A modest property tax increase for Waynesville appears to be off the table with the majority of town board members backing away from the idea.
Two town board members say they won’t support a tax increase no matter what, two others say they would only do so as a last resort, leaving just one who feels the tax increase is fiscally prudent to set a solid course for the future.
“I am 100% not in favor of any tax increases for a multitude of reasons,” said Alderwoman Julia Freeman. “So many are struggling with inflation and price increases and the cost of gas, I cannot see us doing that to citizens in the community.”
The draft town budget calls for a two-cent property tax increase, which amounts to $300,000. How to plug that hole without a tax increase is now the question of the hour.
Major Gary Caldwell said he would only support a tax increase as a last resort.
“No one wants a tax hike, and neither do I,” Caldwell said. “If there was no way out, that would be a different story.”
Caldwell said town staff have been asked to dive back into the budget and come up with another solution.
“The pencil will be sharpened,” said Caldwell. “I’m hoping there is something else there they can find.”
Time is running out, however, with the town required to pass a budget for the coming fiscal year by the end of June. Meanwhile, a public hearing on the draft budget will be held at 6 pm on Tuesday, May 24.
But with the majority of aldermen now rejecting a tax increase, the budget that’s on the table is already out of date going into the public hearing. That’s something Town Manager Rob Hites had hoped to avoid.
“No manager wants to present a budget that is dead on arrival,” Hites told the board earlier this month.
Following a workshop in April where town board members shared their wish lists for the coming year, Hites signaled that it would likely be impossible to pull off without a tax increase.
“We might be in the land of Oz,” Hites said. “We don’t want to provide you with a budget come May that’s like an atom bomb.”
But lacking clear direction on whether a tax increase was palatable to the board, Hites floated a tax increase of 2 cents per $100 valuation.
Back to the drawing board
Alderman Chuck Dickson, who is unequivocally against a tax increase, believes it’s possible to make up the $300,000 shortfall another way.
“The folks I am really concerned about are the 20% of the population in Waynesville that is below the poverty level,” Dickson said.
Dickson had suggested making up the difference by dipping into the town’s savings account. But the rest of the town board felt it was too risky to deplete their financial cushion anymore than they already have.
“It could come back to bite us,” Alderman Jon Feichter said.
Feichter, who is in the “last-resort” category, said he is going through the budget with a fine-toothed comb to see what could be cut.
“We need to exhaust all options before I would vote for an increase in the property tax rate,” Feichter said. “I am hoping there would be ways we can offset any kind of property tax increase.”
Freeman said she is hoping Hites and the town finance director will “find ways to close the gap.” But she’s also brainstormed some ideas of her own, like postponing a $70,000 expense for new audio-visual equipment for the town board room.
Where the money’s going
Feichter acknowledged that making up the $300,000 without a tax increase will require sacrifices.
“I certainly understand we are facing some serious headwinds,” Feichter said.
For starters, the town is grappling with inflation — from the rising cost of supplies and equipment to the price of gas.
“It is taking a chunk of our budget to cover additional costs,” Alderman Anthony Sutton said.
One of the new big ticket items in the budget is $400,000 for design and engineering of a new fire station in Hazelwood — which the town board unanimously agrees is a priority.
Another big chunk is going to employee raises. The town is lagging behind in salaries, making it difficult to retain and recruit staff given the competition in today’s labor market, Hites said.
The proposed budget calls for $250,000 in raises from the general fund — which comes close to the amount the tax increase would net. All town board members said the raises were a must, however.
“We must bring the salaries up to the level employees deserve for the job they are doing,” said Sutton. “They deserve to be paid what they are worth.”
Another big hit to the town budget is lost revenue at the recreation center to the tune of $275,000 — an amount close to what the tax hike would bring in. Recreation center memberships have yet to recover from the pandemic slump when people quit going to the gym.
Alderman Chuck Dickson said it’s high time the county contributed, since the majority of recreation users don’t live inside the town limits.
“For too long, the taxpayers of Waynesville have been subsidizing a recreational facility used by the entire county,” Dickson said.
Dickson also questioned the $150,000 the town gives out annually to charities and nonprofits — from Folkmoot and HART to REACH and CARE, domestic violence and child abuse agencies respectively.
“I don’t think we should be giving away charitable contributions to organizations that serve the whole county,” Dickson said.
One saving grace for the town is construction and development of new homes and businesses being added to the tax roll. That’s grown the tax base by 13%, bringing in considerably more than last year, amounting to around $475,000.
While a spate of additional large-scale housing developments are in the pipeline, they won’t come to fruition by next year.
“We see very little chance that any of these projects will be far enough along to benefit Waynesville’s tax base in 2023,” Hites said.
The town has also gotten a $3.2 million windfall from federal COVID stimulus money. Most of it has been spent or earmarked: the purchase of police vehicles, replacing crumbling water lines below Pigeon Street, a footbridge across Richland Creek to further greenway expansion, new roll-out trash cans for every home and business, repairing sewer lines to reduce inflow and infiltration during heavy rains, and a grant to Helping Haywood for transitional housing for homeless people.
The town still has $400,000 left, but Hites recommends keeping it in reserve for projects that come up over the course of the year.
Meanwhile, sales tax has continued its upward swing. Consumer spending coupled with population growth means the town’s cut of the state sales tax has been climbing.
The budget presumes that trend will continue, predicting an additional 5% growth in sales tax in the coming year. Sutton fears it will eventually contract, however.
“We can’t bank on the sales tax continuing to go up forever,” Sutton said.
Sutton said that putting off a property tax increase this year could constrain the town going forward.
“I am a fiscal conservative and believe we have a fiduciary responsibility to make sure the town is in sound financial standing,” Sutton said.
The same board members who don’t want a tax increase have advocated for special projects, from solar panels on the new fire station to parks and rec improvements, and Sutton questioned whether they would be willing to give those up.
The debate playing out now is a repeat of last budget season. The budget last year called for a four-cent tax increase, but opposition by some led to 11th-hour machinations to dial it back.
The town board ultimately enacted what amounted to a two-cent property tax increase on a 3-to-2 vote, with Dickson and Feichter opposing. This year, however, the majority doesn’t appear to be going for it.
“We raised taxes last year, I don’t think we need to raise them again,” Dickson said.
The current Waynesville property tax rate is 45 cents per $100 property valuation. A two-cent increase would amount to an additional $40 a year on a home valued at $200,000.