ZEBULON — Town leaders knew what to expect as they viewed the first draft of Zebulon’s budget for the upcoming fiscal year Wednesday, but to see it on paper still sent a shock through town hall.
The potential loss of some major revenue streams and the decrease of others prompted town staff to recommend a 3-cent property tax increase for the upcoming year, which would bring the tax rate to 54.25 cents per $100 of property value. The proposed budget of $8,139,520 also calls for delays to several capital projects and a wide range of cuts to town services that had already been held out from the budget of the current year.
After hearing a presentation on what town leaders have called one of the toughest budgets Zebulon has ever had to prepare, Zebulon Mayor Bob Matheny was critical of the town’s money management in recent years.
“I’m really concerned we can create a sustainable budget,” Matheny said. “We keep spending money we don’t have, so we keep borrowing money. We’ve got to get out of that habit and quit hoping growth will catch up with us.”
The greatest potential budget shortfall is no surprise to the town. Zebulon leaders have known for years “hold-harmless” funds – a state reimbursement for a 1988 decision by the General Assembly to repeal the inventory tax – is scheduled to end in the current fiscal year.
If the funding is not renewed in the General Assembly this year, Zebulon is in line to lose about $420,000. The budget was prepared under the assumption the town would not receive the funding in the upcoming year.
“We’re also still facing the effects of our (2010) census figures being lower than expected, and we haven’t seen a lot of growth in our tax base over the last couple years,” Town Manager Rick Hardin said Friday.
Another major source of revenue set to end this year is a federal grant that fully funded three firefighter positions since 2012. The SAFER grant provided more than $120,000 per year.
As part of the grant agreement, Zebulon is required to keep three positions for an additional year after the grant ends. Hardin said representatives of the Wake County Fire Commission were scheduled to meet with Wake County Manager David Cooke late last week to discuss the possibility of splitting the cost with Zebulon in meeting that requirement.
Impact on residents
While tax changes aren’t set in stone at this point, water and sewer rates are scheduled to rise 5.5 percent in accordance with the town’s merger agreement with Raleigh. That means an average customer who uses 5,000 gallons of water per month will pay an additional $5.32 each month.
Based on the value of the average single-family home in Zebulon, the utility rate increase added to a 3-percent property tax increase would cost the average Zebulon homeowner $103 more in the 2014 fiscal year compared to what they currently pay.
Zebulon Commissioner Dale Beck voiced his concerns at Wednesday’s meeting that residents are “getting taxed from everywhere to the hilt.”
“We’re talking about raising taxes and water rates at the same time,” Beck said. “I think we ought to look at all the services we provide, prioritize what we need to offer and don’t need to offer.”
Cutting to the bone
As proposed, a vacant public works position will remain unfilled in FY 2014, and as a precautionary measure the town is freezing all positions that may become vacant in parks and recreation, police and public works departments.
Factoring in numerous cuts to services that went into effect with the adoption of the 2013 budget, Zebulon has few other options for lowering its expenses beyond making severe financial decisions.
“We don’t want to cut any services, but we might have to,” Matheny said at the meeting. “We don’t want to cut any (personnel), but we might have to.”
The police department also has a vacancy, but is proposing to use $128,000 it recently received in federal forfeiture funds to fill the position.
Some projects survive
The proposed budget delays about 40 percent of capital projects originally slated for this fiscal year. Twelve projects totaling $694,770 survived their way into the first draft.
Seven of the 12 projects are flagged for financing – the most expensive of those being the replacement of the heating and cooling unit at Town Hall ($252,500), the creation of a Unified Development Ordinance ($125,000) and Town Hall masonry repairs ($60,500).
The budget draft also includes the demolition of the town’s old police headquarters as a capital project costing $50,000.
Hardin said it is the town’s intention to sell the property at a reduced rate, as with its other surplus properties, before considering having it torn down.