FY21-22 Town Budget Drivers

FY21-22 Budget Drivers

June 5, 2021

Dear Blowing Rock Homeowners

Our challenge is to present the facts for a complex budget in simple terms to inform the homeowners before the Town Council votes to approve the new budget at the Budget Public Hearing on June 8th.

We believe that our role is to educate the homeowners, so they can have a framework to understand the decisions of the Town Council.

The centerpiece of this budget is the Town’s goal to compensate and retain the employees who provide our services in an environment where the County, Boone and University are all moving to raise minimum pay to reach a living wage of at least $15 per hour.

The Town Manager and Finance Director have prepared a comprehensive 129 page budget document that can be viewed on the Town of Blowing Rock website at –
https://www.townofblowingrocknc.gov/home/showpublisheddocument/10499/637572045334330000

We will focus on the General Fund Budget that is principally funded 60% by property taxes and 13% by net sales taxes and not the Water & Sewer Fund that is run like a business enterprise funded by user fees.

A discussion of this budget is complicated by comparing the FY20-21 “COVID” budget to FY21-22 “normal” budget. Fortunately, actual net sales taxes and occupancy taxes far exceed the conservative estimates used for the FY20-21 COVID budget, thereby avoiding dipping into reserves to balance the budget for last fiscal year. Our property tax base of $1.142 billion provided a stable revenue source during the volatile COVID period. See Page 30.

The easiest way to understand the budget and how it impacts property taxes for homeowners is to talk in terms of the property tax rate in “Cents” per $100 of valuation. The propose budget is based the math that 1 Cent equals $120 thousand of revenue for the General Fund. The property tax rate for last year was 39 Cents and the proposed property tax rate for this year is 43 Cents or a 10% increase of 4 Cents. For example, a home valued at $500,000 would pay property taxes of $1,950 in 2020 and $2,150 in 2021. See Page 16.

For FY21-22, Caldwell County revalued all real property that represents about 9% of our $1.175 billion tax base or $107 million The budget does not include a roll back for the 5.8% increase in property values in Caldwell County. See Pages 5 and 30.

The proposed property tax increase is $593 thousand of which $480 thousand is due to a 4 Cents increase in tax rate and the remainder is due to growth in tax base and Caldwell County revaluation.

Watauga County will revalue all real property in Blowing Rock for next fiscal year. The increase is expected to be fairly substantial and the Town will present a roll-back property tax rate for the next year’s budget for comparison.

The Key Drivers for expenditure increases in the General Fund Budget follow:

Compensation – 5.4 Cents
321 Landmark Landscaping Contract – 1.1 Cents
Debt Service of $3.5 million GO Bond – 2.5 Cents
Debt Service for DOT Land on 321 – .4 Cents
Total – 9.5 Cents

The increases are offset by other revenue increases of 5.5 Cents due to a 3.6 Cents increase in net sales taxes, 1 Cent increase in TDA occupancy taxes and .8 Cents from other revenue sources.

A description of Key Drivers follows:

The compensation package for all employees is about 70% base pay and 30% for benefits – 10% for insurance and 20% for retirement. The key goal in this budget is to raise the minimum base pay for 3 levels of employees and adjust the pay ranges for the remaining 12 levels of employees. The average base pay for the 59 General Fund employees will increase from $44.2 thousand to $53.1 thousand. The increase for General Fund employees is $650 thousand per year.

The Town committed to take over a Landmark level landscaping from the DOT after completion of Highway 321 which will start this fiscal year. The goal is to extend the special landscaping look that we enjoy in downtown, so 321 is not just an ugly by-pass. The Town Manager evaluated a contract solution versus permanent staff. The scope is significant with thousands of trees and shrubs and miles of medians and banks. The contract solution allows the Town to avoid adding permanent employees and purchasing a significant about of equipment. A recurring allocation of funds from the TDA Occupancy Taxes will offset 50% of the cost, thereby sharing the total cost of $264 thousand.

The Town issued a third General Obligation Bond of $3.5 million in FY20-21 which increases debt service by $305 thousand per year.
The Town purchased a DOT property at the corner of North Main Street and Highway 321 for $442 thousand adding $48 thousand of debt service per year.

We hope that this analysis will help you understand the Town’s General Fund Budget and the key drivers that are impacting the proposed FY21-22 budget.

As we look to future budgets and the timing of the Sustainable Tourism Study scheduled for this summer, we need to begin a discussion of additional sources of funding to cover the increasing costs of managing tourism impacts on the Town. The allocation formula for the TDA occupancy tax was adopted almost 20 years ago in 2003 when the primary goal was to attract tourists compared to the current challenge of managing tourists. Demands on the General Fund Budget is not matching up with business and tourism sources of funding. Examples of increasing costs include operating and infrastructure costs like new bathrooms, park improvements, land acquisition for parking, bathroom attendants, and additional trash management, parking enforcement, additional police, 321 landscaping and three new crosswalks.

You can send comments or questions to the Town Council in advance, attend the Town Council meeting or speak at the Public Hearing scheduled for 6 pm on June 8th.

Regards,

Tim Gupton
President

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