Alamance County’s commissioners were urged to move the goalposts this week as they reviewed their traditional approach to taxation at a yearly budget “retreat” with the county’s top-ranking administrators.
The adequacy of the county’s property tax rate was ultimately one of the key issues to arise from this seven-hour huddle, which took place on Monday at a decommissioned bank building along South Main Street in Graham that has been repurposed to serve as the county’s election office.
Monday’s marathon meeting also forced the commissioners to confront questions about the county’s skyrocketing payroll expenses, the persistent problems with turnover in some county departments, the strain that residential development around Mebane has put on the county’s ambulance service, and various big-ticket capital projects that appear poised to break the figurative piggybank.
In the meantime, county staff members trooped out their latest sales tax returns, whose lackluster growth from a year ago only amplified their emphasis on property taxes as a means to make ends meet in the future.
In the end, the county’s administrators argued that the county many need to ramp up its property tax rate by some 6.67 cents, or almost 15½ percent, in order to cover an anticipated budget deficit of nearly $17.2 million in the new fiscal year.
“You’re looking at a dime [property tax] increase unless you’re willing to cut some stuff. I would be happy if 6.6 cents is all it would be. . . If we can get by with 6.6 cents, I would kiss you right on the mouth.
“The [property tax] rate is the most important thing. You have to raise taxes when it’s called for. . . But you [also] don’t have to have a PhD in mathematics to cut spending.”
– County commissioner Bill Lashley to county manager Heidi York during Monday’s meeting
But this projected tax hike seemed rather modest to commissioner Bill Lashley, who said that his own calculations suggest an even steeper increase to ensure the county government remains on an even keel.
“You’re looking at a dime increase unless you’re willing to cut some stuff,” Lashley went on to assure Alamance County’s manager Heidi York. “I would be happy if 6.6 cents is all it would be…If we can get by with 6.6 cents, I would kiss you right on the mouth.”
The dire financial picture that emerged from Monday’s retreat may seem to stand in stark contrast to the county’s latest annual audit, which showed a robust surplus in revenue or the fiscal year that ended in June of 2023.
According to this independent financial review, which was presented to the commissioners shortly before Christmas, the county’s general fund had managed to finish that year with excess of roughly $7.5 million. Most of this unspent revenue was plowed back into the general fund’s “fund balance,” or financial reserves, whose $46.8 million in uncommitted cash amounted to some 23.75 of its annual budget.
Under the county’s savings policy, the commissioners are encouraged to maintain an “unrestricted” fund balance of at least 20 percent – and are at their discretion to transfer anything over and above the 20-percent mark into the county’s capital reserves. During Monday’s retreat, the county’s administrators conceded that this allowable transfer comes to some $7,389,652. They nevertheless cautioned the board of commissioners to consider some of the county’s recent financial developments before they sign off on this reallocation into the capital reserves.
Susan Evans, the county’s finance director, reminded the commissioners that the various budget amendments they’ve authorized during the current financial cycle have driven up the general fund’s projected expenditures from $214,495,550 to $225,984,517. Evans acknowledged that, on December 31, the fund’s actual year-to-date revenues stood at $123,817,192, while expenditures had reached just $94,749,462. She added, however, that the fund’s outlays are expected to climb to $207,832,800 by the fiscal year’s end – or some $609,419 more than the anticipated receipts by that point.
“So, with the expenditures that we’ve had, I’m leaning toward it being a tight year.” Evans went on to warn the commissioners.
Covering the Gap
Alamance County’s manager Heidi York attributed this year’s anticipated deficit to “non-sustainable” budgetary decisions that the commissioners had made in the county’s current annual budget in their aversion to an increase in property taxes.
In the end, a majority of the board approved a property tax rate of 43.2 cents for every $100 of value – or .61 cents more than the “revenue neutral,” or break even, levy that the county’s tax office had calculated following a countywide property revaluation in January of 2023.
Although, on paper, the new tax rate was sufficient to cover the county’s expenses, York argued that this balance was predicated on some “illogical” assumptions, such as the expectation that the county wouldn’t need any more vehicles or staff-level positions to maintain existing levels of service.
“We made some short-term decisions that were band aids rather than long term solutions,” the county manager went on to admit.
Rebecca Crawford, the county’s budget director, predicted that the impact of these short-sighted measures will only increase when the county enters the next financial cycle on July 1. She said that, based on the latest financial figures, this year’s potential six-figure shortfall will balloon to $17,176,238 – or the equivalent of 6.67 cents on the property tax rate.
“We’re calling this the gap where expenditures are higher than revenues.” Crawford added before she touched on the factors that could lead to this deficit. “We know that we will have some salary and benefit increases, we also know that there are some technology increases, some vehicle increases that we have committed to in previous years, and capital projects that will be detailed this afternoon.”
During the course of Monday’s retreat, the commissioners expressed interest in many of the proposed expenditures that the county’s administrators asked them to contemplate. But based on her experience in the previous financial cycle, York admonished the commissioners to make sure their serious about these endeavors before she and her colleagues begin to prepare the county’s next spending plan.
The county manager recalled that the commissioners had also endorsed a number of spending priorities during their annual budget retreat in 2023. A few months later, however, they chucked many of these items aside as they grew increasingly preoccupied with the county’s property tax rate.
“If the tax rate is still the number one priority,” she went on to exhort the commissioners, “it’s best to address that now, so we’re preparing a budget that’s responsive to the board’s priorities.”
In response to York’s entreaties, Lashley insisted that he has been careful not to start with a pre-ordained tax rate during his own budgetary calculations. That said, the commissioner stressed that he wasn’t completely detached from the role that the county’s property tax rate will play in the grand scheme of things.
“The rate is the most important thing,” he insisted. “You have to raise taxes when it’s called for…But you [also] don’t have to have a PhD in mathematics to cut spending.”
Lashley proceeded to acknowledge the apparent inevitability of a tax increase in the county’s next annual budget. This sense of resignation also seemed to afflict some of his colleagues, including the chairman of Alamance County’s governing board.
“I’m agreeing with Bill,” Paisley said with respect to likelihood of a tax hike. “We’re eventually going to have to increase the tax rate to pay for these services.”
Paisley went on to encourage his fellow commissioners to suggest some potential levels for this proposed tax increase before the county’s administrators delve into the budget’s particulars at future meetings.