Citing unavoidable state revenue losses, legislative actions, rising costs, and a 19.5 percent increase in the deductible on health insurance, Sylva's Town Manager Paige Roberson informed the Sylva Town Council that drastic measures needed to be taken in the upcoming fiscal year.
The proposed budget Roberson presented to the council called for a five percent tax increase to the general operating fund for Sylva, which would bring Sylva's tax rate to $.35 cents per $100 of property valuation. Roberson told members of the Town Council that the proposed tax increase would be the first increase in 10 years.
“In 2003, the tax rate increased three cents,” said Roberson. “The tax rate went from $0.42 to $0.45 per $100. Sylva’s tax rate is now $0.30 per $100 valuation.”
With the average property value in Sylva's city limits being $150,000, a five percent increase would mean an additional $75 from 2012 tax payments.
The proposed increase is not the only measure being taken to balance the budget, according to Roberson.
“To remain consistent with the policies and goals adopted in the Town Council's Financial Management Plan, staff continued the practice of projecting revenues conservatively and containing expenditures,” explained Roberson. “The General Fund Balance totaling $3,052,161 is an increase of $42,910 or 1 percent from the amended 2012-13 budget.”
The budget was amended to acknowledge the impact the recession has had and continues to have on town revenue sources. “These economic times are difficult and there is not an end in sight,” stated Roberson. “We are faced with the pressure to operate with less and provide the same level of services to our citizens.”
In the past, Sylva has been able to lean on the town's fund balance in times of trouble. As it stands, Sylva's fund balance is a little less than $2 million. Last year, the balance was a little higher, but the decline in the economy forced officials to tap into the fund balance to balance the budget. The 2013 budget does not spend any money out of the fund balance and leaves the total at 59 percent of the town's overall budget. The town's fund balance states that the revenues must remain at 40 percent, with a target goal of 69 percent.
Roberson informed commissioners that the five percent increase will help the town brace for continued shortfalls in the coming years, which she expects to continue to be difficult.
“With the closing of the Bryson City/Sylva ABC store and Jackson County passing county-wide alcohol sales, Sylva faces a $60,000 revenue shortfall in the upcoming budget,” stated Roberson. “We are estimating a $20,000 revenue loss on privilege licenses following the elimination of video gaming sweepstakes. The sale of telecommunication will be $10,000 less than in 2012 since fewer people have land lines. Another source of loss is from Police Department fines and fees and substance tax distribution. We project a loss of approximately $12,200 from last year's budget there.”
With the combined revenue losses project from 2012 to 2013, Sylva is starting the budget planning process with an 11 percent shortfall, with daily operating expenditures increasing across most town departments by a total of $42,910.
“Sylva is facing a severe budget deficit of about $200,000,” said Roberson. “The revenue shortfalls are approximately $120,000. Expenditures have increased mainly due to capital needs that have been delayed in the past. This is a difficult budget year. I really hated to suggest a five cent tax increase because I know how difficult it is right now for people, but we aren’t bringing in the money to operate. Prices have gone up and costs have increased since the last revaluation. The town has really made an effort to reduce costs. We have also recommended drastic cuts within the departments. The proposed budget freezes a position and delays capital needs. Proposed cuts and reductions amount to $178,000.”
Roberson informed council members that uncertainty in the coming years is the biggest challenge for the board. She cited state legislation regarding municipalities’ ability to levy privilege license taxes; the continued impact of unemployment; and the slow housing market will continue to affect the budget. The uncertainty of the long-term impact of county-wide alcohol sales has also made that budget line item a moving target during the process.
In order to minimize the impact of the budget, Roberson said that the proposed budget focuses on planning to replace long term capital needs instead of outstanding goals and capital improvements. Urgent needs took precedence in the planning process so that necessary expenditures were kept as priority to ensure the quality operations of the town.
Several projects that had been discussed during the Feb. 11 budget work session, were put on hold to be considered at a later date as funds allow. Those projects included Main Street Economic Development such as bringing the Great Smoky Mountain Railroad train to Concerts on the Creek, a public bathroom downtown, $27,500 in merit raises for employees, replacements for three police departments and several street repairs.
In addition to delaying projects previously favored by council members, Roberson said that the budget reflected other cuts and strategic budget moves. “In this budget the Town has diligently tried to control spending,” stated Roberson. “This budget recommends the cuts and reductions as solutions to help combat the budget shortfall.”
Those moves included freezing the police department clerk position, which will reduce the budget by $48,548. Other cost saving measures were found in the amount of $28,537 by not updating capital needs at the Police and Public Works Departments such as not replacing tasers and radios that had been requested.
The proposed budget also calls for Sylva to change insurance providers and raise the deductible, while fully funding employee benefits through a Health Savings Account.
Roberson noted that the final budget must be adopted in North Carolina by July 1. This year, Sylva will adopt the budget at the June 20 Town Board meeting. Roberson's formal submission of the budget to the Town Council is May 23. The public hearing on the budget this year is scheduled for June 6 at 5:30 p.m.