt said.

Also, the budget will be helped in 2019-20 as some debt is retired, and the board has decided to delay some capital projects, he said.

"This will put us in a good position," he said. "I hate to look too far down the future, but I think for right now it is really a good place to be. It meets our low-wealth concerns as far as what the effective tax rate is.

"So, we have spent a lot of fund balance recently. That is one of the big concerns that I think this board has is that we want to make sure that we don't spend too much."

Mayo asked if the county would be able to absorb the extra funding, and not increase taxes, if not for the low-wealth funding loss. He asked if county departments could possibly cut and additional 2 or 3 percent to help the county avoid an increase.

The county cut about a $1 million from the capital improvement plan, Honeycutt said. Also, county departments have been cutting back for several years and have reached a point where their budgets are already tight, he said.

Mayo said he does not like tax increases and what he had been fishing for was whether the county could absorb the $2 million and use the fund balance to do so.

That is possible, however, the goal was not to hit the fund balance quite as hard, Honeycutt said.

Bids are still out on some capital projects so the county might have to turn to the fund balance for those, he said.

A copy of the budget will be posted on the county website, www.waynegov.com.

Commissioners will hold budget work sessions at 10 a.m Wednesday and Thursday, May 30 and 31 in their meeting room on the fourth floor of the Wayne County Courthouse Annex.

A public hearing on the budget will be held at 9:15 a.m. Tuesday, June 5 in the commissioners' meeting room.

The budget needs to be approved prior to July, the start of the new fiscal year.