The draft fiscal year 2020-21 budget that the Town Council will consider at its workshop session next Tuesday is unbalanced, showing a shortfall in projected revenues over projected expenses during an uncertain financial time of about $350,000.
Projected revenues for next year are $5,953,243, and expenses are $6,302,096.
For the proposed FY 2020-21 budget, see pages of: 3-17 of the April 21 budget workshop packet: https://www.southernshores-nc.gov/
Interim Town Manager/Budget Officer Wes Haskett and Finance Officer Bonnie Swain have submitted a budget with “minimal increases” in expenses to “keep services running at the current level,” they write in a memorandum to the Town Council, and have reduced revenues in occupancy taxes (by an overall 20 percent); sales taxes (5 percent); and land- transfer taxes (2.5 percent).
The projected occupancy-tax revenue assumes receipts in July of 50 percent of last July’s receipts; 30 percent in August, 20 percent in September, and 10 percent in October, according to the memorandum. The two staff members assume all other occupancy-tax receipts will be “flat as compared to last year’s numbers.”
They are also assuming that “travel patterns will return to normal.”
Mr. Haskett and Ms. Swain project a slight increase in real-estate property (aka ad valorem) tax revenue, based on a revenue neutral tax rate (RNTR) of 0.1958, which towns are required by state law to calculate, but not adopt, after a countywide property reappraisal like the one Dare just performed.
The Town’s current tax rate is 0.22, or 22 cents per $100 of property value.
For an explanation about the confusing RNTR, see: https://canons.sog.unc.edu/the-revenue-neutral-tax-rate/
Rather than recommend to the Town Council a preliminary budget that is balanced, Mr. Haskett apparently has left to the Council the tough decision-making about how that can be achieved. In the joint memorandum, he offers the following options:
- Cutting expenditures/services
- Using monies from the Town’s unassigned fund balance
- Increasing taxes (by keeping the current 0.22 tax rate)
- Using a combination of the above three options
The current balance in the undesignated fund balance, which was depleted in this fiscal year by $1,406,411–some of which will be reimbursed by grant money–is not indicated in the memo.
North Carolina town managers are tasked by state law with preparing and submitting the budget and capital program to a town council. (See N.C. General Statutes 160A-148(5)). They are in the best position to analyze and consider carefully all departmental requests. A town council serves only in an advisory role, offering guidance.
The Beacon believes that Mr. Haskett should have dug deeper for cuts in expenses, not only to balance the budget now as he and Ms. Swain have projected it, but to anticipate further revenue reductions. We believe Mr. Haskett should be suggesting potential cost-saving measures—per a town manager’s budgetary duty and power—and we can readily offer some obvious ones:
1) Asking all department heads to cut their budgets by a mandatory 10 to 15 percent;
2) Eliminating all external contracts (engineering, beach nourishment studies, etc.);
3) Reducing or eliminating capital expenditures.
Employee salary cuts should be considered, too, in case the local economy fares far worse than currently anticipated.
We also believe the timing of this draft budget is unfortunate. In a month, we will know much more about what the “new normal” in North Carolina will look like and how the tourism and construction industries will be affected. The Town can be flexible in the next two months about when it workshops the budget; when Mr. Haskett submits a balanced budget; and when the public hearing on the proposed balanced budget is held.
The usual budgetary deadlines need not be rigidly observed, as long as an FY 2020-21 budget is approved by June 30 and the public has had an opportunity to be heard.
THE GOVERNOR’S PLAN: TESTING, TRACING, TRENDS
Governor Roy Cooper started discussing life in North Carolina after COVID-19-related restrictions are lifted yesterday at a news conference at the state’s Emergency Operations Center in Raleigh.
“This virus is going to be with us until there is a vaccine, which may be a year or more away,” the Governor said, cautiously. “That means as we ease restrictions, we are going to enter a new normal.”
Governor Cooper seeks to ensure that when people go back to work, and businesses and schools reopen, public-health measures are still in place to protect the most vulnerable people. He is cognizant of guarding against a spike in COVID-19 cases that could overwhelm hospitals and cause widespread casualties.
“We now need to look ahead at how we stay ahead of the curve,” said Dr. Mandy Cohen, secretary of the N.C. Dept. of Health and Human Services, a chief adviser to the Governor.
The plan that the Governor proposes to initiate gradually consists of three components:
- Widespread testing, so infected people can be identified, isolated, and tracked;
- Aggressive contact tracing, so that people who came in contact with individuals who test positive for COVID-19 can be identified and tested, and, if necessary, isolated and tracked;
- Detection of “trends” that will influence policy decisions.
