PILOT MOUNTAIN — Pilot Mountain residents would face a 4-cent tax increase, increased water/sewer rates, increased garbage collection fees, with the town still needing to use more than $30,000 in fund balance to balance its budget for the 2015-16 fiscal year under the budget proposed by the town manager this week.
The budget includes a 1.5-percent cost-of-living increase for the nine full-time employees who are making less than $15 an hour — that is five police staff and four public works employees. None of the staff at the town have had pay rate increases in six years, and Town Manager Amanda Reid hopes to look at how the town does at the end of the 2015-16 fiscal year to see if bonuses are available for the remainder of the employees.
While most of the town’s board of commissioners seem determined to find ways to reduce expenses for the upcoming fiscal year, it was apparent during a budget workshop last Wednesday night that elected officials aren’t on the same page as to what needs to be cut and what the priorities should be.
The town already has approached the county commissioners about separating the contribution to the Pilot Knob Volunteer Fire Department into a separate fire district tax for town residents, a decision the county commissioners tabled at their Monday night meeting.
Whether that 4-cent fire district tax is created separate or not, town officials are looking at a tax increase for residents to make the budget balance, according to information discussed during the budget workshop.
Elected officials had hoped to build a budget without needing a tax increase, which would have put town residents paying 54 cents per $100 valuation for property tax, 4 cents for fire tax and then the county’s 58.2 cents. But Reid’s budget message made it clear Wednesday night that keeping the tax rate flat could be impossible.
Reid is tasked with bringing the commissioners a budget that meets the town’s existing and future needs and providing how funding those should be handled, thus the tax increase, rate and fee increases and fund balance allocation.
Then it is the commissioners’ job to instruct Reid on how to adjust expenses and revenues to what they want to actually approve as the final budget, in hopes of keeping tax rates and fees to a minimum while still covering operational expenditures for the year.
Water rates could increase
The workshop began Wednesday with a presentation by Marty Wilson of the North Carolina Rural Water Association, a nonprofit group which aids small communities across the state in keeping up with changing regulations, trends and other water-related issues.
Wilson explained the need for the proposed water/sewer rate increases, noting that unless the rates are increased the town still is not covering the cost for producing the water and treating the sewage.
“We are still not hitting our water/sewer usage rates and are about $200,000 from hitting our revenue mark on the water and sewer fund,” noted Reid as she introduced Wilson to the board. Last year, the town went through a rate restructure, which increased water users’ costs, in hopes of covering the operating costs of the water and wastewater treatment processes.
Wilson explained the UNC Environmental Finance Center’s water dashboard to the group, and then showed them with existing rates of $63.60, Pilot Mountain is below the state median of $70.40 monthly rates for municipalities with similar number of accounts.
In cost recovery, Wilson said, “You are in the red below where you need to be,” of whether the town is generating enough revenue to cover its cost of operating.
The dashboard also shows whether a system’s rate is affordable to its users. Wilson said it is based on the percentage of local household income and that the bill should be about 2.6 percent of one’s average income. Pilot Mountain’s is 2.25 percent.
The dashboard showed that the town is not covering operating costs once the debt service is added in to the overall figures, Wilson said. And using depreciation information provided by the auditors to the Local Government Commission, the dashboard showed the town’s water system’s physical assets are in condition that the town should be planning for their replacement, Wilson noted.
Based on the expected expenditures to operate the water and sewer systems, Reid and Wilson are recommending increasing the base water rate from $10 per month to $14, and then increasing the per-thousand gallon rate from $5.45 to $5.95 for users inside town limits. Users outside town limits would see rates of $28 base and $11.90 per-thousand if the approved rates are approved.
Wilson said with those rates, the town would be covering “all operating, debt service and proposed capital outlay costs, but it does not cover depreciation cost to plan for the future needs.”
He also said those proposed rates in the bill comparison would put Pilot Mountain at $87.77, and still in the affordability range per the dashboard information.
Reid and Wilson said if grant money is available for future needs to the utilities system, the town would not qualify for them now because the rate remains too low.
Tax-rate increase, fund balance use possible
The town for the past four years has been tasked with increasing its available fund balance, which is like a savings account for governments to make sure they can cover at least two or three months’ operations in case of an emergency, after its fund balance level fell below the state’s required eight-percent level.
But even with a proposed increase in taxes of 4 cents per $100 valuation by Reid, balancing the budget would require more than $30,000 of fund balance appropriation. Originally Reid’s budget called for $54,000 in fund balance, but she believes financing the purchase of a needed backhoe over four years instead of two will lower the need of fund balance by $20,000.
When someone suggested renting a backhoe in place of purchasing one, Reid said it costs $480 a day to rent and it is used for 90 percent of the work by public works crews. The purchase of a backhoe will not be made until the second half of the fiscal year.
One of the losses the town is seeing is in its solid waste collection rates. It is costing the town just more than $9 per pick-up per month for collection of garbage and recyclable items, and in the coming year that cost will include the bulky item pick-ups twice a year. But the town has only been charging customers $3 a month for that service.
Reid is recommending a fee of $8 per customer per month to get closer to what the town is paying Waste Industries for the contract services.
Mayor Dwight Atkins said he’d like to see the town cut as much as possible to avoid going into fund balance and hope for $33,000 in hold harmless funds from the state. “Every $13,500 (saved) is a penny less than what we have to raise taxes,” he said.
“We have a lot of capital we are putting off,” Reid reiterated. “If we keep deferring them, then the needs stack up so it all comes at one time.”
