No tax increase for Canton, but rates will rise
Buffeted by a flood, the loss of a major employer and a hurricane — all in the past four years — the Town of Canton again faces tough budget discussions. Cory Vaillancourt photo
The Town of Canton is currently wrestling with one of the ugliest budget conundrums in decades due to a combination of natural and human-caused disasters, the general unsustainability of the American health care coverage system and a colossal mistake by a contracted service provider.
“I’ve been the finance officer for a number of years now, and this is by far the hardest budget we have ever had to formulate,” said Natalie Walker, Canton’s CFO and assistant town manager.
While Canton’s highest-in-the-county property tax rate doesn’t look set to rise, user fees for some town services will.
A TRASHY DILEMMA
WastePro, the Town’s trash contractor, will increase its prices by 5.2%, based on the consumer price index. The increase only comes to $13,635 a year against $275,000 in annual expenditures; however, the company will now charge a “disposal fee” of $100,000 — a massive bump to what it already charges the Town.
During an April 24 budget discussion at town hall, Town Manager Lisa Stinnett said that after a recent management change at WastePro, the company discovered it hadn’t been charging Canton for disposal fees incurred when the trash gets dumped.
“Somehow,” Stinnett said, “WastePro was paying [the fees] for years. For years.”
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Despite inadvertently giving the town a huge break on trash pickup services all those years, WastePro is not seeking repayment and is only charging the fee going forward.
Together, the two increases will bring the Town’s annual trash expenditures to more than $375,000.
The Town’s governing board had to decide whether to absorb some of the increase, which it can’t really afford to do, or pass the increase along to the 1,684 customers who are used to seeing a bill for $13.50 each month. Now, they will likely see that bill increase to about $18.60 a month just so the Town can break even on the service.
Stinnett said she was shopping for a new contract.
PIPELINE PAIN
Most North Carolina local governments utilize a tiered structure to charge for water and sewer services based on usage, and Canton is no different.
Historically, Canton has set rates among the lowest in the region, but with a new wastewater treatment plant on the horizon, the rates have become unsustainably low. They’re so low, in fact, that the Town does not qualify for some state grants, the theory being that municipalities shouldn’t slash customer rates and rely on handouts to operate.
Along with that, this is this first year in decades — perhaps ever — that Canton will pay a competitive rate for treatment of its wastewater. Previously, the owners of the mill had treated the town’s waste at nearly no cost, but now that the parcel is in private hands, the old agreement that governed the relationship is gone. A new one has not yet been signed, but Walker hopes the hit is $200,000 a month, or less.
For water, customers inside town limits currently pay an $18.04 per month base rate for up to 3,000 gallons, and $4.46 for every 1,000 gallons above the base amount. Customers outside town limits pay a $36.07 base rate, and $8.91 for every 1,000 gallons above the base.
Proposed rates for inside customers would rise to $23.08 and $4.73, respectively, while customers outside town limits would pay $72.14 and $9.45.
For sewer, customers inside town limits pay a $22.16 per month base rate for up to 3,000 gallons, and $2.23 for every 1,000 gallons above the base amount. Customers outside town limits pay a $44.30 base rate, and $4.46 for every 1,000 gallons above the base.
Proposed rates for inside customers would rise to $48.75 and $2.37, but customers outside town limits would pay $88.60 and $4.46.
“I think it’s important for us to talk about that this is something that we have not wanted,” said Alderwoman Kristina Proctor. “We didn’t want to do this, and we explored every opportunity to try to mitigate this as much as possible.”
THE COST OF STAYING ALIVE
Eggs, energy and the cost of other everyday items were all hot topics during the most recent election, but American consumers aren’t seeing much relief 100 days into the new administration. That puts the pinch on employers, like the Town of Canton, to find ways to retain the qualified employees who keep town services up and running.
“There is nothing that keeps me up more at night than affordability — of everything,” said Mayor Zeb Smathers. “I mean, you can’t go out to eat with one kid and you’re not spending upwards of 80 bucks. You can’t go to Mickey D’s and get you a combo meal for less than 10 bucks.”
Relying largely on top-notch benefits, family-like work atmosphere and quality of life, the Town has struggled to provide the one thing that employees really want — cash in their pockets.
“We all know they’re all underpaid, right?” Stinnett asked rhetorically during the meeting. “Everybody here is underpaid.”
“Correct,” Proctor answered.
The exchange came amid a discussion on including a cost-of living adjustment in the budget.
Right now, in addition to salaries and overtime, Town employees receive a Christmas bonus, but local governments usually consider annual cost-of-living increases based on the consumer price index, which in January was 3.1%.
Walker presented a range of options, from 1% to 5% increases, along with their budgetary impact. The Board decided to go with 3%, which would increase payroll costs including taxes and retirement contributions by nearly $168,000, from $4.92 million to $5.08 million.
But the COLA discussion didn’t take place in a vacuum; spending more on COLA means less money to spend on other things, like health care coverage.
“We’ve had this Cadillac plan of insurance for years. We’ve always been told that it was really unheard of, that our deductible being $500 was super-unheard of,” Walker said.
