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Letters: Against The Property Tax Increase
Former Commissioner Weighs In
June 7, 2016

At the June Town Meeting a new budget and property tax increase will be considered. As proposed, the budget includes a $.02 rise in the Town Property tax – from 20 to 22 cents per thousand dollar value of the property. That translates to $20 more in annual property tax for every $100,000 in property value. Former Town Commissioner Larry Summers is opposed to the tax hike.

The Town of Oriental is proposing to raise taxes property taxes by 2 cents per $100 of valuation at the June 7th Town meeting. This would increase the Town of Oriental only portion of the property tax to 22 cents per $100 of valuation. For someone with a $200,000 house (Tax Value) that would mean a $40 per year real property tax increase. In addition they plan on adding an additional $3 per month charge on each garbage can.

There are, at least, two questions that need to be answered before we decide if we really need a tax increase. The first question: what is our current financial position? The second question: why do we need more funding and if it is required how do we fund it?

Our financial position is demonstrated by something called the Fund Balance. There are four major parts of the Fund Balance; Unassigned (The Unassigned Fund Balance is what we can use for any emergency or unbudgeted need), Funds stabilized by NC Statue, Powell Bill Money from NC DOT funds and Committed Occupancy Tax Monies. In general adding those up should equal our fund balance.

In FY 14/15 we added to our State Stabilized Funds $14,777 for a total of $ 64,281
In FY 14/15 we added to our Streets (Powell Bill) $ 2,877 for a total of $ 97,365
In FY 14/15 we added to our Occupancy Tax $ 5,515 for a total of $ 211,358
In FY 14/15 we added to the Unassigned Balance $$26,991 for a total of $323,637

The total of all of these additions is $50,160. This is $47,162 less than the total amount added to Fund Balance in the 2015 audit. There is, however, another line, “Assigned: for subsequent years expenditures” of $47,162. That would only be permissible if a portion of total fund balance is being appropriated for the next year’s budget that is not classified as restricted or committed. The only matching income lines in the 2015-2016 Budget are $23,662 from Restricted Powell Bill Funds and $23,500 from Restricted Occupancy Tax Funds which add up to $47,162. It seems that we committed these funds twice. We made one commitment from unassigned fund balance, and one from restricted funds. The actions presented do not seem to represent good accounting practices, good oversight or good auditing. Because of the “Out of Balance” accounts in the 2014 Audit we were reprimanded and fined by the State of NC. We may have that same problem again.
If that extra is added to the Unassigned Fund balance it would increase that balance to $370,799 or 49% of actual annual expenditures. That leaves us well above the state mandated requirements and, with another similar addition this year it could leave us in great fiscal condition.

The major need presented at the budget hearings for additional funding was for street repaving that Powell Funds seem unlikely to cover. We should certainly have a prioritized plan for paving many of our streets. We currently have no plan and no proposed budget for any paving to fund.

NC has provided Municipalities with the ability to add an annual motor vehicle decal tax of up to $30 per year per vehicle. That is a way of providing additional funding by taxing the users. We can also place any unassigned fund balance, beyond a level we determine, into committed funds for paving or anything else the town deems important.

I don’t believe in increasing taxes because of an undefined or unbudgeted need. If we had an actual plan and a proposed budget for implementation it might be another story. In addition there is always that old standard of increasing the Tax Base (i.e. property value in the town). That is what has kept us doing well in the past. That could help us again if we stopped making new decisions and/or ordinances that restrict growth.

Larry Summers
Oriental, NC


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