MOREHEAD CITY — Council members have about another month to decide whether they will levy a property tax increase on residents in the upcoming fiscal year.
The council continued budget talks that began earlier this month during a special workshop Tuesday at the municipal building on S. 8th Street. During the May 7 budget meeting, City Manager Ryan Eggleston proposed a 5-cent property tax increase as a means to generate more funds for capital projects planned in the next few years.
The proposed 5-cent increase would bring the ad valorem tax rate to 40 cents per $100 of assessed property value. Under the current rate of 35 cents, Morehead City ranks around the middle of the pack in terms of tax rates of the county’s municipalities. If all other towns maintain their current rates, the proposed increase would make Morehead City’s tax rate the second highest in the county, only behind Beaufort’s 41.35 cents.
However, some council members expressed hesitancy to raise taxes, at least in the upcoming fiscal year. Councilman George Ballou said the increase could be a burden to residents who may already be experiencing financial hardship due to last year’s Hurricane Florence.
“We’ve just gone through a major catastrophe in Morehead City and there are families that are still in binds and trying to get their bearing. I don’t know if it’s right to have any increase,” Mr. Ballou said. “...Especially because we could do it without (a tax increase), working toward knowing that next year we might have to do something.”
Some of the other council members asked Mr. Eggleston to consider a less significant tax increase, perhaps around 2 cents instead of 5. The city is in good financial standing and a tax increase is not necessary to operate at full capacity next fiscal year, Mr. Eggleston said, but the city needs some sort of revenue stream to fund capital projects.
“The thing I would caution you is where we’re left next year without a mechanism to create capital funding,” he said of a suggestion to eliminate the tax increase.
Mr. Eggleston intends to put the extra tax revenue into a fund for planned capital improvement projects. To that end, he proposes freezing the majority of capital projects next fiscal year so the city council and staff can develop a true five-year capital improvement plan.
Most of the city’s department heads, who briefed the council on their needs and budget requests for fiscal 2019-20, said they will forgo most capital requests this year so the city can build up the fund and create the CIP.
“Council, you will notice there is nothing there (in capital outlay). That doesn’t match our initial request, we asked for vehicles,” Deputy Police Chief Brian Dixon said of his department’s request for several new patrol cruisers, which was not granted under the proposed budget. “This is us cinching our belt, this is us looking at the bigger picture, this is us on board with the five-year plan.”
Under a budget amendment approved by the council Tuesday evening, the police department will receive two new patrol vehicles as part of the current fiscal year, which Deputy Chief Dixon said will help in the meantime.
The budget does lay out funding for a few capital projects, but Mr. Eggleston said most will take a back seat for the next year. Items the budget does give funding to include a new fire command vehicle, phase one of a stormwater management project, shoreline stabilization and dredging of Sugarloaf Island and a new street sweeper, among a few other things.
In total, the manager recommends allocating about $1.1 million for capital outlay from the city’s general fund next fiscal year. However, certain departments are funded through sources other than the general fund, like the water and sewer enterprise fund.
Public Services Director Daniel Williams said the sewer department is due to receive a new jet vac truck in 2019-20 at a cost of about $450,000. Mr. Williams said the city’s current truck is reaching the end of its useful life and is an essential piece of equipment the department utilizes nearly every day.
“It’s an imperative piece of equipment,” he said. “We use it every day, I’ve got a man dedicated to that piece of equipment.”
The public works department will also receive new trucks, a new backhoe and a few other capital items next year for a total cost of about $870,000 in capital outlay from the water and sewer fund.
As for operating expenses, which encompass day-to-day costs such as salaries and supplies, department heads said they expect to mostly hold the line from this year in the upcoming budget, with some minor increases requested here and there.
The council also approved a suite of budget amendments during the regular monthly meeting that directly followed the special budget meeting. The items were originally included in the consent agenda, but Mr. Ballou pulled them for further discussion during the city manager’s report.
One budget amendment included the following projects and their costs: police patrol vehicles, $80,000; SmartGov software, $57,866; website upgrade and implementation, $25,000; Munis phase three implementation, $378,000; and JIB improvements, $55,775. The amendment also included about $1.1 million in paving and surfacing projects, but the council decided to remove that item for further discussion at a later time.
Contact Elise Clouser at email@example.com; by phone at 252-726-7081 ext. 229; or follow on Twitter @eliseccnt.