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Carolina Beach Adopts Budget: Tax Rate Reduced; No Fee Increases

Managing Editor

CAROLINA BEACH - Carolina Beach property owners will not see a drastic increase in their municipal property tax bill next year.
The Carolina Beach Town Council adopted their 2012-2013 fiscal year budget at their June 12, meeting.
Town Manager Tim Owens provided highlights explaining the Town's Ad Valorem Tax Levy - or total value of all properties in Town - dropped by 34% from fiscal year 2011-2012 at $2,488,349,000 to $1,645,700,000 for 2012-2013 following the latest County re-evaluation.
The budget proposal calls for a property tax rate of $.235 per every $100 of property value. The revenue neutral rate is $.2621.
The revenue neutral rate is the property tax rate that would generate the same amount of property tax revenue as generated prior to the countywide tax revaluation.
Historically that rate is set much lower following a revaluation because properties appreciate in value. This time the economy brought much lower values. In a good year it's designed to avoid a windfall in tax revenues for local governments. In this case, it's a call to bring in the same amount to continue operations.
The proposed rate is much lower than the revenue neutral rate.
The revenue neutral rate would have generated approximately $4.2 million dollars which is equal to last year's revenue generated with a $0.175 tax rate. The lower rate adopted in the budget will generate around $3.8 million dollars.
Owens explained water and sewer rates remain unchanged at $5.70 for 1000 gallons of water usage and $6.30 per 1000 gallons of sewer treated.
All water and sewer flat rate charges will remain unchanged.
Also, there are no changes to solid waste fees and no changes in the $9 per month storm water rate.
Owens explained, "There are no changes in rates and fees with one exception, $5000 application fee for communication tower and antennae co-locations and an $8,000 retainer for technical assistance for the same."
Owens said, "This year we had proposals for transfers and fund balance expenditures in the general fund. A little over $258,000 from fund balance to help balance the budget. There's a transfer of $300,000 from the water and sewer fund and a transfer from the tourism fund of $457,000." He said, "This is approximately one million dollars or about 6.4% on the tax rate."
He said due to the reduction in the tax rate from revenue neutral, "Basically the Town will lose and estimated $100,000 off the bat."
He explained, "Sales Tax revenue projections were decreased in the General Fund from the fiscal year 2011/2012 Budget ($1,270,000) to the fiscal year 2012/2013 Budget ($1,066,334). This is a decrease of $203,666 from the prior year. This projection is a direct result of a proposed $.03 Ad Valorem tax increase proposed by Wilmington and a $.02 proposed Ad Valorem Rate proposed by Kure Beach" which resulted in a projected $100,000 loss in sales tax even if the Town stayed at revenue neutral.
He explained, "Likewise, it is estimated that with each $.01 drop in the Carolina Beach Ad Valorem Rate the Town could lose an additional estimated $50,000 in sales tax revenue. In all, the Town could see a reduction in projected sales tax revenue as a result of the above actions estimated at $225,000."
Owens explained, "Finally, fiscal year 2012/2013 Ad Valorem Tax collection estimates were projected at $3,791,000 which is down from the FYI 2011/2012 projection of $4,200,000 for a reduction of $409,000. This projection is a result of lowering the tax rate from revenue neutral."
He said equates to a $612,000 reduction in revenue.
Employees will get a $500 cost of living raise and 1% merit pay increase based on performance.
Mayor Ray Rothrock made a motion to adopt the budget as presented but with the revenue neutral rate rather than the reduced tax rate. He said, "The reason being, the difference between the .235 and .2621 will generate probably a little over $500,000. We need to put this in a contingency fund, earmark it to be used, for example, inlet dredging if needed, beach nourishment if needed, grant matching if needed, and other capital projects. We need to not give that sales tax up to the other municipalities."
Owens said the Council could instruct to create a capital improvement fund or contingency fund.
Council member Sarah Friede said, "I think we need to give our residents a break this year and start right away coming up with a plan for next year so that we do have more of those capital reserves so we can make accommodations for some of those expenditures that we know are coming."
Those expenditures include future funding for beach nourishment, infrastructure improvements and other items.
Councilman Steve Shuttleworth said he couldn't support Rothrock's motion because, "Back in January and February we had a discussion about setting aside reserve dollars for beach nourishment and dredging and the discussion was we didn't want to do that at this time. We didn't want to have that in the budget because we didn't want to show the federal or state people that we were setting aside those kind of dollars. We went through a budget cycle without specifically identifying those dollars."
He said, "The second part is, your comment Mayor was to set aside that money in a capital reserve fund for whatever future items may be coming up. That's just a slush fund to me. We have a reserve account. We have unforeseen expenses such as the street sweeper that came up during the budget cycle. We readily approved that. The sales tax issue was a problem and that came up late in the budget cycle. I understand that. But we stood fast that we were going to come in under revenue neutral."
He said, "We were told at the beginning of the budget cycle that there was absolutely nothing else we could do other than twenty six cents. We were told there was nowhere in there to save any money... We have a budget before us today that was well presented that came in at $0.23 and is balanced. So we were able to find those things and now to come in at the eleven and a half hour to come back and just say we'll put another $500,000 aside in a fund that is not identified and not specific. We have discussed in those budget meetings Mayor that we ought to forthwith come up with a plan not only for capital improvements on water and sewer, but a very specific plan on how to pay for beach nourishment and inlet dredging."
He explained, "We still are in flux right now. The state budget is in flux on how much money we will or will not have."
He said, "I'm going to stick with the .23 tonight and I'm happy to have the discussion in the future on those fees we might need."
Councilman Lewis agreed and said it's not fair to the public to make such a change at the last minute.
He said people and local and state governments across the county are having to cut their budgets.
Councilman Lonnie Lashley said he has mixed feelings. He will vote for the budget but is not in agreement with not filling a position in the police department.
Rothrock withdrew his motion and Councilman Lewis made a motion to adopt the budget as presented.