Those days are over for Canton. Last month, the North Carolina League of Municipalities announced it would wind down its Health Benefits Trust and no longer offer dental, medical, vision and life insurance policies to about 8,000 people — government employees and their families across the state.
“This decision was not made lightly, and many factors contributed to it, including the rising prices of medical procedures and specialty drugs,” reads a statement from NCLM.
Canton had offered employees two Aetna plans through NCLM, the most popular including a $500 deductible for a single person, $2,000 out-of-pocket annual max and copays of $20 for primary or urgent care, $30 for specialty care and $500 for emergency care.
The Town pays 100% of the premium for individuals, 47% for an employee/spouse plan, 35% for an employee/child plan and 34% of a family plan. Deductibles and out-of-pocket limits are doubled for family plans, although since 2011 the town has only paid for coverage for new employees, not spouses or dependents.
Two proposed alternative plans from Blue Cross Blue Shield both offer $3,000 deductibles for individuals, a $6,000 out-of-pocket max and copays of $25 for primary care, $50 for specialty or urgent care, and $500 for urgent care. Deductibles and out-of-pocket limits are also doubled for family plans.
Both BCBS plans are more expensive for employees and for the Town, which would continue to pay 100% of the premium for individuals but 48% for an employee/spouse plan, 64% for an employee/child plan and 36% for a family plan.
One of the plans would cost $722,000 (an 18.9% increase), but the other, which does not allow for new retirees or a budgeted health reimbursement arrangement, whereby the Town would further subsidize deductibles by an estimated $47,000, costs $674,000 (an 11% increase).
By deciding to spend an additional $168,000 on COLA, the Town’s unavoidable health care coverage spending increases of $115,000 for the first BCBS plan or $69,977 for the second become a much tougher pill to swallow. Board consensus solidified on the second plan.
The Town also considered several alternatives to its dental, vision and life insurance benefits, settling on a 6.8% increase, rather than other options ranging from 21.4% to 22.1%. The increase, about $7,800, is minor, but is an increase nonetheless.
FREE LUNCHES AND THE NOSTALGIA TAX
Other components of Canton’s proposed budget appear to be relatively routine, but there’s an old saying in municipal government circles — your budget is a manifestation of your priorities. One of Canton’s priorities has always been maintaining its identity as a gritty, blue collar mountain mill town with unique historic charm in a quaint, compact central business district.
Now, with fewer blue collars, this mill town without a mill needs to come to grips with a new reality and move on from what Carl Cortright, a planning board member who once ran for alderman and with his wife Tiffany have attended most governing board meetings over the past decade, calls “the nostalgia tax.”
“We just can’t afford it,” Cortright said, mentioning the annual five-figure insurance costs for the town-owned historic Colonial Theatre on Park Street. The iconic 300-seat venue was flooded in 2004, again in 2021 and then again during Helene and remains closed. Over the years, town officials have explored ways to make the building pay for itself, but haven’t yet come close.
Privately, many worry that leasing or selling the building would lead to changes that aren’t reflective of the town’s character.
“Spending $36,000 a year on insurance for a building that you all have done nothing with for 10 years, that’s ridiculous. It’s got to go. You’ve got to get rid of it,” he said. “You can sit here and say, ‘Well, we’re going to gut it out and we’re going to find somebody to come in.’ That’s the pipe dream of all the building owners in town. ‘We’re going to have somebody come in and spend $100,000 to renovate it, but they’re not going to own it. They’re just going to lease it from us.’ That’s unrealistic. No one’s going to do that.”
Cortright also expressed frustration at what he says has been an inadequate effort to monetize the town’s diverse cultural and recreational offerings, including the pool, the Armory and the International Paper Sports Complex.
“We have a lot of things in this town that people love and utilize, but what I see is a lot of people not from town are utilizing this stuff,” he said. “I know these are public spaces, but we as taxpayers cannot continue to pay for recreation for all of the county.”
OTHER FACTORS
During the budgeting process, one of the big-picture factors local governments start with is whether or not the town has seen an increase or decrease in its property tax base. This can come from the periodic revaluations performed by county government; however, Haywood commissioners postponed a revaluation that would have taken effect this year due to the destruction caused by Hurricane Helene.
The other component is natural increase or decrease, based upon the amount of development — or demolition — within municipal boundaries.
Thankfully, Walker told The Smoky Mountain News, there doesn’t appear to be a substantial decrease in the property tax base because of Helene.
“We did not lose that many residential buildings in Helene,” Walker said, adding that she didn’t have solid figures on the losses or on any potential increases in tax base due to new construction and that regardless, they’d likely not be a major factor in budgeting.
There will be, however, a decrease in property tax revenue at the site of the old Pactiv Evergreen paper mill, which shut down in June 2023 and was recently sold to a developer for $3.3 million, far below its assessed value of $19 million. As development proceeds, some of that property tax revenue will eventually return, but for now, it’s a yearslong waiting game with no real answer. Walker estimates an initial hit of $1 million-plus.
The conclusions reached by town staff and elected officials during the meeting are solidifying but are not yet final. The town will hold at least one public hearing before voting on the final budget, which by law must be passed before July 1.
