The town has proposed lowering its tax rate in its 2016-17 budget, but like in other Wake County municipalities subject to this year’s revaluation, residents’ tax bills could vary, town staff said.
The staff has recommended a rate of 38.5 cents per 100 dollars of appraised value, down from 41 cents in previous cycles. That represents a revenue-neutral rate, where the total revenue collected in property tax remains constant after a revaluation, plus, in Morrisville’s case, a 4-percent growth factor. The idea is to keep the tax burden constant as property values change.
“But everybody’s tax bill is going to be different,” Town Manager Martha Paige said. “Averages don’t reflect what a person’s going to pay. There are too many factors that go into what their tax bill is going to be.”
With the exception of increases voted on by residents as part of a bond issue, this would be the 25th consecutive year that the town council has not raised property taxes, which account for about 58 percent of the town’s revenue.
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The report, outlined by Budget Manager Jeanne Hooks May 10 at the Town Council’s meeting, set the town’s main fund operating budget for the next fiscal year at $29.7 million, up almost 5 percent from this year’s budget of $27.6 million.
But one key change in this year’s draft budget is the recommendation that the town not dip into its savings. Town staff said keeping Morrisville’s reserves intact would allow it to complete small but important projects and help it manage cost overruns as it gears up for hefty road projects.
“We’re not recommending usage of unassigned fund balance, for the first time in a while,” Hooks said. “We’re allowing the natural growth in revenues to do our work for us.”
The town’s unassigned fund balance essentially functions as its savings account. Mayor Mark Stohlman said cautious budgeting has meant the town typically spends less than planned and takes in more revenue than expected; the difference goes into the unassigned fund balance.
The fund now is about $3 million but could jump to $5 million later this year once Morrisville finds out how much money is left over from the previous budget.
Even though fund balance dollars are often rendered unnecessary once the difference between revenue and expenses is calculated, the town typically plans to use part of the balance to cover costs on paper. That’s not the case this year.
“We’re not even pretending like we need the money,” Stohlman said. “And that’s not a minor announcement. It’s significant in that it means Morrisville is doing very well in terms of growth and how we’re controlling our expenses.”
Of the proposed budget total, $3.7 million will go toward what Hooks called “non-routine discretionary” spending, while the remainder is what the town considers its base operating cost.
The primary goal of this year’s discretionary spending likely will be maintenance and repair of town facilities and equipment, Hooks said. Staff recommended replacing eight town vehicles and adding four additional police vehicles at a combined cost of about $500,000. The town would also pay $159,000 to install dashboard cameras in all police vehicles.
Although Stohlman painted a positive picture of the town’s finances, he emphasized the need for continued prudence as Morrisville’s bonds mature and it begins a handful of projects that will push the town close to its debt limit in 2019.
The budget includes eight new staff positions: four police officers, a police records clerk, an administrative support position, a building inspector and a project manager.
Stohlman and other council members responded by requesting justifications for the requests.
“Personnel costs are our biggest expense, as they should be,” Stohlman said. “We want to see why we’re adding those positions, because those costs are forever. They don’t go away.”
There are no new capital projects slated for the upcoming fiscal year, although the 2016-17 budget would include funding for road projects as laid out in the town’s capital improvement plan.
Stohlman also said he’d like to delay, if possible, a recommendation to fund design for a public works facility that hasn’t been approved for funding by bond referendum. The town’s debt schedule won’t allow it to consider issuing more bonds until 2021, he said.
Residents can view the draft budget at the town’s website and attend town budget workshops on May 17, May 31 and June 7. Public hearings on the budget will take place at May 24’s council meeting, with a second briefing and further discussion at June 14’s meeting. The council is expected to adopt the budget at its June 28 meeting in time for the July 1 beginning of the fiscal year.
Gargan: 919-460-2604; @hgargan
Correction: A previous version of the story stated that the town council had not raised property taxes in 25 years without mentioning voter-approved increases in 2014 and 2015 related to the passage of a bond in 2012.