The Clayton Town Council might raise property taxes.
For the first time since 2006, Town Manager Steve Biggs has proposed upping the property-tax rate – this time by 2.5 cents to 55 cents per $100 of valuation.
The increase, which would generate an extra $400,000 in revenue, would cost the owner of a $200,000 home about $50 more a year.
Biggs said the increase is needed mostly to cover rising health-insurance costs and to offset the loss of privilege-license fees paid by businesses.
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The town will spend about $217,000 more on health insurance for employees next year, a spike Biggs attributed to several large, recent claims.
The town has a wellness program that’s designed to improve the health of employees and reduce premium costs. Biggs said the recent claims stemmed from long-term conditions that were beyond the scope of the wellness program.
“I still feel positively about the wellness plan, but we saw an astounding increase in claims and, in turn, an astounding increase in premiums,” Biggs said.
The other factor driving the tax increase is the loss of revenue from privilege-license fees. Last year, the General Assembly ended towns’ power to levy the fee, which businesses paid to operate in many municipalities.
Clayton will lose about $65,000 from the repeal of the privilege licenses.
Biggs said he approached the tax increase “reluctantly” and worked with staff to find a way around it. Other options, though, would have harmed services, facilities and the town’s good financial standing, he said.
Councilman Butch Lawter said the town tightened its belt during the recession and reduced taxes after a revaluation in 2012. With the town’s continued growth, Lawter said he agrees that a tax increase is likely needed.
“It’s not something that any of us want to do, but there are a lot of tough decisions, and this is one of them,” Lawter said.
Rising insurance costs and the loss of business fees aren’t the only factors driving the proposed budget.
Adhering to recommendations from a recent pay study, the town will spend about $227,000 more next year on raises for certain employees. Biggs is also proposing a 1.5 percent cost-of-living increase that would cost an extra $130,000. In addition, he is budgeting about $100,000 for a bonus program for employees.
The town also plans to increase water and sewer rates.
The change would cost an average customer about $1.80 more a month, or about $22 more a year.
Assistant Town Manager Nancy Medlin said the increase is needed partly to ensure the town can pay off projects financed with revenue bonds. In addition, Biggs said the rate hikes will pay for the increasing costs of sludge disposal, odor control and long-term maintenance.
If the council approves the increased rates, the total bill for a customer who uses 4,000 gallons a month would be about $52, which is less than the monthly bills paid by customers of Johnston County ($67.20) and the private provider Aqua North Carolina ($92.01).
As for electricity rates, the town won’t make any changes until a pending deal with Duke Energy Progress is finalized.
Clayton and 31 other Eastern North Carolina towns are selling their stakes in area power plants to Duke. The deal should free the towns of debt and thus allow them to cut rates for customers.
In Clayton, the town will have to balance the savings from the Duke deal with the cost of an estimated $6.5 million substation project. Until the final numbers come in for both, Biggs said, it’s hard to know how much to adjust electricity rates.
“We would be entirely shooting in the dark trying to do that now,” Biggs said.
The Duke deal is expected to close in June. At that point, the town will hire a rate analyst, Biggs said, and perhaps make a rate adjustment during the upcoming fiscal year.
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Other notable items
The Town of Clayton’s proposed 2015-16 budget would also:
▪ Build a greenway from the Clayton Community Center on Amelia Church Road to downtown. The town will use a grant to pay for 80 percent of the $1 million project. The town’s share, about $207,692, will come from Clayton’s open space fund.
▪ Add 10 new full-time positions and two part-time positions.
▪ Build an 18-space parking lot between The Clayton Center and Horne Memorial United Methodist Church on Second Street. The project is estimated to cost $50,000.
▪ Purchase a car for the Clayton Police Department’s new parks officer, $35,000.
▪ Replace police radios, $109,050.
▪ Make the final payment on a fire engine, $325,418.
▪ Add four automated external defibrillators at town-owned buildings, $6,400.
▪ Pay $31,000 for a remote lighting system at Clayton Community Park and $20,000 to pave the parking lot at the town’s dog park on Glen Laurel Road.
▪ Install an LED lighting system in The Clayton Center auditorium, $29,696.
▪ Spend about $250,000 on equipment and vehicles for public works.
▪ Add snow-removal equipment, $30,000.
▪ Make emergency improvements to the former Clayton Town Hall, $29,000.
▪ Spend about $250,000 on a window-replacement project at The Clayton Center. The budget also includes $38,000 for roof repair at The Clayton Center.
▪ Implement a manhole-rehabilitation project for $83,250.