Debate swirls around tax hike

The Lenoir tax increase debate will carry on for at least another week, and even then it may not be resolved.

On Friday, Lenoir City Council met to continuing its review of the proposed 2008-2009 budget during a work session at city hall. The council wasn't quite ready to take a straw poll vote on whether or not the $25.9 million budget would pass as presented, but it was clear that several council members, including Mayor David Barlow, aren't ready to approve a 5-cent tax increase for Lenoir residents.

“There's never a good time to have a tax increase,” Barlow said, adding that he's worried that next year's property tax revaluation on top of last year's 22-percent increase by the county and the proposed Lenoir increase is too much for many residents.

“Psychologically, what will it do to people?”

If approved, the 9.26-percent increase in the property tax rate will put it at 59 cents per $100 valuation. For a $100,000 home, which currently is assessed $540 in city taxes, each 1-cent adjustment to the tax rate means an additional $10 in annual property taxes.

City Manager Lane Bailey and Councilman Lewis Price urged the council to consider the 5-cent tax increase to lessen the potential for a larger increase, like the one approved last year for the entire county, in the future.

Bailey told the council that the same factors causing financial pain for residents are impacting the city as well.

“It's not like we pay our bills with Monopoly money,” he said, adding that several factors are making the cost of government go up as well.

Council members want to continue the debate from 12:30 p.m. to 1:30 p.m. Wednesday, May 21 during a lunchtime budget work session. They also agreed on a date for the budget public hearing, which provides residents the chance to ask questions, make comments and learn more about the budget. That hearing will be at 6 p.m., Monday, June 2 in the City/County Chambers in the County Office Building, 905 West Ave.

Both meetings are open to the public.

After the public hearing, the council can either adopt the budget or continue debating it. By law the budget must be approved in time for it to go into effect July 1, the start of the new fiscal year.

One of the biggest issues Friday was a proposed across-the-board 5-percent salary increase for city employees. Bailey said the increase is necessary to keep Lenoir in line with average salaries for municipal workers and to prevent the city from losing some of its best employees.

Bailey used the police department of an example of how a low pay rate hurts the city. According to an officer survey, the force is generally happy about working in Lenoir, except when it comes to pay, he said.

“Our officers are getting younger and less experienced,” he said, adding that it's an effect of other communities luring veteran officers away with higher pay. “We're going to end up being a training ground for other communities.”

Bailey said the pay scale is the biggest issue he'd like to address in the budget, which was supported by Price. An ongoing pay scale study is expected to report that Lenoir needs to bring its employee pay in line with other communities of similar size. In order to start the process in 2008-2009, the city may have no other choice than to increase taxes.

Price said there's no point in studying the issue if the council isn't going to follow through.

But some on council expressed concerned about the timing, while others expressed outright opposition to any tax increase.

“Our number one priority needs to be the taxpayers,” Councilman T.J. Rohr said. “The bottomline is we're killing people out there who don't have jobs.”

Also at issue are several infrastructure and equipment improvements, some of which will be paid for with the unanticipated tax payment from Google, which has foregone the first year of its economic incentives from the city, county and state. That has given the city an extra $800,000, for next year's budget only, to work with.

That money already has been designated for several projects, including replacing several public works vehicles, street resurfacing, recreation center renovations and auditorium improvements at the former Lenoir High School.

Either way, much of the council doesn't like the idea of adding to residents' bills at this time. Considering the down economy, rising cost of goods, a hefty countywide tax increase last year and an expected increase in water and sewer rates, some council members were downright opposed to adding yet another burden.

“It's hard to ask people to support a significant tax increase in order to give our employees an increase,” Councilman Merlin Perry said. “They (taxpayers) are not getting overtime, or full-time, are switching jobs or are unemployed. We cannot ignore those things.”