Signal Mountain residents’ property tax rates will jump a whopping 22 percent next year, according to the town’s mayor.
In a lengthy essay posted on Signal Mountain Community Forum, a Facebook site, Mayor Dan Landrum said council members will vote on the proposed budget ordinance at their regular meeting on Monday.
“I might as well just jump to what hopefully won't come as too much of a surprise,” he continued.
“There will be a tax increase. The proposed tax rate will raise the Town of Signal Mountain property tax from 1.5665 to 1.9218. This represents a 22 percent increase.”
About 67 percent of the increase, about $700,000, would be used to cover sanitation costs, he noted.
“The proposed increase is .3553 cents per $100 of assessed value,” Mayor Landrum said. “Covering sanitation costs with taxes represents 0.2381 cents of the 0.3553 total.”
He said council members considered imposing a sanitation fee in lieu of raising the needed funds through a property tax increase, as other communities such as Red Bank currently do.
“We debated the sanitation fee idea as a council,” he said, “compared it to the impact of a property tax increase and chose the latter due to the regressive nature of an $18 monthly fee.”
“What about that other 33 percent (0.1172 cents)?” he asked rhetorically. “The bulk of it, $338,000, is for street paving which is coming in at approximately $220,000 per mile . . . The final $7,510 of the tax increase is related to the overall 5 percent pay increase for all town employees.”
For Signal residents, the town’s proposed property tax increase could come on top of an increase in Hamilton County property taxes. County officials are considering a 49-cent property tax increase. If approved, 34 cents of the money would be turned over to Hamilton County Schools, while the remainder would be allocated to county general government.
Mayor Landrum said he is hopeful that the town’s budget for next year – and the property tax that would help fund it – will be in place by July 1, when the 2020 fiscal year begins.
“If accepted (at Monday night’s council meeting), Boyd Veal, Town Manager, will draft the proposed budget ordinance. Budget ordinances require two readings and a public hearing,” he wrote. “We have no more May meetings scheduled after the 13th, but with two in June, we should be able to complete the final steps before the new fiscal year begins July 1.”
The full text of the mayor’s essay on Signal Mountain Community Forum follows:
SIGNAL MOUNTAIN 19/20 BUDGET - MAYOR'S REPORT
We've completed our budget work sessions. The next step occurs Monday, May 13, at our regular meeting when councilors vote to accept or reject the budget as amended. If accepted, Boyd Veal, Town Manager, will draft the proposed budget ordinance. Budget ordinances require two readings and a public hearing. We have no more May meetings scheduled after the 13th, but with two in June, we should be able to complete the final steps before the new fiscal year begins July 1.
I might as well just jump to what hopefully won't come as too much of a surprise. There will be a tax increase. The proposed tax rate will raise the Town of Signal Mountain property tax from 1.5665 to 1.9218. This represents a 22% increase. I will attempt to explain in this post why it is most certainly necessary, and the alternatives we debated.
THE PROCESS
The town manager meets with each department head early in the budget process, reviews their prior year budget, and instructs them to present their requests for the coming fiscal year. The town manager then decides which of those requests will go into the Town Manager's Recommended Budget Fiscal Year 2019-2020 book, the guiding document presented to town councilors. There are always more departmental requests than can be met. Those that the town manager does not include in the recommended budget are presented in the Unbudgeted Supplement Requests book. The council has the option of adding anything from the unbudgeted book back into the recommended budget, but also has the obligation of determining and defining how these items will be funded. This can mean adding revenue sources or removing and reducing expenditures from the recommended budget book.
MANAGER'S INTRODUCTION
The following is Boyd Veal's introductory statement and summary taken verbatim from the Town Manager's Recommended Budget Fiscal Year 2019-2020 book.
