HENDERSON — Vance County Manager Jordan McMillen’s fiscal 2021-22 budget request holds the line against any increases in property tax rates, water usage charges and the household solid waste fee.
But even without those things, the manager proposes a 3% increase in “general fund” spending, the portion of the county budget that’s supported by taxes.
McMillen’s request indicated that the county has a cushion to work with because sales-tax revenue — money Vance and other counties across North Carolina share with the state government — appears likely to clock in about $2 million higher than expected for fiscal 2020-21.
Because of the COVID-19 pandemic the county used “ultra conservative” estimates of sales tax revenue as it was formulating the current budget in the spring of 2020, the manager said. Going forward, it’ll assume a 2% increase in sales-tax money, which translates into about $10 million in annual revenue.
Presuming the economy performs as expected, that’ll mean the county having $918,887 more in sales-tax money in 2021-22 to allocate to its departments than its budget did the year before — but $1.3 million less than it’s actually in line to receive by the time the current fiscal year ends on June 30.
Sales-tax collections “saw a major increase during the pandemic,” McMillen said, acknowledging a surprise that has caught the attention of everyone from Henderson business leaders to internationally renowned Harvard economists.
By the summer of 2020 it was apparent that the pandemic’s damage to the retail sector wasn’t evenly spread across the state and the country. The heaviest hits, paradoxically, came in well-to-do communities like the Triangle.
Harvard economic Raj Chetty and a team under him that was tracking credit-card-usage data argued that the pandemic and governmental stay-at-home orders disproportionately battered businesses that cater to high-income households, particularly those like bars and restaurants that rely on face-to-face interaction with customers.
Places where there was less discretionary spending going on to start with saw their economies hold up better. And local officials believe the retail trade from passers-by that comes with being on Interstate 85 was a big help to the Henderson and Vance county economy.
Even with the favorable sales-tax news, McMillen said the county government’s operating departments will “continue to keep expenditures to an absolute minimum in” the upcoming fiscal year, “with the majority of departmental budgets remaining essentially unchanged or decreasing.”
The major exception to that is EMS, which is adopting a work schedule that will have its paramedics work a 24 shift and then give them the next 72 hours off.
The change matches the shift structure used by many other EMS department in the region, and advocates believe it’ll result in less medic burnout, but the peculiarities of the system require the hiring of nine more people. It’ll cost the county $469,966 in fiscal 2021-22, McMillen said.
The proposed budget also continues an array of pay changes officials hope will make Vance County more competitive with its neighbors when it comes to hiring workers in general.
It also would allot $8.5 million in local operating subsidies to the Vance County Schools, $50,000 more than the year before. Vance County also figures to spend $625,000 helping the school district with building maintenance and buying laptop computers for students and teachers. And it would put $1.8 toward paying off old and new school-related debts, including some the district will incur for preventive maintenance and school-safety measures.
Some of those expenses are part of a deal with the school system that saw the county take ownership of the former Eaton-Johnson Middle School campus on Beckford Drive so the property could become the new headquarters of the Department of Social Services. As it achieves “full use” of Eaton-Johnson in the upcoming fiscal year, the county’s operating costs for it will rise by $168,500, McMillen said.
Revenue- and expense-wise, there are a couple of issues looming that will affect future budgets.
While the county’s property tax rate would remain at 89 cents per $100 of assessed value, figures local officials are seeing from the N.C. Department of Revenue show that their 2016 estimates of property values in Vance County are lagging well behind what land and buildings are selling for these days.
McMillen said the state’s figures suggest that the 2016 valuations having the county tax only 81 cents on the dollar of actual, real-world market value.
The county’s next state-mandated revaluation will begin in 2022, and after it’s done, officials will need to adjust property tax rates and calculate a “revenue neutral” tax rate that invariably in markets where property values are growing is lower than the current one.
The other issue is with the finances of solid-waste disposal, which for the most part rely on the household solid waste fee. Its reserves are declining in a way that’s “not sustainable” and thus could force “a major adjustment in the household fee in the next 12 [to] 18 months,” McMillen said.
Contact Ray Gronberg at email@example.com or by phone at 252-436-2850.