Franklin considering tax increase

Published 9:04 am Friday, May 4, 2018

Franklin’s City Council is considering increasing the city’s real estate tax rate by up to 5 cents in the coming fiscal year. The council discussed the matter during a budget work session on Monday evening after learning of the financial impact the recent closing of the Farm Fresh on Armory Drive would have on the city.

According to City Manager R. Randy Martin, the closing will cost the city approximately $229,000 in lost tax revenue for its general fund and an additional $200,000 in lost revenue for its electric fund.

Additionally, the city’s fiscal year 2018-2019 budget must absorb a state-mandated $86,000 increase in the city’s contribution to Virginia’s retirement system, $68,000 of which will come from the general fund. The budget must also absorb a 30.8-percent increase in health insurance premiums, costing the city’s general fund an additional $220,000 based on current enrollment. As a result of the loss in tax revenue and these new expenses, the city is unable to grant anything beyond level funding to Franklin City Public Schools.

“To balance the budget at this point, I don’t have any additional dollars available for the schools,” Martin said.

On April 10, Superintendent Tamara Sterling requested that the city allocate $5,729,200 to the school division for the coming school year, which amounts to an increase of $691,805 over the level funding of $4.9 million the council approved last May for the current school year. Some of the priority expenses Sterling proposed during her presentation to the council included electrical upgrades at Franklin High School, resurfacing the student parking lot at the school, hiring additional English, math, Spanish and gifted teachers at J.P. King Jr. Middle School, hiring three security guards for each building and hiring a psychologist to support the Special Education Department.

The tax increase, if approved, would provide up to $170,000 in additional school funding. This would allow the division to hire two new middle school teachers and security guards at all three schools. The balance of the tax increase, according to Martin, would allow the council to consider a salary increase for city employees of up to 2 percent.

Also offsetting some of the loss in tax revenue is an anticipated $160,000 from new EMS fees that the council approved on April 23. However, most of this revenue is budgeted toward salary increases for paramedics, which the council also approved that day.

The increase in the city’s real estate tax rate is the only local tax increase being proposed. Martin said that the city’s electricity retail rate is not expected to change, save for a fuel adjustment increase by Dominion that the city will pass through to utility customers starting this month. There are likewise no retail rate increases being proposed for the city’s water/sewer fund or solid waste fund.

“This [fuel adjustment] is added to their bill and goes directly to Dominion, the city does not get to keep it,” Martin explained.

He also emphasized that the council’s discussion of the tax increase, at this point, was strictly for the purpose of finalizing the wording for the public hearing advertisement. Following the hearing, the council may choose to implement a tax increase of less than 5 cents or not increase real estate taxes at all.

“Council cannot consider a tax increase if it is not included in the public hearing notice,” he explained.

Were the council to adopt the full 5-cent increase, Franklin’s real estate tax rate would rise from its current rate of 99 cents per $100 of assessed value to $1.04 per $100. The city’s new rate would be 19 cents higher than Southampton County and Isle of Wight County, which both currently charge 85 cents per $100. It would also be higher than Emporia’s rate of 87 cents per $100 and Virginia Beach’s rate of $1.00 per $100, but would still be lower than the rates charged by the cities of Chesapeake ($1.05 per $100;) Norfolk ($1.15 per $100;) Portsmouth ($1.30 per $100;) Suffolk ($1.07 per $100;) Hampton ($1.24 per $100;) and Newport News ($1.22 per $100.)

Several council members expressed reservations about the tax increase.

“I can raise prices to customers all the time, but that’s not going to solve my problems,” Councilman Bobby Cutchins said. “This has been years coming.”

Councilman Benny Burgess suggested that a better solution might be to examine the city’s ordinances to identify and eliminate language that might be stifling economic development.

“We’re in a crisis,” he said. “We need to do everything we can do to free up our city so we can grow.”

Of the various non-profits and partner organizations to request funding from the city for fiscal year 2018-2019, only three have been budgeted to receive increases. The Blackwater Regional Library, Western Tidewater Regional Jail and Paul D. Camp Community College collectively will receive $62,000 over what they were allocated last year.

The public hearing on the proposed budget will be on Monday, May 14. The earliest the council will consider action on the school division budget is Monday, May 21. All other aspects of the budget are scheduled to be put to a vote on Monday, June 4. The budget will go into effect on Sunday, July 1.