Moriah Supervisor and budget liaison Tom Scozzafava and Essex County Manager Daniel Palmer, who announced that he along with his wife, Deborah, would be retiring from county service Jan. 1.
With a little pain now, Essex County Manager Daniel Palmer believes he can present a budget that consistently meets the state’s two-percent tax levy cap starting in 2015.
Getting there will not be easy, though.
“We are in a position where the budget has become so lean the following year is a problem,” Palmer said during a special meeting of the Board of Supervisors Nov. 7. “We are looking at a three year plan to balance the budget so we can deliver a budget that does not overly rely on the use of fund balance and can be within the cap.”
Under Palmer’s plan, the proposed 2013 tax levy would be $20,576,274, a 26-percent increase from 2012 ($16,276,443). Palmer said that the estimated tax rate would increase from $2.42 per assessed $1,000 property value to $3.10, a difference of 68-cents or $68 on a home assessed at $100,000.
In 2014, the estimated tax levy would increase 15.56-percent to $23,778,411, with the tax rate increasing 48-cents to $3.58, meaning a $48 increase on an assessed $100,000 home.
Palmer said that 2015 would be the first year that the county would be within the tax levy cap, which he estimated would be around three percent when adding in exemptions. The levy would rise to $24,491,763, with an estimated tax rate of $3.68, up 10 cents from 2014, causing a $10 property tax increase to a home assessed at $100,000.
Palmer said the plan was created to solve the issue the county had with annually using fund balance to pay for fixed costs, what he called, “the gap.”
“If you do not stick to this plan or something similar, then we are going to have more troubles as we go on from here,” Palmer said. “If you do not address the gap, it will become worse every year.”
In the three year plan, Palmer said the county would use $4,350,000 in fund balance for 2013, dropping to $1 million in 2014 and none in 2015, leaving the county with an anticipated fund balance of $5 million.
Palmer said that a cushion is needed in the fund balance account to pay for municipal tax warrants.
“Last year, we paid, schools, towns and districts $4.3 million to cover unpaid tax bills,” Palmer said. “If you have less then $5 million in fund balance to cover that, then you are going to be in a position where you have to borrow from the bank. We were there before and we don’t want to go back.”
Palmer said the county basically had to make up for years of having zero and minimal increases to the tax levy, which may be a hard sell.
“The overuse of the fund balance has ultimately been to the advantage of the taxpayers,” he said. “But, they don’t care what you did for them yesterday, they care what you will do for them tomorrow. However, we have to correct the things that have happened for almost 10 years now. We paid for costs with our ‘savings account’ and now we do not have the revenue coming in to keep going that way.”
Palmer said that his plan was based on several assumptions, the biggest being the pending sale of the Horace Nye Nursing Home.
“If the home is not sold, the plan doesn’t work,” he said, adding that retirement rates, state funding streams and the board requesting the use of more fund balance could all lead to the plan being upset.
“If the board uses more fund balance in any one of these three years, then the plan does not work,” he said. “My intent is to be at three percent in 2015 and have a balanced budget. This plan is controlled by this board. Ultimately, this is based on the people I am talking to here.”
Wilmington Supervisor Randy Preston said he agreed with Palmer’s assessments, but that more needed to be done to bring down current costs.
“There is no easy fix whether you lay off 100 people or go up 26-percent in tax levy,” Preston said. “We do have one of the lowest tax rates in Essex County, but there are factors. I do not know of anybody whose salary has gone up as much as their county, town and school taxes, if they were even able to stay level.
“I don’t think there are any easy answers,” Preston continued. “In fact, I think that this is going to get bloody. Do you think I want to cut the Office of the Aging or Public Health nurses or cleaning, but I have opinions on this and they are not going to be popular and as painful as it is going to be, we need to make some serious cuts.”
“I do not think that there is anyone in this room that wants to see a 26 percent tax levy increase, but you are going to have to either raise taxes or cut services,” Moriah Supervisor and budget liaison Tom Scozzafava said.
Keene Supervisor Bill Ferebee said he wanted people to know that continuing to use fund balance was not the answer.
“If we continue to do that at the county or in our towns, we are going to run out,” he said. “It is going to hurt us all because one day the bank is going to call.”
Scozzafava said that along with the three year plan, he would present a budget for 2012 that fell within the tax cap. Palmer later replied by saying that in order to do that would mean either the use of $8.3 million in fund balance or the elimination of approximately 75 jobs.
“I do not think that you could meet the federal or state mandates for delivery of service if you cut 75 people,” Palmer said.
“These 75 people that would be cut do not come from another planet or somewhere else,” Scozzafava added. “These people are also our constituents.”
Board Chairman and Jay Supervisor Randy Douglas said that the process and meetings would continue.
“There is a lot more thought process that goes into this then we get credit for,” he said.