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Originally published: 2013-06-01 13:22:35
Last modified: 2013-06-03 09:38:05

Council splits on proposed tax hike

by Anna Oakes

Boone Town Council members expressed differing opinions on a proposed five-cent property tax increase at a retreat meeting Friday.

Town manager Greg Young proposed the tax hike in the budget proposal he submitted to the council last week. The town faces an estimated $1.8 million revenue shortfall next fiscal year due to the county's change to local sales tax distribution, which represents about a 16 to 17 percent cut to the General Fund budget, Young said.

A five-cent increase would raise the property tax rate to 42 cents per $100 valuation.

Councilwoman Lynne Mason suggested that the town dip into its fund balance to avoid a tax increase.

"I'm really uncomfortable doing a tax increase. I don't think the decision by the county -- that the citizens of Boone nor businesses should have to pay for it," Mason said. "We continuously try to maintain this large amount in reserves. When is the right time to ever look at using any of that?"

The town maintains cash reserves equal to 35 percent of annual expenditures. Young said the town currently has another $3 million in undesignated funds above the 35 percent amount, including $1 million in "floating" funds the council typically allocates to special projects if unused by the end of the fiscal year.

Mayor Loretta Clawson agreed with Mason, and councilman Andy Ball said he would like to consider using the undesignated funds but that he needs more information. Young advised the council that state legislative actions could result in additional revenue cuts, including tax reform measures that would reduce town revenue by nearly $1 million.

"I think we need a tax increase, personally," said councilwoman Jamie Leigh. "I don't see any other way around it. You don't wipe out your savings in one year. I don't know that it needs to be five cents."

Councilman Allan Scherlen said he agreed with Leigh. Councilman Rennie Brantz was absent from the meeting.

Young's budget continues basic services and maintains existing personnel but cuts departmental expenses by 5 percent and the General Fund by $1.3 million.

He also recommends cutting grants to area nonprofits, an $116,000 expense this fiscal year. Mason said she hoped to continue outside agency funding, perhaps at a reduced amount, but Leigh and Ball said they felt the funding cut would be necessary.

Council members expressed opposition to a proposal to divert the town's vehicle tax revenues from sidewalk expansion to the General Fund. They also opposed the suggested elimination of Fourth of July activities.

The council said the town should discuss proposals affecting downtown with the Downtown Boone Development Association, a nonprofit that provides input to the town on Municipal Service District (downtown) tax expenditures. Young proposed funding the town's downtown coordinator staff position fully from MSD revenues, which are slated to increase with the sales tax change.

Currently, the MSD funds half of the position and the town's General Fund pays the other half, an arrangement that was negotiated as part of the MSD Task Force process in 2010 and 2011.

"I have some reservations about having all that paid out of MSD," Leigh said. "That wasn't our agreement with the DBDA. I think it looks bad."

Young's budget shifts $118,000 paid to the town's lobbyists from the General Fund to the Water and Sewer Fund, which currently has a $50,000 line item for lobbyists.

"As long as we have the water (intake) project active, we need to have the lobbyists, and as long as it's water related, it can come out of the Water and Sewer Fund," he said. But council members said they want to re-examine the town's need for lobbyists.

Young said he plans to find ways to increase revenue from cultural resources programs and special events held on town properties. Council members agreed the town should reduce waivers of fees in favor of a more consistent policy.

No increases to water and sewer fees are recommended in Young's proposal.