City promises no tax hike

HICKORY

Hickory's property tax rate won't change next year.

That's the central component of City Manager Mick Berry's proposed 2010-11 budget.

Hickory residents will likely pay more for water, sewer and garbage pickup, however.

Berry publicly presented his budget plan Wednesday. City Council received copies of the proposal Tuesday night.

Berry's $85.2 million budget maintains the 50-cents per $100 property value tax rate.

If approved by council, it will be the 16th consecutive year without a tax increase.

"The city of Hickory will end the current fiscal year in a strong financial position," Berry said in his budget message. "Our staff has been proactive in reducing costs through the year as the recession has hurt revenue collections and the proposed budget continues to reduce expenditures in line with lower revenue projections."

As is the case for local governments throughout North Carolina, sales tax revenue is the big unknown.

Berry said sales tax collections have stabilized. "They're not dropping anymore."

However, predicting if and how much sales tax revenues may increase is risky.

Another cloudy issue is the property revaluation scheduled for next year.

"The tax base will change," Berry said, "We hope it doesn't go down. Flat (unchanged) would be positive."

He and the city staff do not expect the tax base to grow by a double-digit percentage as was the case before the economic downturn.

Even with the uncertainty, Berry emphasized the city is still in strong fiscal shape.

The city will end the year with a fund balance of $9.8 million. Berry said the undesignated money will help guard against unexpected expenses and also put Hickory in an advantageous position for investment if the economy turns upward.

Historically, local governments have used fund balances to hedge against emergency expenses, optimize cash flow and generate more money through investments to supplement operating budgets.

Hickory also has enough money in its capital reserve fund to ensure all current building and purchasing projects will continue.

Keeping equipment up to date and maintaining the city's fleets of police, fire and other service vehicles is necessary to avoid compounded expenses later, Berry said.

The Clement Boulevard extension project and upgrading the Northeast wastewater treatment plant will move forward, on schedule, he said.

No city employee will get pay raises for the second straight year.

Twenty positions have been eliminated through early retirement and employee transfers to vacant positions. Two of the 20 positions were cut through layoffs.

Hours will be reduced from 70 to 64 per week at both city libraries. They will be closed on Sundays.

The two city pools will not open this summer. The George Ivey and Ridgeview pools are 50 years old and in need of major repairs. Not opening the pools will save the city $825,000.

Overall, the budget is 3.7 percent leaner than last year, Berry said.

He recommends a 2 percent increase in water and sewer rates and a $2 hike in the monthly garbage pick-up fee.

A significant uptick in the economy could change the budget picture, he said.

"We've got to see the bottom of the economy soon." He said when retail sales go up, the revenue outlook for local government will improve.

The League of Municipalities, an organization that represents cities in the legislature, is working to maintain the hands-off law that prevents the state from raiding local government sales tax revenue.

"If the General Assembly chooses to act irresponsibly and rescind the laws protecting city revenues, our planning and proactive steps to balance the budget will be for naught," Berry wrote in his message to the City Council.

The budget must be in force by July 1. All recommendations by the city manager are contingent on City Council action.

The budget proposal is open for public inspection at the Ridgeview Branch Library, Patrick Beaver Memorial Library and the city clerk's office at City Hall.

It can be viewed online at www.hickorygov.com.