The faint creaking and groaning of chairs was just about the only sound that met Elon’s town council this week when its members invited residents to weigh in on the municipality’s next annual budget.
A pair of state-mandated public hearings on Tuesday drew nary a peep about either the town’s proposed spending plan or a potential hike in a special property tax that people outside of Elon’s limits must pay to subsidize the town’s fire department.
In absence of any public input about the extraterritorial tax increase, the council accepted a staff recommendation to ask Alamance County’s board of commissioners to sign off on this 1.35-cent bump in the fire district’s existing 8.65-cent levy.
In the meantime, its members have little other than their own consciences to consult over the proposed budget, which Elon’s town manager has presented in two competing versions – one that would raise the town’s own property tax rate by 1.5 cents and another that would substitute this increase for reductions in spending.
The task currently before the town’s leaders was perhaps best summed up by councilman Randy Orwig after he and his colleagues agreed to postpone their vote on the budget until June 10.
“Since we’re not making a decision tonight,” Orwig said at the end of Tuesday’s two-hour meeting, “we’re left with some time to decide what we want to do and how we want to approach this.”
From the management:
While the general public may have been conspicuously silent on the town’s proposed budget, the council received no shortage of feedback from Elon’s town manager Richard Roedner.
During Tuesday’s public hearing, Roedner presented the council with both the original spending plan that he shared with its members in April as well as an alternative version that he pieced together in response to the council’s concerns about the aforementioned property tax increase.
Roedner reminded the council that his original proposal calls for nearly $11.9 million in outlays from the town’s general fund – a repository for various taxes and fees that bankrolls most of the town’s operations. The town manager added that payroll expenses account for nearly 61 percent of this fund’s recommended expenditures.
“Local government is a personal service,” the town manager went on to explain to the council on Tuesday. “So, most of what we spend is on personnel.”
The only new positions that appear in Roedner’s proposed budget are a pair of additional firefighters whose salaries would be partially subsidized by Elon University. In the meantime, however, Roedner has called for a 2.5 percent cost-of-living adjustment for the town’s existing staff members as well as a merit-based raise that would average out to 2 percent across Elon’s full-time workforce.
Roedner recalled that, in order to cover the general fund’s outlays in his original budget, he had proposed a 1.5 cent increase in the town’s property tax rate, which currently stands at 35 cents for every $100 of property value. The town manager added that he still deems this increase to be prudent given the municipality’s reliance on sales tax receipts, which are estimated at $3.9 million in his proposed budget. He acknowledged, however, that he has scared up some potential spending cuts in response to misgivings that some members of the council had previously raised about the proposed property tax hike.
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“At our budget workshop two weeks ago, I heard loud and clear that you wanted some alternate scenarios that didn’t include a tax increase,” the town manager recalled. “The changes that you see largely came from public works. There’s some sidewalk money that we took back, and some capital money that we also took back because the plan [for those funds] didn’t address the need.”
Holding the levy
Roedner had initially shared a rough draft of these potential cuts during a council meeting on April 28. Since then, he has tweaked his original proposals by restoring some of the smaller departmental reductions in favor of adjustments that would have more of an impact on the bottom line.
All told, his latest roster of cuts proposes to trim some $178,778 in outlays from his original recommendation for the town’s general fund. These modifications include $124,000 in proposed rollbacks at the public works department, $30,500 in computer purchases that the council had previously agreed to move to this fiscal year, $5,000 for advertising to promote Elon’s downtown business district, and $2,500 in cuts to the council’s own travel allowance.
Roedner admitted that, while he thinks the town can weather all of these proposed spending reductions, it would still be his preference to see a 1.5 cent increase in the property tax rate. He added that a decision to keep this levy at this current level would only increase the municipality’s dependency on sales tax receipts, which are already the largest chunk of the general fund’s revenues.
“We have a structural issue with our budget in my view,” the town manager went on to explain. “A third of what we spend for our government comes from a very volatile source…and if we see any downturn, it’s a direct impact on how we operate.”
The council’s take
In addition to his proposal for the town’s general fund, Roedner recommended a 7 percent increase in Elon’s water and sewer fees, which sustain a separate, standalone fund that covers the town’s public utilities. The town manager attributed 5 percentage points of this increase to an anticipated fee increase from Burlington, which provides fresh water and sewage treatment to the smaller community.
It was nevertheless the town manager’s proposal for the general fund that generated most of the discussion among the council’s own members on Tuesday.
In response to Roedner’s proposed spending reductions, councilman Michael Woods commended the town manager for willingness to address the council’s qualms about a property tax hike.
“I thank you for listening to our concerns,” the councilman added, “and I think you did a great job.”
Woods’ sentiments were echoed by Elon’s mayor Emily Sharpe, who nevertheless expressed some doubts about the wisdom of increasing the town’s reliance on sales tax receipts.
“At some point, we need to get out of having sales taxes as our top revenue source,” she declared. “We’re one of the very few municipalities in the state that have sales tax revenues that are higher than property taxes…and that is something that we as a council need to think about strategically.”
Sharpe also lamented the complete absence of comments from residents about the town manager’s spending plan during Tuesday’s public hearing.
Two weeks ago, one property owner confronted the town’s leaders about the manager’s prospective tax hike during the council’s designated public comment period. This same resident was nowhere in evidence at Tuesday’s public hearing. Nor was anyone else
The mayor later confessed that she had been expecting at least a couple of people to venture opinions during that evening’s public hearing.
“I thought we’d be here for at least three hours,” she added when Tuesday’s meeting wrapped up in just under 120 minutes.
Spreading the cost
At the town manager’s suggestion, the council agreed to put off its vote on the budget until its regularly-scheduled meeting on June 10. In the meantime, its members rendered a formal decision on the proposed extraterritorial tax increase at the behest of Elon’s fire chief Landon Massey.
During the second public hearing on Tuesday, Massey urged the council to ask Alamance County’s commissioners to lift this particular levy from 8.65 to 10 cents for every $100 of property value in order to offset the fire department’s ever-increasing costs.
Massey informed the council that the fire department presently serves 9,000 to 10,000 people outside of Elon municipal limits, who pay for tis services through surcharge on their county property taxes. Massey added that, if the commissioners increase this levy by 1.35 cents, the additional revenue would cover some of the cost increases that the town’s own residents have recently absorbed on behalf of the fire department.
Massey pointed out that, in the five years since the extraterritorial district’s current 8.65-cent rate went into effect, the town’s fire department has hired five firefighters, furnished its crews with new turnout gear and equipment, and completed the purchase of a $2 million fire engine. Massey added that the proposed increase would ensure that people outside of Elon’s municipal limits pay their fair share of the cost for his agency’s operations.
“They do account for about 20 to 25 percent of our call volume,” he added, “and the money they bring in is about 12 to 14 percent of our revenues.
Massey noted that a 10-cent tax rate would put Elon’s fire district in line with the proposed tax rates of the county’s other rural fire districts. He added, however, that the county’s board of commissioners will ultimately need to sign off on the proposed increase – to which end, he encouraged the council to endorse the request to the county’s governing board.
The council voted 5-to-0 to recommend the proposed 1.35-cent tax hike to the commissioners.
