Blowing Rock property owners have experienced a 10 cent or 36% increase in property tax rates over the last 5 years for fiscal years 2014 through 2019. Approximately 3 cents of the increase was related to bond debt service
The initial proposed town budget called for a 3 cent or 7.9% increase in property tax rates to 41 cents and a 5% increases in Water and Sewer rates. An increase of 1 cent in property tax rates generates approximately $113,000 of revenue and equals about $10 per year for $100K of valuation for property owners. .
The Council held a public hearing and two workshops to discuss the budget with the new Town Manager, Shane Fox who just started in early June. The timing of the budget and his start date put a lot of pressure on Mr. Fox who exceeded expectations and demonstrated an in-depth understanding of the budget details and broad picture.
Our board member, Tim Gupton, made a presentation at the public hearing and attended both workshops. He asked the Council to focus on the big picture, especially growth in General Fund Operating Expenses over the last 5 years. . The total General Fund Budget has increased by 41% and personnel expenses increased by 40%. National inflation during this period has averaged approximately 2% per year and national wage growth has been low to flat during this period. The growth in personnel expenses has been driven by adding 7 new full time employees including a SRO police position not funded by the county, salary increases and rising benefit costs that exceeded the rate of growth in average compensation. Tim presented a recommendation to reduce expenses or use the available fund balance to reduce the tax rate increase by at least 1 cent.
The Council addressed personnel expenses by unanimously recommending that the Town Manager develop a Merit-Based Compensation System by the winter retreat that includes mandatory performance evaluations. As part of this transition, the proposed 3% Cost of Living Salary increase was reduced to 2% and a 1% increase was reserved for merit increases in the second half of Fiscal Year 20. Mr. Fox was also tasked with reviewing all departmental positions and contract services. We expect that Mr. Fox will bring a fresh, complete and objective perspective to evaluate the overall budget, personnel and quality of services.
Mr. Fox recommended reducing the proposed bond debt service tax increase of 1.5 cents since the next bond borrowing will not occur until the end of this fiscal year. The town’s cash and investment fund balance will exceed $4,300,000 or about 56% of the annual budget. The Town’s policy is to maintain available fund balance of at least 50% of annual budget policy. The Town’s bond rating benefits from maintaining a substantial available fund balance and a high property tax value of over $900,000 per permanent resident due to substantial seasonal home ownership in the property tax base.
Based on the first workshop, the Council called out a number of line items in each departmental budget for discussion at the second workshop. A number of reductions were recommended by Council members, primarily one time expenditures for equipment or other projects that were not high priorities or could be addressed by alternate solutions. Mr. Fox presented a number of alternative recommendations for consideration by the Council.
The Council did evaluate non-resident fees especially for Parks & Rec with an eye to recognize the cost of underwriting expenses for non-residents. For example, the Town has the only outdoor pool in the county that is used primarily by residents throughout the county who do not pay taxes in the Town of Blowing Rock. The Council asked the Town Manager to look at the net revenue for programs to fully understand the cost benefit to Blowing Rock residents of key programs like camps, pool and other facilities.
The bottom line is that the tax rate increase for fiscal year 2019-20 is likely to be no more than 1 cent or 2.6% and the new Town Manager will take a fresh look at all operations to maintain and improve quality service with an efficient mindset.
The next two fiscal years will include some new challenges to fund landscape maintenance of the Valley Boulevard median, proposed increases in landfill charges, and additional bond debt service.