Town leaders are in a tough spot, with departments needing much new equipment while the budget sits, once again, in the red.
During the annual town retreat, held this year at Five County Stadium, Zebulon Finance Director Bobby Fitts said that although the town is operating safely with its savings, staff will need to examine what services or expenditures to cut to avoid raising property taxes.
“We’ve looked in the past few years at what we have to have,” Fitts said in his presentation about significant upcoming projects in the Capital Improvement Plan. This year, he said, the staff examined what they could do without.
General fund revenue increased 6 percent in 2014 from the prior year from service and permit fees and the sale of two town buildings. Tax sources increased by 5 percent and taxable property value inched up 2.1 percent.
However, intergovernmental revenue decreased 7 percent, and investment earnings plummeted 18 percent, a significant blow to the fund’s revenue.
General fund spending hit $7,766,292, 8 percent more than fiscal year 2013.
National and state trends reflect an improving economy through 2015, with unemployment around 5 percent.
Upcoming expenditures for the town are predicted to exceed revenues by about $324,000, which the town would take from their savings. This would still keep 73 percent of the available savings for future use, and town policy allows for that number to shrink to 50 percent.
Fitts pointed out that the large fund balance is a strength for the town, in addition to its ability to collect large amounts of property tax from non-residential properties and available, undeveloped land.
The largest blow to the town’s upcoming budget is that this year, it will no longer receive hold harmless funds, which is state funding intended to replace revenue lost by towns and counties with the state eliminated the inventory tax. The town was to have lost all that funding during the current fiscal year, but legislators gave towns a one-ear reprieve and funded the towns at about half what they had provided in previous years. Because that decision came after the town had approved its annual budget the funding went into the town’s savings to be spent as needs arose. The town will also face the challenge of some decrease in overall property tax base. Less retail opportunity and available services also make the town less competitive.
With the lack of a property tax increase, Fitts said that any deficit will be made up through spending cuts.
Necessary projects that the town plans to undertake include short-term initiatives like drainage at the Zebulon Elementary School ballfield and resurfacing the Whitley Park tennis court and the Zebulon Community Park basketball court among others.
Long-term projects – needed in less than six years – include a second fire station, a community park picnic shelter, improvements at the Little River Park and more ballfields at the community park.
Many town departments are in dire need of updated equipment, from data servers to police and fire radios.
Mayor Pro Tem Don Bumgarner was skeptical of continuing to depend on the town’s fund balance, or savings, to aid in basic needs.
“We’re going to get to a point where we’re not going to have any money left in the fund balance,” he said, adding that he’d like to see on paper a projection of which year the town could stop operating in the red.
Mayor Bob Matheny agreed, with the caveat that budget projections are normally higher than what departments actually spend.
“We need to get to a sustainable budget,” he said. “We need to keep our eye on the ball.”