"This year’s budget is very limited in terms of capital projects and purchases. Of the $622,646.00 in capital appropriations, $547,896.00 can be attributed to vehicle replacement fund contributions, facility maintenance needs or projects funded by donations. I have also shifted funds associated with large capital projects to the Capital Projects Fund rather than budgeting the funds year after year in General Fund while the projects move toward construction. This budget gives us a very clear look at the actual operational costs associated with our established departments. This year you also have a second book which contains the supplemental requests that were submitted by the various department heads but are not funded or included in the budget recommendation."
"For the last few years, we have recognized and discussed the need to address two specific issues – loss of the Hall Tax revenue and the additional personnel costs associated with the new fire station. These two things result in a $1,330,000.00 impact on our budget. While we have adjusted and reallocated portions of our tax rate, the rate itself has remained very consistent. Property tax revenues in FY ’17-’18 were only $617,517.00 more than the property tax revenues for FY ’13-‘14. Over $700,000.00 of this felt impact has not yet been addressed. This budget contains a mechanism to address that shortfall."
"Many municipalities have established a sanitation fee to support associated operations. The Town has historically transferred money from the General Fund to the Sanitation Fund, so our sanitation functions are funded by property tax revenue. Red Bank, for example, has a tax rate of $1.3900 compared to our $1.5665 tax rate. However, they also have a sanitation fee of $16.00 per month. The owner of a $300,000 home in Red bank will pay $1,234.50 in property tax and sanitation fees. The owner of a $300,000 home in Signal Mountain will pay $1,174.87 in property tax. While their tax rate is lower, it actually costs most property owners more in Red Bank than it would if they owned a comparably valued property in Signal Mountain. The establishment of a sanitation fee is certainly not the only way to generate the necessary additional revenue but I felt it needed to be thoroughly considered so I chose that as the mechanism to include in this budget. We will look at other options."
"Historically, we have experienced periods of very high turnover and felt the impact of increased hiring and training costs. Several years ago we adjusted our pay scales to combat this scenario. We now have a more well-trained and seasoned workforce than we have had in many years. Unfortunately, we are now seeing that we have slipped in terms of competitive wages and the prospect of losing excellent employees to other municipalities is again very real. This budget includes a 5% increase in our pay scales and, as a result, a 5% raise for current employees. There are some additional pay adjustments that I feel are absolutely necessary and we will cover those in detail."
"This budget has been developed with an eye toward addressing known issues and organized in a manner that will help us more clearly evaluate the cost of operations in the various departments. As presented, it also resolves issues associated with fund balance to budget ratios. When I prepare a budget, I continually ask three primary questions. As we work through the budget evaluation and approval process, we should consider the same three questions: are we delivering an excellent level of service, are we delivering that service in an effective and efficient manner, given the resulting quality of life enjoyed by our residents, are the taxes and fees required of them reasonable and justified?"
SANITATION FEE VS. TAX INCREASE
Boyd introduced the concept of a sanitation fee two paragraphs above this one. Sanitation is a department of Public Works. It is not a new expense. Departmental expenses include a portion of the Public Works Director's salary, a portion of both an administrative assistant's and Street/Sanitation Supervisor's wages, and the costs associated with solid waste at the transfer station, recycling, leaf collection, and trash pickup. We debated the sanitation fee idea as a council, compared it to the impact of a property tax increase and chose the latter due to the regressive nature of an $18 monthly fee.
Covering the Sanitation Department expenditures of 7 hundred thousand dollars with property tax revenue rather than a sanitation fee accounts for 67% of the total proposed tax increase. The proposed increase is .3553 cents per 100 dollars of assessed value. Covering sanitation costs with taxes represents 0.2381 cents of the 0.3553 total. It seems reasonable to at least ask if these are necessary expenses. While discussing funding methods, I proposed a hypothetical; what it would look like if we just eliminated the department altogether? It is easy to see why that's a bad idea. Sure, people could contract for their own trash pickup. It would mean a variety of commercial interests, some more reputable than others, competing for the work, more trucks on the roads, more illegal dumping, and a generally trashier town. The loss of the recycle center, transfer station, and leaf collection would be felt immediately. These are basic and expected services already provided to our citizens, but what about those outside town limits that use services like the transfer station? Since our taxes are going up to cover the cost of these essential services, all associated non-resident fees need to be revisited and revised accordingly. Council did not discuss this as part of the budget process, but it will need to be among our first orders of business in the new fiscal year.
