By John Peters
June 9, 2014
Today the Mount Airy Board of Commissioners will gather for a budget work session, and if recent history is any guide, very well could vote on approval of the 2014-2015 budget.
A key component of that budget document is a proposal to cut the city tax rate by 4 cents, from the present 52 cents per $100 of assessed value to 48 cents, and follows a trend by city officials in recent years of cutting the tax rate. Those moves have come after the board listed as a top priority in 2011 of slicing 10 cents off of the city tax rate.
It has been gratifying to see the board make that commitment and follow through. This year, however, there has been some surprising, though light, opposition to the cuts.
Last week Kelly Hiatt, a city resident and retired city police lieutenant, approached the board and asked the tax rate be left where it is. He said Mount Airy is the envy of many around the state because of its superior level of services and its caring, highly qualified staff.
Another resident, Gene Clark, who opposed the proposed Municipal Services District expansion which took in his property, suggested if the downtown district needed more revenue the city should reduce the city tax rate by 3 cents instead of 4, and use the money it would have saved with that fourth cent to fund downtown needs.
Both Hiatt and Clark expressed concern that while it might be politically popular to drop taxes now, cutting city funding would leave the commissioners in the position of having to raise the rate again a few years down the road.
We agree with Hiatt, Mount Airy is truly a jewel in North Carolina, and is the envy of so many communities both in state and out, and part of that is because of the level of services offered by the city and the level of commitment by city staffers.
We agreed with Clark that his property shouldn’t be taken in — ultimately it wasn’t, when the board voted to extend the MSD boundaries only to take in the properties whose owners voiced no opposition to the move.
And while we have often praised the commissioners for cutting taxes, we have consistently asked the commissioners not to make additional tax cuts unless there is a plan in place that shows the annual budget can be self-sustaining each year without taking big chunks from the end of year fund balance or having to come back and raise taxes a year or two down the road
However, we feel the tax rate should still be cut the full 4 cents as proposed, and we do not believe this cut will endanger the fund balance, leave the city or the MSD without proper funding to do needed projects, nor will it leave the city in a position of having to raise taxes again a year or two from now or force any cuts in service.
During the same period when the commissioners have been whittling away at the tax rate, the city’s fund balance has continued to grow, to the point that now nearly a full year’s worth of general fund expenditures could be handled from that balance.
While we commend the board and the city administration for conservative, efficient management of resources that has allowed that fund balance to grow, if it’s gotten that large, the city can clearly continue cutting the tax rate.
Some might point to the 2014-2015 budget proposal — which shows the city pulling $2.5 million from the fund balance to balance its budget.
However, as city resident John Pritchard showed the board, many of the city’s departments have turned in budget proposals in recent years that under state what eventual revenue would be, or overstates projected expenses, sometimes to the tune of hundreds of thousands of dollars.
While it is good to see budget writers taking a conservative approach when projecting revenue and expense, at some point when budgets continually reflect figures that turn out to be inaccurate, later budgets lend themselves to questioning.
An example is the present budget proposal that calls for the city dipping into that fund balance for the $2.5 million. We’re not sure we believe that is an accurate depiction of what is likely to happen, and need to look no further than the current budget as an example.
This year’s budget calls for the city to drain $2.03 million of that fund balance to meet operating needs. However, at mid-May, with just six weeks left in the fiscal year, city officials said none of the fund balance had been used. While we won’t know the final figures for some time, it is entirely possible the fund balance may show growth yet again this fiscal year.
Do not misunderstand — we are not trying to be critical of the city administration nor the commissioners in their budgeting practices. On the contrary, it is rewarding, and every city resident should take comfort, in the fact that this administration and this group of commissioners has taken seriously the idea of increasing government efficiency, holding the line on spending, while maintaining — even improving — excellent city services.
But we do suggest a little tighter budgeting would give everyone a clearer picture of what might come, and that in light of recent budget year results, the city can well afford this additional tax cut with no real danger to city jobs or services.