Commissioner Cordie Armstrong said, “We don’t need the fund balance to be the go-to.”
As far as expenses on the general fund side of the budget, Reid said the town is looking at health insurance providers and costs to see if there is some savings they can find there, as well as better plans for the town employees.
New expenses in the general fund include a part-time finance officer position, a role that has been split between Reid and Town Clerk Holly Utt up to this point. Reid has budgeted $25 an hour for a salary of $32,000 annually for that part-time position, as well as $5,000 for an intern to assist in the office.
Savings will be seen in the departmental supplies as the town has been renting its phones and Reid is proposing the town buy those and rework the IT server.
One cut that Reid also is proposing is to reduce the amount of money the town is contributing to the Charles Stone Memorial Library. Rather than provide the $30,000 requested, Reid is proposing the town contribute $15,000 from its budget and then pull the remaining $15,000 from the Charles Stone Trust stock.
This would be something she would propose for this year and next fiscal year, which would drain the funds in the trust, and give the library time to come up with other funding sources, Reid said.
Another new salary included in the budget is for a 20-hour paid coordinator for the Downtown Associate Program, which is part of the Main Street Program the town has applied for. The position can be manned by a volunteer instead, but town officials are concerned about the consistency of having a volunteer handle those duties.
Elected officials voice opinions on proposed budget
Once Reid completed her presentation of the budget, Atkins opened the floor to each commissioner for their thoughts, feedback, direction they might want to see the budget go in.
Commissioner Gary Bell said, “I’m not in favor of a 4-cent tax increase. I will not approve raises for the staff. We do not need to spend money for the K-9 (just more than $900 for the Police K-9 program). We are going to have to make cuts somewhere to get money from somewhere whether its insurance, reducing staff or somewhere else.
“We’ve raised our water rates five years in a row and last year we restructured to avoid raises again, and I think we have a responsibility to not do that again. We have a lot of contracted services, I think some of the staff needs to be multitasking, learn new trades to help around town.”
He suggested the town find a way to sell more water “or build a pond or something.”
Bell pointed out the many contracts the town is in to provide services from mowing the cemetery to volunteer fire protection to trash service, and he said “I know it is a lot to ask” but he thinks the town employees, including police department, start multitasking.
“Where we do contract is cheaper than what we could provide or it is regulatory,” responded Reid. “It is designed to save money.”
Commissioner Linda Needham said she likes the idea of recovery the costs spent on solid waste removal so that the customers are helping foot the bill. She also said she wants to see more work done on the condition of the roads from paving to potholes.
She said if some of the staff get a cost-of-living increase, then they all should get that.
At the cemetery, Needham said, the grave diggers have been hauling off the dirt they remove for burial, when the town could use that dirt to fill holes at the cemetery.
Bell jumped in and suggested the town employees could dig graves at the cemetery and charge less than the funeral home is charging and still make money to help pay for the backhoe, but Reid’s concern was if there is a water main break or some other immediate need for the backhoe, it couldn’t be in two places at once.
Another concern of Needham’s was code and zoning ordinance enforcement, a service being contracted to a group from Kannapolis which comes up once a week. Also, she doesn’t think the town needs to remodel the front office, which Reid said would provide one less computer need in the front office so that it could be utilized in the police department.
Commissioner Armstrong wasn’t sure where she stood on the budget, and chose not to comment.
Commissioner Kim Quinn, who was appointed to the board to fill Atkins’ vacated spot after he was elected mayor in the fall, was very vocal on her support for Reid’s budget.
“We need to do the right thing as a town and pay the extra $40 (for a tax increase of a $100 valuation property) so people can get raises and make needed repairs,” Quinn said. “We need to invest in our people, and tell people we need to raise taxes.
“We have four years of audits saying we don’t balance the budget,” she pointed out as Needham and Bell spoke up to counter her comments. “We only have a 13-percent fund balance, and you are saying to cut more and not need fund balance growth again.”
“We’ve had financial issues,” acknowledged Atkins. “We’ve been presented a budget that meets our obligations. But we need to look at what financially we can do to reduce tax increases, rather than adopting a budget where we are $54,000 in the hole (the original fund balance allocation).
“We can’t be flippant. We need to explain, people are going to want an explanation,” he said. “What can we do to meet our obligations, have a water rate that is not an exorbitant increase and reduce the fund balance allocation by $54,000 and still maybe cut a cent or two off of what we have to increase taxes.
“My feeling, what I would like to do, look at reducing the backhoe cost, eliminate the part-time finance officer, look at killing the K-9 program and have public safety do some of the code enforcement instead of contracted services,” Atkins said. “That is pushing $70,000 is savings. You can take $54,000 from that and still reduce 1 cent on the tax rate.
“Notice I have not said not give salary increases.”
When Armstrong has Police Chief Darryl Bottoms how active the K-9 is, he said she is used a lot when she is healthy, but she is aging and reaching her expiration of service.
“The finance officer I’m thinking is really, really needed, and I think it is something we need to do for administration,” said Armstrong.
Atkins said he felt the board will need to meet at least one more time prior to the public hearing and vote on the budget, which typically is held during the June meeting, this year on June 22 at 7 p.m. But no meeting time has been scheduled yet to revisit the budget.
“It gets contentious during budget time, but we respect each other and we want to do what’s best for the town,” Atkins said as the special meeting closed.
Wendy Byerly Wood may be reached at 336-258-4035 or on Twitter @wendywoodeditor.