What about that other 33% (0.1172 cents)? The bulk of it, $338,000, is for street paving which is coming in at approximately 220 thousand dollars per mile. The cost overruns on the James Blvd project put us way behind on paving. This portion of your taxes will allow us to resurface an additional mile and a half, bringing the total to 3.6 miles and getting us back on schedule during the next fiscal year. More importantly, it prepares us for covering the uncovered portion of two expiring revenue sources in the following fiscal year: a SAFER Grant, and the Hall Tax. The SAFER Grant helped pay for hiring new firefighters. We'll still get 30% of their salaries from that grant this year, but it expires the following year and will need to come entirely from the general fund.
We've all known for a while the Hall Tax is being phased out. That process concludes this fiscal year. The amount we received from the Hall Tax varied each year, but averaged in the 700 thousands. We are making sure we can complete the covering of this loss in the 20-21 budget with this decision.
The final $7,510 of the tax increase is related to the overall 5% pay increase for all town employees. The bulk of that pay increase was covered within the Town Manager's Recommended Budget, but the town manager didn't include himself in the 5% raises. Town Council added this back in the budget, plus an additional dollar per hour for police officer Troy Kennedy. Troy continues to add value to our force by serving as our de facto information technologist. This has helped us modernize our police department and saved us a significant amount of money by eliminating the need for outsourcing or hiring a full-time Director of Information Technology.
A POTENTIAL CHANGE IN REC SPORTS
Within the budget, you'll notice a new full-time position for a Youth Recreation Sports Director. While the decision hasn't been made to hire anyone yet, it is included because of a recent development with the soccer fields in Shackleford Ridge Park (SRP), and ongoing discussions within the leagues themselves. There will be much discussion about this in the coming months, but it bears mentioning, at least briefly, now. There is a strong chance that Hamilton County will reach an agreement with Town of Signal Mountain giving us control and responsibility for the SRP fields. It opens up many possibilities for solving field access problems within our recreation leagues. This is all in the idea phase at the moment and it hasn't been discussed at council yet, but there is a very real possibility of a major shuffle in the way leagues operate. The position is included, but the salary and other associated costs are covered by additional revenue from the town operating the leagues. In short, the proposal includes league fees being collected by the town. And to be clear, there's a chance we will see a league reorganization this year, regardless of the Shackleford Ridge Park status. There will be much talk about this in coming weeks, and it may be a case of what was old is new again, as the leagues were once organized by the town under the management of Scott Cook.
In general, the town has seen an average cost increase of around 30% this past year for major projects put out for RFP (request for proposal). This is one of the downsides of a booming regional economy. We've had fewer people bidding on our projects, their bids have been higher than projected, and in some cases we've put projects out for bid and had no response at all. This trend effected everything from simple construction contracts to road paving. Our 19/20 budget accounts for this general trend and I think it represents a realistic, corrective, and accurate accounting of the Town of Signal Mountain's fiscal health.
So what didn't get funded? Quite a lot. The supplemental budget request by department included $1,330,768 in asks, of which $990,008 was denied. The bulk of what was approved is the 338 thousand in paving.
TAX RATES
I've created a chart so that you can determine how your property taxes will be effected. It is attached as an image to the first comment on this post.
NEXT STEPS
As I mentioned at the top of this post, we only have two meetings in June, and one of those will include a public hearing, but we have plenty of time to talk about this budget prior to the June meetings. Assuming this budget is accepted in current form at the meeting Monday, May 13, the finalized proposed version will be made available at the Signal Mountain Public Library. There will also be a copy available at Town Hall. It will also be at least one of the topics of discussion at 6pm Monday, June 3, at the Signal Mountain Community Forum which will be held at Pruett's Porch.