The budget, which reflects a 5.3 percent increase over this year, keeps the property tax rate at 31 cents per $100 valuation for the second year in a row.
A legally required public hearing will be held in the conference room in the Village Hall on Tuesday, June 7, at 11 a.m. before the council votes to adopt the budget. The new fiscal year begins July 1.
The council completed its review by early afternoon, eliminating the need to have a second budget work session that was tentatively set for May 24.
The only potential changes that could come up before the council adopts the budget is a $10,000 appropriation in the General Fund budget for the Given Memorial Library. An official request has not yet been received by the village for this annual appropriation, said Village Manager Andy Wilkison.
The council also directed the village staff to conduct an in-house study of salaries instead of spending $30,000 requested to hire a consultant. The study is intended to make sure the village’s salaries are competitive with the marketplace.
The $30,000 was transferred to a fund already containing $75,000, which is set aside for any salary adjustments that are needed as a result of the study. The fund now totals $105,000.
Several council members commented about the amount of money being spent on consultants, which led to the decision to do the pay study in-house.
Under the proposed budget, $371,000 is designated for consulting work, with almost half of it for legal counsel that the council agreed could not be performed in house.
The village has contracted with Robin Tatum, an outside attorney, over the past year to advise the village on the Midland Green shopping center controversy and a rewrite of the Pinehurst Development Ordinance. The council agreed that it should keep enough money in the legal fund in case of more litigation next year. The fund also pays the village attorney Michael Newman for ongoing legal work on behalf of the village.
The rest of the money for the outside consultants includes preparation of the New Core master plan, the preparation of a feasibility study on an alternative western connector corridor to relieve congestion on N.C. 5, a stormwater management master plan and design fees for the planned recreation center.
Two Tax Increases
Over the last two years, the council increased the tax rate by 3 cents — 2 cents two years ago and then another penny last year. The 3-cent increase is needed to carry out initiatives in the Comprehensive Long Range Plan.
Pinehurst still has one of the lowest property tax rates among Moore County’s 11 municipalities, the council was told.
During a public-comment period, Tom Burton and Douglas Middaugh praised the council for retaining the current property tax rate another year, instead of cutting it.
Councilman Doug Lapins had suggested reducing it by a penny by cutting $200,000 in expenditures, specifically the contingency accounts that most local government keep for emergencies. But the other council members didn’t want to go along with his idea.
Burton also said he would rather see the focus put on the value residents get from their tax dollars per capita rather than on the tax rate itself.
“Let’s make the point that we’re paying a lot of dollars for the high quality services we get,” he said.
As for consultants, Burton suggested volunteer retirees offer valuable expertise from their former careers that could be used instead of paying consultants.
“You have a wealth of them right here in the community,” he said.
Middaugh said keeping the current rate will prevent a shockingly large increase later.
“Everyone should acknowledge there’s an 800-pound gorilla just over the horizon,” he said. “The school board bond issue could just add a nickel to our (county) tax rate. Doing what you are is going to help.”
Wilkison recommended that the council keep the same tax rate at 31 cents. He pointed out that in two years, a countywide revaluation will take place, and the council could cut the rate since property values will increase.
Reserve Funds Critical
Mayor Steven Smith said he prefers leaving the contingency fund intact, rather than cutting a penny off the tax rate. He said the village needs contingency funds.
The council also has a policy requiring that the village maintain an unreserved fund balance equal to 27 percent to 33 percent of the operating budget. That is slightly less than most other owns, according to Natalie Dean, assistant village manager in charge of finances. Other towns normally have fund balances of 39 percent to 40 percent, she said.
The North Carolina Local Government Commission, a state agency that regulates the finances of municipalities and counties, requires a minimum unreserved fund balance of 8 percent, Dean said.
The unreserved fund balance is used to handle emergencies, cover cash flow problems, for investment income, to avoid short-term borrowing and to take advantage unexpected opportunities, according to Dean.
Revenues that support the operating budget — primarily property taxes, sales taxes and permit and inspection fees — typically aren’t enough to cover all of the expenditures. Most local governments rely on money from the fund balance — money leftover from the previous year — to balance the budget.
Under state law, local governments cannot operate at a loss. The village continues to experience increased expenditures need to keep up with the population growth.
At the end of the fiscal year, the council also transfers unearmarked money from the operating budget fund balances to the Capital Reserve Funds. These funds are used to pay for big-ticket items to avoid paying interest on loans, for example, or to float a bond issue.
“We as a village have historically spent a much lower percentage of our budget on capital improvements than other towns,” Smith said. “I personally believe that (new capital expenditures) are the chickens coming home to roost. Our residents demand high quality services, and they cost more than low quality.”
New Positions
The draft operating budget also includes six new positions to help most of the departments handle heavier workloads because of growth and to carry out initiatives in the long-range plan.
The budget includes $156,000 to provide 4 percent merit pay raises.
The Comprehensive Long-Range Plan initiatives are funded mostly by 3 cents on the tax rate, designated by the council last year.
It includes spending village funds to resurface five or six deteriorated municipal streets a year that state funds aren’t sufficient to cover. It also provides money for expanding recreational opportunities such as continuing to develop the greenway trail and Rassie Wicker Park and on plans to build a recreation center for the growing populations of younger families.
Wilkison said the village is likely to have to continue spending money on its streets, such as widening existing roads or even building new ones as the New Core service district planners are talking about recommending. The resurfacing catch-up work will also continue for the next few years.
