FRANKLIN—In the initial 2014-15 budget update, City Manager Randy Martin was showing a revenue shortfall, which may have to be made up by a tax increase.

Martin said there are sources of revenue other than property tax increases, and it was his goal to not increase the tax rate. His update to the board did compare certain increases to how they would affect the tax rate, however. His preliminary budget compares primary budget drivers to a 17-cent tax increase.

“This is not a final budget, so I’d like to add a disclaimer that there are many variables and moving pieces at this point,” he said. “In the coming weeks, we will finalize the budget and make recommendations.”

He said the suggestion could include a tax increase, but that is not a guarantee.

One of the major general fund budget drivers is property values, Martin said, and they are projected to fall 8 percent in Franklin. If that occurs, Franklin could lose $432,000 in revenue.

Martin said that with an 8-cent increase, residents wouldn’t pay more than they did last year. As an example, a property worth $140,000 in 2013 would have levied $1,260 in taxes at the current 90-cent rate. In 2014, that property would be devalued to $128,000 if trends hold true, and it would levy $1,262.24 at 98 cents.

Funding the Western Tidewater Regional Jail will also be more expensive. The jail is refinancing its debt, and that could save Franklin $34,015 over time. Current projections that do not include this figure have the costs going up $408,580. Taxes would have to go up 7 cents to recoup that, should the city pursue the option.

School debt will also increase $172,000, which will be on top of the superintendent’s requested budget that has yet to be finalized. To recover it through taxes would cost the city approximately 2 cents.

The superintendent is requesting approximately $4.8 million in local funds, which is the base rate plus a carryover of $345,599. The budget does not include the $272,613 additional in funds that the school board is requesting, which is in part to pay for a 2 percent salary increase for teachers.

Additional budget drivers include a salary adjustment of 1.1 percent to cover the required employment retirement contribution, which is the third-year incremental increase as part of a state mandate.

Health insurance is also going up a projected 6.8 percent.

The projected increase in the Industrial Corridor Revenue Sharing contribution to Southampton County is $100,000. The projected increase in the Department of Social Services local match is $69,675, and the projected increase in the Comprehensive Services Act local match is $60,790.

Community agencies that receive funding from Franklin are requested an increase of $71,496.

Building and maintenance requests are at $202,000.

Street and Utility and Water and Sewer are seeking excavating equipment worth $90,000.

Department personnel related requests are at $159,047.

Martin said he would work to make recommendations to balance the budget.

Revenues are expected to be approximately $21 million, while expenditures are expected to be approximately $23 million. The variance is $2,432,974.

If Martin decides to recommend the 17-cent increase due to the major budget drivers of real estate property value reduction, increase in jail administration costs and school debt increases, the city’s general fund would be $1,012,560 closer to a balanced budget.

“There are obviously going to have to be cuts,” Martin said. “Some of these funds are just what people are asking for. We also have reserve funds, but, the less you use of those, the longer they last. It’s another factor to weight.

“I’ve never had a year where balancing the budget was easy. It’s a balancing act. Literally.”