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Local budgets vary on how sales tax, personnel raises are calculated

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From problems with staff-level turnover to high rates of inflation, Alamance County and its municipalities have grappled with many of the same issues as they’ve laid out their respective budgets for the new fiscal year.

In some cases, however, city and county officials have made some very different assumptions about their shared financial concerns – leading to some striking variations in how they plan to make ends meet in the budgets they have prepared for the coming 12 months (beginning July 1).

One area of conspicuous disagreement has been the stability of the sale tax receipts that constitute more than a quarter of the cash which the county and its municipalities use to bankroll most of their programs and services.

Over the past several years, local government leaders have enjoyed a veritable bonanza in funds from this levy thanks to a robust retail economy that has persisted despite repeated warnings from doomsayers. The tenacity of this trend certainly wasn’t lost on Mebane’s city manager Chris Rollins when he presented his proposed spending plan for the city nearly a month ago.

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“Sales tax revenues have increased over the past several years,” he observed at the time, “with a strengthened economy, the natural growth in Alamance and Orange counties, and because the state expanded sales tax to include certain services.”

 

Mixed forecasts for sales taxes
In his budget presentation last month, Rollins pointed out that Mebane is on track to bring in about 13.7 percent more in sales tax receipts for the current fiscal year than it had in the previous financial cycle. He went on to predict that this revenue source would generate more than $7.1 million in the coming year – an increase of 27.3 percent over the city’s budgetary projection in the spring of 2022.

 


Graham’s city manager Megan Garner has been similarly optimistic about her jurisdiction’s sales tax receipts in the new fiscal year. In her own budget presentation last month, Garner predicted that the city would see an additional $1,345,000 from this particular levy – an increase of 27.7 percent over the city’s sales tax projections a year earlier.

The mood has been significantly more cautious for Alamance County’s manager Heidi York, who predicted a leveling off in the county’s sales tax receipts when she unveiled her recommended spending plan to the county’s board of commissioners two weeks ago. In her proposed budget, York anticipates that the county’s sales tax proceeds will come in about 7.7 percent higher than the projection a year ago, compelling her to put greater emphasis on property taxes to cover the county’s expenses in the upcoming year.

Burlington’s city manager Craig Honeycutt has also dialed back his sales tax projections in the budget that he has proposed for the county’s largest municipality. Although not nearly as skittish about sales taxes as the county manager, Honeycutt is still calling for a relatively modest increase of 12.4 percent above the city’s budgetary predictions from 2022.

When asked about his comparatively rosy outlook for Mebane’s sales tax receipts, Rollins told The Alamance News that he’s staking his projections on actual, historical trends rather than other, more speculative factors.

“I really care about what is coming in so far this year – and what actually came in in previous years,” he told the newspaper on Wednesday. “Everybody’s got their own opinion on it,” he added, “and I guess, a year from now, we’ll see who predicted the best.”

 

Chasing inflation
Another area of dispute among local government administrators has been the best way to calculate the cost-of-living adjustments, or COLAs, that they’ve proposed for their full-time employees.

In most jurisdictions, the preferred metric for setting this annual pay raise is the vaunted Consumer Price Index (CPI) – an amalgamation of some of the most common products and services that a typical household buys on a regular basis.

The administrators in both Alamance County and Graham defer to this figure to justify their suggested cost-of-living adjustments of 5 percent per employee. They nevertheless cite considerably different versions of this statistic in their budget presentations – with York quoting a “March inflationary rate CPI” of 5.3 percent and Garner invoking a figure of 8.5 percent from January that she proceeds to reject in favor of a 5 percent COLA.

In Mebane, Rollins has proposed a cost-of-living adjustment of 6 percent for his city’s employees that’s predicated on a 6.4 percent rate of inflation for the South Atlantic Region. Rollins insists that this regionalized index wasn’t selected arbitrarily in order to rationalize a higher COLA than some of his counterparts have recommended.

“They have 10,000 different ways of looking at the CPI,” he went on to elaborate in an interview Wednesday, “and we have typically looked at the South Atlantic Region in the past.”
Meanwhile in Burlington, the city manager seems to have disregarded the CPI entirely in recommending a 4-percent across-the-board salary increase for the city’s municipal staff.

Honeycutt told The Alamance News that, because the aim of this raise is to deter turnover and not to offset inflation, per se, he has resorted to a much different method to establish a proposed COLA than other local government administrators.

“You can pick out any number you choose,” he added, “so what we looked at is what our peers are doing.”

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