No tax increase in Waynesville budget
File photo
During a difficult meeting in March, Waynesville’s Town Council was presented with a perfect storm of bad budgeting news. After Council’s most recent meeting, it looks like they’ll weather that storm with only a modest sewer rate increase.
“Our forecast of revenues and expenditures is based on the same economic outlook as the national economy — uncertainty,” said Town Manager Rob Hites May 13.
In presenting a balanced all-funds budget of just over $40 million that contains no property tax increase and no rate increases for the town’s electric and water customers, Hites again summarized the difficult circumstances he first outlined in the March 21 meeting.
The town’s general fund will increase by 4.5%. On the revenue side, an existing moratorium on sewer connections means the town has seen almost no growth in the tax base over the past year. Sales tax projections are flat or down. A previously scheduled countywide property revaluation that could have helped with revenue was postponed by Haywood commissioners in the wake of Hurricane Helene.
One bright spot, Hites said, was a surge in investment income on the order of 17%. But that only really adds about $50,000 to the town’s $19.1 million general fund.
Another is the modest growth of the Downtown Waynesville Commission. Revenue is projected to increase by $3,900 to $113,200, while expenses are only projected to increase $1,972 to $200,372. That means the Town’s subsidies to the Commission, which conducts beautification projects and helps with events that drive tourism, will drop by nearly $2,000.
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On the expenditure side, another of the state’s periodic unfunded mandates means the town has to increase employee retirement contributions by 1%, or just over $148,000. For comparison, one cent on the ad valorem tax rate — the town’s largest source of revenue — is worth about $156,000.
Liability insurance rates will go up by around 50%, due to claims the town made in relation to Hurricane Helene.
Citing price increases “in all areas of the economy,” Hites said the Town has settled on a 2.5% career track increase and a 1% cost of living increase for employees, which comes to $431,868. Council has long fought to increase worker pay after years of inaction that resulted in costly employee turnover.
Hites reported that the town was now nearly fully staffed but has also reduced operating costs and eliminated nearly all capital spending to offset inflationary increases.
“Given the economic outlook of our economy, it’s not an appropriate time to increase spending, except for critical needs,” he said.
Aside from the general fund, the Town also operates several other funds that are treated almost as separate businesses — they have a different set of books, and funds can’t be comingled, so accountability and transparency is easier.
The electric fund, which buys bulk power and resells it to customers while maintaining the transmission network, expects a 1% increase in revenue but a nearly 3% increase in expenses. No rate hike is proposed.
Water fund-related activities result in the collection, treatment and distribution of water. The Town anticipates a 3% increase in revenue and in expenditures. No rate hike is proposed.
The stormwater fund, which helps manage runoff and improve water quality, will see a slight decrease in forecast revenue but a substantial increase in spending due to the reclassification of some public works positions. The fund, however, remains balanced with respect to revenue and expenditures at $193,238. No rate hike is proposed.
The town’s garage fund provides for the regular maintenance of its fleet of vehicles. It does not generate outside revenue, but it does charge expenses to the appropriate Town departments, like the police or the water department. The fund is balanced at $1.26 million, a slight increase from $1.19 million.
The sewer fund, however, is a different story, due to different circumstances. The Town’s new wastewater treatment facility is expected to come on line later this year, but so do payments toward the $29 million zero-interest loan the town acquired to construct the new facility. The annual payment is just over $1.2 million.
“We are recommending a 10% increase in our sewer rate this year,” said Ian Barrett, the Town’s finance director. “With that 10%, that would put our customer charges at $4,718,250.”
By law, municipal budgets must be passed by July 1. The town has set a formal public hearing for the budget during its next meeting on May 27, at which time Council members may vote to adopt it, or send it back to the drawing board.