In order to ease restrictions, there needs to be an increase in testing capabilities over what is currently possible in the state, and more public-health personnel need to be hired in order to do aggressive contact tracing, according to the Governor’s Office.
See press release, “Governor Cooper Shares Path Forward for North Carolina”: https://governor.nc.gov/news/governor-cooper-shares-path-forward-north-carolina
By trends, Governor Cooper means data showing changes in the number of new positive COVID-19 test results; the number of COVID-19-related hospitalizations and deaths; the number of available hospital beds and ICU capacity; and the number of available supplies of personal protective equipment. Any worrisome trends that emerge will have to be addressed by public-health safeguards, such as social distancing, face masks, and limited gatherings.
Invoking the now common light-switch analogy, the Governor said he prefers to use “a dimmer switch that can be adjusted incrementally.”
Until state and county restrictions are gradually lifted, we will not know how the Outer Banks will “trend.”
Returning to the draft Southern Shores FY 2020-21 budget, we were glad to see that the town has been offered a recycling contract by Recycling & Disposal Solutions (“RSD”) of Virginia with a fixed price of $57.50/ton for processing single-stream recycling with glass; or $49/ton for single stream recycling without glass.
RSD, which operates a materials recovery facility in Portsmouth, is assuming the market risk should the price of commodities drop—which is what Bay Disposal & Recycling should have done, instead of requesting a price hike from the Town Council, when the processing fees it was paying increased.
The Beacon previewed RSD’s proposed contract with Nags Head on 4/14/20, expecting it to be much like the one the recycling company would offer Southern Shores, and it is, with the significant exception of the price. (See pp. 18-48 of the meeting packet.)
RSD’s contract only concerns the disposal of the Town’s curbside recyclables once they arrive at its facility. Bay Disposal would charge the Town separately for collecting the recyclables and hauling them to Portsmouth. As of yesterday, Mr. Haskett did not have a price quote from Joshua Smaltz, who is Outer Banks Site Manager for Bay Disposal.
A big advantage that RSD offers over the previous processing arrangement that Bay Disposal had with a Chesapeake recycling center is that it will handle sorting all recyclables so that any contamination does not adversely affect the Town.
Facing what Nags Head Town Manager Cliff Ogburn believes might be a $1.5 million budgetary shortfall in the next fiscal year, the Nags Head Board of Commissioners, which met yesterday, decided to postpone a decision on its RSD contract until its May 6 meeting. The larger town was not offered a fixed price like Southern Shores was.
The Beacon would like to see the Town Council approve an arrangement with RSD and do some good for the planet, while also supporting the recycling market. If the Council decides to continue to allow Bay Disposal to haul our recyclables to the Wheelabrator incinerator in Portmouth, it will do neither.
The Beacon has lost track of the figures, since the Town Council gave Bay Disposal a price increase to transport the Town’s recyclables to Wheelabrator, but it may be that the arrangement with RDS is also more cost-effective.
ZOOM AND PUBLIC COMMENT
The Town has given notice that next Tuesday’s 9 a.m. budget workshop will be held in the Pitts Center, “utilizing the Zoom platform/app.” Details about who will be present at the Pitts Center would be welcome, but the Town does not provide them. We will never understand why the Town is not more forthcoming with basic information.
We suggest that you do a trial run with Zoom before Tuesday, if you have not used it before. The Town’s instructions, via the link below, might confuse you:
The bottom line is that, once you have downloaded the Zoom software and can join a meeting, all you need to participate in the budget workshop is the meeting ID, which is 952 9642 3158.
You also may listen to the meeting on the telephone. The link above gives telephone numbers that you may use.
You may email public comments to Town Clerk Sheila Kane before the meeting at email@example.com, with the subject line, “Public Comment April 21, 2020,” or you may comment live via the chat feature on Zoom.
If you do email your comments, someone will read them into the record on your behalf. The Beacon advises you to be mindful that the person who reads them might be a slow and stumbling reader. You are limited to three minutes, which may be shortened when read by a hesitant reader.
The Beacon will write again about the draft budget before next Tuesday’s workshop.
Ann G. Sjoerdsma, 4/16/20
One thought on “4/16/20: TOWN’S DRAFT FY 2020-21 BUDGET SHOWS PROJECTED SHORTFALL OF $350,000. GOVERNOR GIVES OVERVIEW OF STATE ‘REOPENING.’ Also News on Recycling. Town Council Budget Workshop 9 a.m. Tuesday.”
at this point in time I believe we need to tighten the purse strings, tighten the budget, no new unnecessary spending cut in all depts., where u can, this could be catastrophic to everyone’s purse! time to be extremely fiscally responsible!