Franklin Council OKs tax increase

Published 10:50 am Wednesday, June 11, 2014

FRANKLIN—The Franklin City Council approved the budget as presented by City Manager Randy Martin, which included a 6-cent real estate tax increase, from 90 cents to 96-cents per $100.

The $59.2 million budget was passed 5-1, with Ward 3 councilor Greg McLemore voting no and Ward 6 councilor Donald Blythe absent. The tax increase is comprised of 4 cents to achieve the revenue neutral rate of what taxpayers paid last year plus 2 cents to help balance the budget.

A property value reassessment created a net-reduction of 8 percent, which would cost the city $227,685 if no action was taken. With the 4-cent increase, single-family taxpayers would pay less than they did last year, while multi-family and commercial owners would pay more.

The city also passed a 2 percent increase to Franklin Power and Utility customers, effective July 1. This was also passed 5-1, with McLemore being the lone nay.

Several permits and fees were also added to the inspection department. Community Development Director Donald Goodwin described these as user fees to help make the department consistent with what Southampton County had before the merger. The vote was also 5-1, with McLemore voting no.

McLemore said he could not in good conscience vote to increase the burden on his constituents at this point. As far as the fees, he said it didn’t make good business sense.

“With economic development, we are striving to be business friendly,” said McLemore. “This makes it more costly to do business in Franklin. We may raise our revenue with these fees, but we may also divert others from choosing Franklin.”

Goodwin said the fees will only affect those seeking building permits, it will not alter fees that affect people’s daily lives, such as the garbage fee.

The fees include plan review fees, which max out at $300 plus $100 for each additional 10,000 square feet above 40,000 square feet; building permit fees, which max out at $450 plus $40 for each 500 square feet above 5,000 square feet; residential, commercial and industrial electrical permit fees, which max out at $50; and annual operating permits for other than landscape irrigation systems, which is $40 annually.

The budget, which can be viewed on the city’s website, had some big challenges beyond the city’s control, said Martin. The drivers included the estimated loss in revenue from the reassessment; an increase in administrative costs at the Western Tidewater Regional Jail; scheduled increased school debt; increased local funds to cover health and welfare administration; and increased health insurance benefits.

To recoup the estimated $777,685 of all of these drivers added together, the city would have had to raise taxes 14 cents. Instead, Martin recommended raising taxes 6 cents, which he said was a remarkable feat in this challenging budget year.

To accomplish this, Martin had to cut more than $1 million in departmental requests.

As directed by council at the budget public hearing, Martin had several options that council could choose from to give city employees a 2 percent raise, which would cost the city approximately $200,000.

In that meeting, McLemore and Vice Mayor Barry Cheatham had voted against this request, McLemore citing that he did not feel comfortable talking raises when already asking citizens for a 6 cent tax increase, and Cheatham said he did not think city employees should get a raise if school employees did not.

The options included freezing vacancies; re-advertising the budget to include an additional 3-cent tax increase; eliminating the contingency fund; using a portion of reserve fund balances; or keeping a portion of the school’s recommended carryover.

“None of these options are deemed sustainable or viable, therefore I cannot in good conscious recommend any of the options,” Martin said. “Whether city employees need an increase in salary or not is not the issue at hand. The focus should be on whether at this stage of the budget process, given the facts as they are currently known, is it prudent to retrofit a salary increase into the proposed budget for FY 2014-1015?”

The budget did not include the $274,702 increase requested by the schools, which was partially being requested to pay for a 2 percent increase in teacher salaries. Martin added that the school board could still give employees the 2 percent raise if they could find the money elsewhere in their budget.

“I don’t see how we can do anything for the schools or our employees,” said Ward 2’s Benny Burgess. “However, I am very interested in looking at it in the fall and seeing if we can make it work.”

Cheatham said when it comes to the fall retreat, where they will discuss the school base funding along with an increase to city employees, they would have to get creative.

“I am not for giving a certain group a raise and not others. I think that would cause dissension,” he said, talking about the idea that had gone around about giving only lower-paid employees a raise.

“I also wouldn’t give our employees a raise without giving the school employees a raise,” Cheatham added. “I think both of them deserve it.”

Ward 4’s Mona Murphy and McLemore were interested in whether it was legal to give lower-paid employees a raise without increasing the administrators’ salaries.

In the absence of City Attorney Taylor Williams, Martin said you couldn’t call it a cost of living salary adjustment if you did it that way. He added that if there was justification that the lower- tier salary steps are not high enough to begin with, then he thought it could be done. Martin said to do that, however, you’d have to first conduct a study.

Hearing no solutions, Mayor Raystine Johnson-Ashburn asked council members if they were ready to move forward with the budget as presented. Burgess made the motion, Cheatham seconded it and everyone present voted yea except McLemore.