No way city needs 21 percent tax hike

Mount Airy City Manager Barbara Jones is asking the city commissioners to approve a 21-percent rate hike in city property taxes for the upcoming fiscal year.

That’s what was included in her budget proposal to city commissioners recently, when she said the city tax rate needs to jump from 48 cents per $100 of assessed value to 58 cents.

Even with that hike, she claims the city will continue to eat away at the year-end fund balance the city has built up, if the city is going to continue to offer the same level of services its residents expect.

Yes, it’s that time of year again. when the Mount Airy city manager presents her doom-and-gloom forecast which shows the city operating at what amounts to a multi-million dollar deficit, eating away at that fund balance, just a few years away from running through the entire amount.

We almost feel as if we could pull an editorial from this time last year and put it here, because it seems to be the same story every year.

This year, however, things are a little different, and a small tax increase might be warranted. But it’s hard to say, because the city manager has so routinely presented budgets that bear little resemblance to reality it’s hard to get a handle on what’s really going on with taxpayer money.

Generally, each year the city manager turns in a budget that shows Mount Airy digging into the year-end fund balance by the millions. Because the city has been able to build that balance — just a few years ago it stood at $12 million, nearly enough to run the city for a year without collecting a penny in revenue — the commissioners have had the luxury of being able to use a little of that money to balance what might be otherwise a deficit budget. This would be, of course, a terribly irresponsible way to manage the budget on a long-term basis, not to mention unsustainable.

Except the city has for several years ignored the manager’s call for tax increases while seeing that year-end balance continue to grow.

According to at least one independent analysis of the city’s budget, presented last year during the budget negotiations, we learned that fund balance stood at roughly $10.4 million at the end of the 2012 fiscal year. It grew to $11.7 million the next year and, despite Jones’ budget saying the city would need $2 million of that money the next fiscal year, the fund actually grew by $200,000, even with a 4-cent tax decrease.

As of the end of the fiscal year 2016, that fund stood at roughly $12 million.

Jones’s budget proposal was at least directionally correct in the most recent fiscal year, with the fund dropping to $10.8 million by June 30, 2017, though she had forecast a drop in the fund of $3.1 million, more than double the actual decrease.

At this time last year, Jones was asking for a 5-cent hike in the city tax rate and still she forecast the need to draw nearly $900,000 from the year-end fund balance.

The commissioners wisely ignored her call for the tax increase. We won’t know what the year-end fund balance is for several months — the year concludes June 30, though an annual audit won’t be completed until later — but we suspect she might be close to the mark on that prediction.

Not because of any faith in her budget forecasts — they have been famously inaccurate — but because of new and growing expenses. Last year, the commissioners voted to make substantial raises in police officer salaries — a good and overdue move — and we’re certain that had a negative effect on the present budget.

The city also continues to spend substantial sums on redevelopment efforts at the Spencer’s property, which no doubt will contribute to the city eating away at the year-end fund balance. For good or bad, until the city finds some way to divest itself of this property, it will continue to be a drain on city finances.

For these reasons, we believe the city might truly need to consider a small tax increase this year, unless the commissioners really do want to start using the fund balance to keep the operating budget afloat. But the idea that a 10-cent increase is warranted, or that we might see millions siphoned off from the year-end balance, is almost laughable.

What keeps it from being funny is that we’re talking about hard-earned taxpayer money. And that, we hope, will keep the commissioners focused on realistic, honest budgeting with an eye toward keeping the tax rate as low as possible.