Zebulon budget sealed before move by state on hold harmless

amoody@newsobserver.comJune 28, 2013 

Zebulon Mayor Bob Matheny discusses the town's 2013-14 budget plans during a meeting in April.

AARON MOODY — amoody@newsobserver.com Buy Photo

— Time ran out for commissioners who were hoping to hear if a major state revenue stream would be extended before they adopted Zebulon’s 2013-14 budget.

Included in the town’s $7.9 million spending plan is a 1.25-cent increase in the property tax rate that leaders say wouldn’t have been necessary had the General Assembly renewed hold harmless funding by last week’s town budget vote. The funding is a compensation for towns left in the red after the state’s decision in 1988 to repeal the inventory tax.

The Town Board met to approve the budget Wednesday, a week later than normal, in a final effort to avoid raising taxes. But with no news at the state level, commissioners had to assume Zebulon would be without $420,000 in hold harmless funds in the new fiscal year. And they had to act by July 1, when town budgets by law must be adopted.

“It really is disappointing,” said Zebulon Mayor Bob Matheny, a long-time advocate for extending the funding. “You just don’t win every battle you fight. (We) can’t amend the tax rate. That’s what was pushing us against the wall, unlike the legislature.

“Had we been able to get hold harmless, we would have left the tax rate the same.”

The new tax rate is 52.5 cents per $100 of property value, a 2.4 percent increase. A resident with property valued at $150,000 will pay $787.50 in town taxes and a total of $1,588.50 including county taxes.

Zebulon utility rates are also increasing by 5.5 percent beginning this month in accordance with the town’s water and sewer merger agreement with Raleigh. The increase equals $5.32 per month for customers using 5,000 gallons of water.

The hold harmless extension is still possible and could still benefit the town if it happens.

“We would put it into the general fund, and the fund balance would not be drawn down,” Matheny said. “It would remain at a higher, healthier number.” The fund balance is an account like a savings account used to manage cash flow and pay unforeseen expenses during the year.

Only the state House has the extension in its proposed budget. Its version, however, falls roughly $7 million short of the $22 million needed to fully compensate local governments still feeling the affects of the inventory tax repeal.

Matheny said “the feeling is” hold harmless will likely get stripped out in the compromise of the state House and Senate budgets.

“The bets on it are that we’re not going to get it,” he said. “If we did, we’d be getting less money, but it would still be a very nice shot in the arm for us.”

Moody: 919-829-4806

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