The Franklin Town Council will move forward with a proposed 2022-2023 budget that includes a three-cent property tax increase, an increase in water rates and a possible increase in the fire district tax.
The council voted 3-2 on the proposed budget during a work session Monday evening. Stacy Guffey made the motion to adopt the budget as presented, Joe Collins seconded the motion, and Adam Kimsey joined them in voting in favor of the increase. Members Rita Salain and Mike Lewis voted against the budget as they opposed the property tax increase. Council member David Culpepper was not present.
Prior to the vote, Salain and Lewis both spoke in favor of presenting the budget without a tax increase.
“I’m not against raising taxes,” Lewis said saying he might support a lower tax increase, but he doesn’t think this is the time given the other increasing expenses people will be facing.
“It just looks hefty to me with inflation being what it is,” Salain said, noting even a small increase would be a struggle for some people to pay.
Collins said even though he would love to say, “no taxes,” it would be irresponsible to not include a tax increase to cover increasing expenses. “If we tote the cost one year, we’re going to have to catch up the next.”
Guffey said the town has an obligation to provide a certain level of services for the citizens and to provide opportunity for improvements when possible.
After further discussion about the possibility of a smaller tax increase and how much would be needed from the fund balance to balance the budget, Salain withdrew her motion for a budget without a tax increase. Guffey then made the motion to go forward with the budget including the three-cent increase.
The public will have an opportunity to speak on the budget during a public hearing to be held during the regular Town Council meeting on Monday, June 6. The meeting begins at 6 p.m. in the board room at Town Hall. The budget must be approved by July 1.
Copies of the budget are available from the clerk’s office at Town Hall or on the town’s website, franklinnc.com.
Property taxes
Monday’s work session began with a presentation from Macon County Tax Administrator Abby Braswell about the county’s revaluation process. Any changes that come about due to revaluation will be reflected in the 2023-2024 budget.
The tax increase proposed for 2022-2023 would increase the property tax rate from 32 cents per $100 valuation to 35 cents. The increase is expected to generate approximately $215,000 in revenue for the town.
For a homeowner with a house valued at $225,000, their property tax bill would increase from $720 per year to $787.50 per year, an increase of $67.50. If the fire tax increase is also approved, that would add another $34.88 to the homeowner’s taxes for the year. That would be a total tax increase of $102.38 a year/$8.53 month.
General Fund budget
In her review of the budget, Town Manager Amie Owens said they had adjusted the budget since the first draft was presented during the work session in April. The general fund budget is now estimated at $4,275,542.63 for 2022-23 compared to $4,371,043 for the current 2021-22 fiscal year.
With the tax increase added in, the use of $350,000 in ARPA funds and $153,024 in revisions to department requests, that brings the amount needed from the fund balance to $175,633, compared to the $893,657 originally projected. The $350,000 in American Rescue Plan Act funds are proposed for the general fund to help with sidewalk repair and construction.
Without the tax increase, $390,633 would be needed from the fund balance to balance the budget. The current year’s budget included $640,000 from the general fund, but because revenues have come in above budget, the town has not had to use that amount yet this year.
Although the budget shows an overall decrease for next year, Owens said there was an increase of $107,667 in expenses that the town did not have much control over such as health insurance premiums, required retirement contributions, workers compensation and insurance, retiree insurance and an automated timekeeping system ($18,000). She estimated those increases alone would have required a 1.5 cent tax increase to cover.
The budget does not include a cost-of-living adjustment (COLA) for town employees, but Owens asked that the council review the financials after the first quarter of the fiscal year (July-September) and then determine if funds are sufficient to add a COLA to the budget. The budget does include merit increases based on performance evaluations for workers.
“The only thing you can’t change after you set the budget is the tax rate,” she said.
To add a 2% COLA for employees would have required an additional $78,155 in the budget and a 3% increase would require $116,908.
“I want to protect our employees, I think that is our most valuable asset, but I want to protect our taxpayers,” Salain said.
Owens said the budget as presented will allow for the continuation of baseline operations. “We’re not going to cut any services, but at this point we can’t add any either.”
The total combined budget for general fund, water/sewer and fire department is $10,290,716.38.
Water and Sewer Fund
Owens said they also adjusted the water and sewer fund budget bringing it to an estimated $4,845,977.75, which will require $1,026,478 from the fund balance to balance the budget. It was previously projected the department would need a $1,617,678 fund balance appropriation.
The budget includes a 3% rate increase that was approved as part of the 2020 water/sewer capital improvement plan. The department will use $572,000 in ARPA funds to support capital improvements including the Wilkie Street lines and the East Franklin Pump Station.
Other collection and distribution line improvements are included in the budget using water/sewer revenue.
The water/sewer budget also includes the addition of two new employees – a water treatment plant operator and a meter reader.
The town submitted a $5 million grant on May 1 that would go toward phase II of the water treatment plant improvements. Owens said they hope to know if the grant is approved in August. The town is also using proceeds from an $8.8 million State Revolving Fund Loan to pay for the water treatment plant improvements.
The 2022-2023 water/sewer budget is a decrease from this year’s budget of $5,211,972.
Fire Department
The Fire Department is requesting a 1.55 cent fire district tax increase to a rate of .07 per $100 value. The Macon County Board of Commissioners must approve the fire tax increase. If the increase is approved, the fire department would not need a fund balance appropriation to balance its budget. The additional revenue from the tax would support hiring three additional firefighters.
The fire department’s estimated budget for 2022-2023 is $1,169,196, compared to the current year budget of $948,810.