News

Mills River tax increase drops to 1 cent

Mayor Roger Snyder asks a question as Shanon Gonce, left, and Wayne Carland study numbers.

By Bill Moss, Published: May 11, 2012

MILLS RIVER — Mills River residents may see a 1-cent property tax increase this year.

The Town Council on Tuesday directed Town Manager Jaime Laughter to prepare a budget with a 1-cent property tax increase in order to meet operating expenses that have grown with the town’s new facilities. The money would also give employees a 2.6 percent cost of living raise and potentially a 2 percent merit raise based on performance.

Laughter last week told council members they needed to raise the property tax rate by 1½ cents per $100 valuation if they want to maintain the services they have committed to and keep the town finances on sound footing next fiscal year and beyond.

“Any measure to maintain the existing property tax rate,” she said, “will either reduce the quality or availability of town services or facilities or would require the town to endanger the quality fiscal responsibility” it has practiced since it was founded nine years ago.

The 1-cent tax increase “is not the recommendation that I had made in order to optimally run our services and run the human resources side in support of those services,” she said, but it is the council’s decision. The 1-cent tax increase would mean the town won’t have to use its fund balance to pay for operating expenses.

The action at Tuesday’s budget workshop followed a long budget session on May 10.

Councilman Shanon Gonce said that the town had deliberately saved money and after getting a state parks grant and low-interest loan backed by the federal government had spent a lot of it to build the library, the town hall and the park on 50 acres on N.C. 191.

“Henderson County was throwing rocks at us for sitting on $2 million but what did we have it for? To building something for everybody to use,” he said. “What’s the use of us having $1.8 million (in a reserve fund) in the bank.”

Gonce favored drawing from the town’s rainy-day fund to pay for services and park improvements instead of raising taxes.

Revenue could be ‘hijacked’

Laughter warned that drawing down the reserves was risky.

She argued that the need for more revenue has been growing for three years as the town has added new facilities and services. The town remains lean in staffing — fulltime positions have remained static over five years — and revenues have been flat. She recalled that she told Councilman Larry Freeman when he was sworn in, “In three years, when we open the town hall and the park, we’re going to need a tax increase.”

The town manager’s recommendation would raise the Mills River property tax rate from 1.24 cents to 2.74 cents per $100 valuation. The 1-cent increase would raise the rate to 2.24 cents.

Overall, the town collects a tax of 8.74 cents per $100 valuation but the Mills River Fire Department receives 86 percent of the total collected. It has a tax rate of 7½ cents per $100 valuation, which funds an annual budget of $566,530.

A tax increase of 1 cent would raise the tax bill for a home valued at $143,047 (the average tax value) by $14.30. The owner of a $200,000 home would see the local tax bill rise by $20.

Keeping the tax rate the same is an option as long as the council puts the brakes on spending, Laughter said. “If that drives your budget decision, it needs to drive your decision to spend.”

Because it has a property tax rate of only 1.24 cents per $100 valuation, the town’s $1.4 million budget relies heavily on utility taxes, ABC taxes and other shared state revenues.

While the state Local Government Commission recommends counties and large cities generally set aside a reserve of 8 percent, it recommends a town the size of Mills River keep 68 percent of its budget in contingency.

“That might seem high,” Laughter said. “But like it or not, the state has a history of hijacking money when you need it.”

Councilman Larry Freeman agreed. “The state could potentially hijack any of them,” he said.

The town could see a cut in its ABC distribution because, with voter approval of liquor stores, Henderson County may also share in the proceeds.

Laughter prepared a detailed analysis to support her recommendation for staff restructuring that would add a position, realign some functions and raise salaries to the mid-level for towns similar in size.

Mills River has a population of 6,830 and land area of 22 square miles. Laurel Park has 2,180 people and 2.87 square miles, and Fletcher has 7,187 people in 6.1 square miles.

The manager proposed adding a receptionist, splitting the town clerk and tax collector duties and putting part-time park rangers under the zoning enforcement officer/park director.

The study showed that Mills River’s spending is dramatically below that of other NC towns ranging in population from 2,500 to 9,999:

• Salaries: $26 per capita expenditure (in Mills River), $453 (state average), or 6% of the average spending.
• Capital outlay: $237, $253 for all towns, 94 percent.
• Other/operating: $124, $660, 19 percent.
• Total: $387, $1,366, 28 percent.

If the council accepted the salary recommendations, the total per capita spending would rise to $33 a year, still just 7.3 percent of the average. The study showed that Mills River’s town manager, town clerk, zoning enforcement officer and administrative assistant are underpaid compared to those same jobs in similar size towns. She recommended the pay rise to the mid-range of salaries paid by small towns.

“We were not necessarily looking at the best paid,” she said. “We just didn’t want to be the worst.”

Another $94,000 for park

With costs of the park and other facilities rising and tax revenue flat, the town needs the higher rate, she said, even if it rejects the new position and salary increases.

“Even without the implementation of the staffing study, a tax increase for next year is still warranted,” she said. “Council cannot maintain services and resources and meet the goals outlined in visioning if a tax increase is not approved.”

After it wrapped up its budget presentation, the board voted to spend $9,400 to buy a Polaris Ranger 500 EFI all-terrain vehicle for use by park personnel and dipped into the reserve fund for $85,000 to build four new tennis courts. The courts would cost $160,000.

Among other capital expenses for the park in the next year are $43,000 for a walking trail at the rear of the property and $6,000 for a storage building.