Town council holds its 20-cent tax rate

Fiscal concerns dominated last week's Sparta Town Council meeting. As officials discussed the preliminary 2002-03 budget, they agreed the state's withholding of tax reimbursements is putting the town — along with other North Carolina municipalities — in a squeeze.

Discussion also mentioned the budget crunch when two local organizations asked for donations. While the town leaders agreed the requests represented worthy causes, they did not act on the requests.

During council's May 7 meeting, Town Manager Tom Douglas presented the preliminary budget, which keeps the property tax rate at 20 cents per $100 valuation; garbage-collection fees will increase from $4 to $5. However, Douglas said in order to balance the budget without a tax increase, $150,000 would have to be used from unappropriated fund balance moneys.

Gov. Mike Easley has announced plans to withhold reimbursements to local governments — including those from the franchise tax, intangibles tax, and beer and wine tax — in order to help balance the state budget. That will cost the town $189,201 in lost revenues, most of that from franchise tax reimbursements.

"State reimbursements are critical for future services to remain the same without a tax increase," said Douglas. "The Blue Ridge Electric purchase was based on franchise tax revenues which are being withheld by the state of North Carolina."

Budget figures include a $100,000 payment on the town's purchase of the present Blue Ridge Electric Membership Corporation (BREMCO) building. The budget totals $1,578,641. Douglas said there may be some adjustments in the figures between now and June 4 — when council will hold a public hearing on the budget and consider its adoption — but the total will not change. General fund expenses add up to $922,461, which is a decrease of about $46,000 dollars from 2001-02. Water and sewer expenses total $656,180, a decrease of about $35,000.

"That's about as far as we can go," said Douglas of the decreases. "We can get by this year, but if they keep decreasing our money, we'll be in a bad place."

Mayor John H. Miller said, "We had every reason to believe we'd have that money....If we don't get our money, we may have to go up 10 cents on the tax rate."

Douglas added, "It's fortunate that we have enough fund balance that we're able to do (cover) it."

Town Clerk/Finance Officer Kay Cox later said the total unappropriated fund balance is about $600,000.

Douglas' budget recommendation includes a 5 percent pay increase for employees, he said, but not a new police car which was requested.

Officials agreed a tax increase would be unpopular and undesirable. Douglas commented, "The tax rate is 20 cents. It would have to go to 39 cents to make up for the reimbursements. That's lynching material." Miller said there has been only one tax increase since 1975, and that rise, to pay for a fire truck, was later repealed.

Douglas said a one-half-cent local option sales tax has been discussed to restore revenues to local governments.

"That puts the burden on the local people to pass the tax, instead of it coming out of Raleigh," said council member Robert Andrews.

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