City eyes 18% tax rate hike

Published 11:14 am Tuesday, May 15, 2012

FRANKLIN—Franklin’s $52.1 million draft budget for fiscal 2013 includes a 14-cent, or 18.2 percent, increase in the real estate tax rate to offset lower assessed property values.

The 2012-13 budget suggested by City Manager Randy Martin during a budget work session Monday night is $980,000 less than this year’s spending plan in large part because of the loss of $1.1 million from a revenue-sharing plan with Isle of Wight County on property that includes the International Paper mill, which closed in 2010. Revenue-sharing funds from the repurposing of the mill into a fluff-pulp facility won’t be available until the following year’s budget, Martin said.

The increase in the real estate tax rate means the owner of property valued at $140,000 would pay $1,146 in taxes next year, or $68 more than this year. Raising the tax rate from 77 cents to 91 cents would generate $283,000 in additional revenue for city coffers.

The 14-cent tax rate increase would offset what Martin expects to be a 10 percent reduction in property values as a result of the city’s biannual reassessment. Property values fell 8.9 percent overall during this year’s reassessment, but Martin expects values to decrease more as residents begin to challenge the reassessment firm’s figures.

Martin said the estimate of a 10 percent decrease was made to ensure the city could properly budget for the loss of revenue associated with reassessment. He said state law prohibits the city from increasing the proposed tax rate once assessments are finalized, but the city can lower the rate if there is a significant change.

“We built in a cushion that if something changed, we could change the rate,” Martin said. “It gives us some wiggle room.”

The personal property tax rate, which is assessed on vehicles and boats, won’t change.

City Councilman Don Blythe blamed city government’s poor money management in the past for the tax rate increase this year. He said he hates having to push a tax increase on residents, but he believes it has to be done.

“It all goes back to good management, and we haven’t been doing that,” Blythe said. “There has been a lot of money spent on wants instead of needs in the past.”

Martin recommends not giving Franklin Public Schools any more than this year’s $4.8 million in city funds. The district asked for a $598,000 increase. Martin said he would meet with school officials this week in hopes of bridging the gap.

Residents’ electric bills are expected to increase $1.17 per 1,000 kilowatt hours, with the money to be used to build back up a cushion in the city’s electric fund. The budget also calls for a decrease of $1.17 per month in garbage bills to help offset the electric rate increase.

“We knew we had some flexibility in the solid-waste fund,” Martin said. “Once we knew what the electric rates were going to be, we set the solid waste rates accordingly.”

The general fund would receive a $1.4 million transfer from the electric fund again next year.

The budget would leave six full-time jobs vacant, including one in public works, three in the water and sewer department and two in the police department.

“We will assess how operations are impacted,” Martin said.

The budget also calls for an across-the-board reduction of hours for part-time employees, Martin said. He added that management didn’t cut back on part-time employees in departments affected by the hiring freeze. No full-time jobs would be cut.

The cuts in personnel spending equal $152,217, or 1.37 percent of the overall budget.

Martin recommends funding outside agencies the same as last year except for Paul D. Camp Community College, which would receive $4,916 from the city, and iRide, a public transportation service, which would receive $6,000 to expand its program.

The college didn’t receive funding from the city in this year’s budget because it failed to get paperwork in on time to be considered during the budget cycle.

Under the draft budget, the city would phase in over five years a 5 percent pay increase for employees to offset higher contributions by participants in the Virginia Retirement System. Higher employee contributions were mandated by the state. The city would increase pay by 1 percent a year for five years, Martin said.

A public hearing on the suggested budget is scheduled for 7 p.m. Monday, June 11, at City Hall.