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HILLSVILLE — Staff working on Hillsville’s fiscal year 2014-2015 budget propose to avoid a tax increase by finding more savings, applying for grants and fixing more utility issues, according to the discussion at the April 28 town council budget workshop.
The budget document shows the general fund revenue and expenses balancing at approximately $2.59 million, the water fund at almost $1.96 million and the sewer fund at $929,402.
Travis Jackson, former town manager who agreed to serve in the interim until council found his replacement, noted many rural localities continue to struggle as they prepare the next fiscal year’s budget.
“Many communities have addressed their financial shortfalls by initiating charges for solid waste programs, eliminating extra services such as door-to-door recycling or establishing new or increasing existing taxes,” Jackson wrote in the budget message included in the proposal.
Hillsville faces the same challenges, but town officials will try to make the decisions that have the “least negative impact” for citizens.
Water & Sewer
Much of the financial strain on the town comes from losses in its water and sewer funds, he wrote.
“The water system financial problems are a result of the loss of the county as a wholesale purchaser of water and the sewer system [problems] are due to the lack of flow to an oversized treatment plant and the debt service associated with that construction,” he wrote in the message.
The plan involves having the general fund’s unrestricted reserve offset those utility losses, but town officials need to continue working towards making the water and sewer funds self-supporting, as enterprise funds are supposed to be, Jackson wrote. This can be accomplished by continuing the program to find and repair leaks and “inflow and infiltration problems” and to improve the treatment plants’ energy efficiency.
Though plant improvements will add to debt service, Jackson said staff is looking for the best funding package that’s available.
“That being said, our citizens have some of the lowest water and sewer rates in the region,” the budget message said. “Therefore, rate adjustments will be necessary and can be spread out over the next several years.”
Engineering firms trying to get the preliminary engineering report work will prepare a rate analysis, Jackson wrote. The report when it comes out by July will provide town officials with the tools needed to make decisions about future rates.
“It is only then that the town will be able to replenish its retained earnings to a level that will allow for funded depreciation of the equipment and greater investment in economic development,” the budget message said.
The tax rates would remain at 8 percent for both meals and lodging taxes, 22 cents per $100 of real estate, 36 cents per $100 of farm equipment and personal property and machinery and tools at 72 cents per $100.
“It is our opinion that we can meet the demands for our service within these guidelines without jeopardizing service,” Jackson wrote. “Our efforts will continue with the focus for economic development, which will provide the opportunity for additional tax base and utility use.”
At the budget work session, Jackson and other town officials discussed in more detail about the 2014-2015 proposal with members of town council, including:
• staff worked on the goal of keeping 25 percent of operating capital in reserve, he said. Increasing the reserve means that unexpected things, like a pump going out, won’t become an emergency that the town would have to borrow money to pay for.
• staff will try to get more of the town’s fair share of meals taxes from vendors at the Memorial Day and Labor Day flea markets by having the land owners know the total sales and collect the revenue from the vendors. That will keep the town from trying to track those vendors down for the meals tax.
“There is an 8 percent meals tax and that’s what should be coming back into the town,” Jackson said.
While town officials expect to collect more of the meals taxes, that hasn’t been written into this budget.
Flea market packets with the information about the meals tax collection were to be available to affected landowners May 1, town officials discussed.
• the town has hired a public works employee who will also provide maintenance on town vehicles, including those in the police department. Jackson said this will allow the town to provide maintenance in-house that used to be done at retail prices.
Also in connection with the police department vehicles, Jackson said the town received a grant to pay for part of a police vehicle. He recommended police officials searching for other grants to match that.
Other savings at the police department could come from eliminating a position and managing overtime, officials discussed.
• a planned water system project has received a Virginia Tobacco Commission grant. Jackson said that town officials also will apply for other grants from the Mount Rogers Planning District Commission and the Department of Housing and Community Development.
• the proposal shows the increased revenue coming in from treating the leachate from the solid waste authority’s landfill.
• right of way clearing has allowed town workers to uncover manholes that had been buried, possible sources of inflow and infiltration problems that would need to be fixed.
Trying to keep the necessary bacterial levels at the sewer treatment plant can be expensive.
• Jackson looked at 118 towns in Virginia and found that 36 had higher real estate taxes than Hillsville, three were the same and 79 were lower. For personal property, out of 100 towns, 48 were higher and 52 were lower, he added.
Among the 79 that were lower on real estate rates, many of those charged for solid waste collection while Hillsville does not.
“Of the 79 that have lower real estate taxes, those are then charging for solid waste. So, out of 93 towns in the state, there’s only 29 towns not charging for solid waste,” Jackson said. “So you either make it up here or you make it up there.
“We’re actually, overall, much lower than many other communities of our size,” he continued. “We do have some of the lower utility rates of many of our Southwest Virginia friends.”
That means Hillsville remains conservative and has avoided passing budgets that are “too harsh” on the citizens.
• town officials want to do away with the town vehicle stickers, which could save $2,000, Jackson said.
Carroll County does not require a vehicle sticker now.
• charging credit card fees to the users will save Hillsville $20,000 that it’s covering now.
• the budget reflects $75,000 in grants, with more awards being sought.
• the budget contains a 2 percent raise for employees.
• town officials discussed that Hillsville now has an improved cash position of $300,000 over last year.
Hillsville will hold a public hearing on the budget at the first meeting in June and approve it at the second meeting in June, according to town officials.