The Town of Franklin began its budget planning session for the 2022-2023 fiscal year with a work session on April 19.
Town Manager Amie Owens said the town continues to rebound. “That’s the good news,” she said. The town is seeing record-high lodging tax collections and expects sales tax collection to continue to increase as new businesses open.
However, she said there is still some uncertainty, and she requested a .03 tax increase to help offset the amount needed from the fund balance to balance the budget. Owens said she would rather not ask for a tax increase in her first year as town manager, but that it is necessary to “keep revenues steady into the future.”
“This budget allows for continuation of baseline operations without cutting services, with no new services added,” she stated in her budget overview presented to the Town Council.
Property tax increase
The three-cent tax rate would set the tax at 35 cents per $100 valuation and would provide approximately $215,000 in revenue.
If the property tax increase is approved, someone with a house valued at $250,000 would see their property tax increase by $75 from $800 to $875.
Council Member David Culpepper voiced concern about raising property taxes as the county enters a revaluation. “From a tax digestibility standpoint, we are putting quite a bit on everybody’s plate to have to digest in the next year or two.”
Vice Mayor Joe Collins pointed out revaluation is not designed to be revenue producing. Tax rates are usually adjusted to a “revenue-neutral” rate following revaluation.
Mayor Jack Horton said it is important that the town maintain its current level of services and not fall backwards while making improvements when they can.
“Look to make sure we’ve got covered the things that are important and essential as far as what the town provides for the citizens who live here,” he said. “We need to maintain and move forward and take make sure that we take care of our employees and make sure this town is moving forward without overburdening our taxpayers.”
Projected budget
Without the property tax increase, the projected general fund revenue for the coming year is $3,787,410. General fund expenditures are estimated to be $4,681,067. That means $893,657 would be needed from the fund balance to balance the budget. If the property tax increase is approved that would reduce the amount needed from the fund balance to $678,657.
Owens said the budget includes $107,667 in expenses associated with health care and retirement costs, workers compensation and property and liability insurance, retiree insurance and an automated timekeeping system. On the expense side, the town was able to negotiate a new contract for employee unforms resulting in a savings of $6,000 and dental and life insurance costs decreased by $1,744.
The projected general fund expenditures show a $310,024 increase over the current year’s budgeted expenditures of $4,371,043. On the revenue side, the 2022-23 projections are $141,383 less than the current budget of $4,371,043. Although there has been an increase in sales tax collections and the Powell Bill appropriation, the 2022-23 budget shows a $50,000 decrease in the franchise tax collection. Owens said that amount has declined over the years due to the availability of various telecommunications and utility options.
“It doesn’t sound like we have a year coming up with a lot of frills,” Collins said.
Fund balance
For the current 2021-22 fiscal year, the town budgeted $418,736 from the general fund to balance the budget, but Finance Officer Sarah Bishop said it is unlikely that full amount will be used prior to the end of the fiscal year on June 30.
The fund balance currently stands at $2.9 million unrestricted.
Horton said he would like the Town Council to look at what the general rule is statewide in regard to how much is kept in the fund balance. While fund balance appropriations are sometimes necessary, he said setting a fund balance goal would protect the town during an emergency or times of uncertainty.
“If you are trying to maintain financial stability and growth you need to have some kind of guidelines to go by,” Horton said.
Fire Department fund
Coupled with the property tax increase, the fire department is requesting a 1.55 cent fire district tax increase to a rate of .07 per $100 value. The current rate is .0545. Using the same example as above, someone with a house valued at $250,000 would see their fire district tax increase by $38.75 (from $136.25 to $175). The property tax and fire tax together would be a $113.75 increase, which amounts to an increase of $9.48 per month.
The Macon County Board of County Commissioners must approve the fire district tax rate. The increase would help fund three full-time additional firefighter positions.
With the proposed fire tax increase included, the fire department fund is showing a balanced budget of $1,169,196 for 2022-2023.
Water/Sewer Fund
The water/sewer fund budget includes a 3% rate increase, which was previously approved as part of the 2020 rate study and the water/sewer capital improvement plan. Owens said the utility rate increase is needed to help fund continued improvements and due to rising material costs.
The budget also includes funds to continue work on the phase II of the water treatment plant improvements. The improvements are being funded through State Revolving Fund Loan proceeds of $8.8 million and an application for a $5 million grant will be submitted.
The budget includes a request for two new positions in the department – a water treatment plant operator and a meter reader.
With revenue estimated at $3,819,500 and expenditures at $5,437,178, the town would need to allocate $1,617,678 from the fund balance to balance the department’s budget.
ARPA funds
During the work session, Owens reminded the council the town still has $850,000 in American Rescue Plan Act funds to spend. Those funds must be committed by Dec. 31, 2024, and spent by Dec. 31, 2026.
The town has received an estimate of $30,000 for beautification of the roundabouts. Council Member Mike Lewis asked that the council consider using part of the ARPA funds for the improvements.
An additional $350,000 is recommended for sidewalk repair and maintenance.
The Council previously approved using $73,000 of the ARPA funds for employee bonuses.
Upcoming Meetings
The next regular Town Council meeting is Monday, May 2 at 6 p.m. The next budget work session will be Monday, May 9 at 6 p.m. Meetings are held in the board room on the lower level of Town Hall.