When they last met, Havelock commissioners appeared set to impose a two-cent property tax increase on residents in the 2014-15 budget.
Three out of the five board members said the increase was necessary to maintain services like animal control, maintain its fleet of police cars and replace a needed planning department position.
But since their last meeting, a new state law on business privilege license fee has been approved, meaning the loss of an estimated $20,000 in revenue for the city in 2014-15.
“It’s going to be pretty difficult to overcome,” Havelock Finance Director Lee Tillman said. “It just ties their hands even more. The board’s going to have to make some difficult decisions.”
Residents will get the chance to voice their opinions on the budget during a public hearing at 7 p.m. Monday at Havelock City Hall.
As currently proposed, the 2014-15 fiscal year budget increases the property tax rate from 46.5 cents per $100 in property value to 48.5 cents. The total budget is $16.9 million.
Commissioners are divided on the spending plan, with Jim Stuart, Karen Lewis and Brenda Wilson agreeing on the two-cent tax increase. Commissioner Danny Walsh has said he would support just a one-cent increase to save the city’s animal control program. Commissioner George Liner has said he opposes any increase in taxes but could be swayed.
“We’re no different than any other business,” Tillman said. “We have to have revenue to survive.”
In a typical year, the city has a fairly clear picture of its spending plan prior to the public hearing. However, uncertainty over the state’s business license fee and a divided board has left that picture somewhat cloudy.
Residents can review the proposed budget during normal business hours at Havelock City Hall.
Havelock Mayor Will Lewis has been a vocal opponent of the state’s action on the privilege license fee, which used to be based on a business’ gross receipts. In the long term, it could cost the city $100,000 annually, he said.
“For us, you’re talking about not buying police cars,” he said of the impact on the city. “You’re talking about shutting down recreation programs. We don’t have anything to cut to amount to $100,000, so our citizens are going to take that burden on. It makes all of us sick because we don’t have any recourse and they (state legislators) are not listening to us. They’re not listening to us at all, and it’s just frustrating. I’m still fired up about it. I think it’s wrong that they would even do that.”
The Omnibus Tax Law Changes bill was signed by Gov. Pat McCrory on May 29 and goes into effect July 1.
“In the history of North Carolina, they have never voted in the House, voted in the Senate and had the governor sign the bill in the same day,” Walsh said. “If there was a hurricane in Eastern North Carolina, they couldn’t get an agreement signed that fast to help any of us, but they can sure take away the taxes from us with no explanation.”
The law strips $62 million from counties and municipalities across the state. Proponents argue that a flat $100 privilege license fee is fair for all and helps out businesses that hire workers in the state, with the overall reduced fees also allowing businesses to pass the savings on to their customers.
Will Lewis said the General Assembly is simply sticking its nose in city government business, a place it doesn’t belong.
“Absolutely they’re overstepping their bounds,” he said. “It’s not even necessarily about the dollars. The dollars are going to hurt everybody. It’s about the fact that this is a General Assembly that ran on the fact that they were going to let the government closest govern. They wanted smaller government, but instead what they’re doing is the exact opposite of that and they are trying to regulate every little piece of municipalities, and they are coming down here telling us we cannot collect a privilege license because they didn’t think we were doing it fairly, when the whole time we were just following the rules that they gave us. All they had to do was change the rules, but instead they just abolished the whole thing. They abolished the whole thing and left us holding the bag. It’s unfair.”
Though the bulk of the impact from the legislation won’t hit Havelock until 2015-16, the mayor said the one-year delay means little.
“It’s going to cost us money and they have this notion that we’ve got 12 months now and that we’re just going to find the money to cut it,” he said. “You’re telling me to find a penny and a half out of our budget when we’re already bare bones. Are you crazy?”
Walsh, who is mayor pro tem, was equally frustrated.
“When is the government going to stop being stupid and realize that we can only charge these folks so many dollars, that it’s very important to keep their taxes down and just because you went to Raleigh or you went to Washington D.C. doesn’t mean that you suddenly have the opportunity to take advantage of everybody out here so that you can get re-elected for the rest of your life,” Walsh said. “The state just keeps making it unreasonable for everybody.”
He said that in the past, the General Assembly used to work with the cities and counties.
“They’ve always tried to hold us harmless, tried to stay and work with us,” Walsh said. “This is the first time in my recollection that they have just totally ignored everything that we’ve said and done it their way. I’ve never seen anyone act and do like this group has done lately.”
Commissioners are expected to listen to residents during the public hearing and could schedule another work session to complete the budget. The board is expected to approve the final budget at its June 23 meeting.
“Next year’s going to be worse,” Walsh said, “but we’ve still got to go back and figure out how to make this year work.”