To tax or not to tax, that is the question? Featured
This is an election year and things could get heated locally and nationally as local governments figure out how to deal with budget shortfalls. Locally, before you jump on or off someone’s political bandwagon, it’s important to have the facts about Smyrna’s financial position. Families, businesses, and municipalities across the country have had to tighten their belt and figure out a way to manage with less.
Over the last few years the Town of Smyrna has been able to avoid serious discussions around layoffs but the Town has had to tap into reserves to pay the bills. The Town currently has a $1.7 million deficit and the question remains, where is the money going to come from? In the past building permits and sales tax revenue were enough to sustain the municipality but permits have sharply declined from peak numbers in 2007 (500) to around 80. Sales revenue has remained relatively flat over the last three years.
So, if you were the mayor, town council and city manager, what would you do? Would you recommend raising property taxes, lay-offs or a combination of both? I got a chance to speak with Mayor Tony Dover and Councilman Tim Morrell to get a better understanding of the Town's financial situation and direction.
The Town has been judicious about the budget, cutting things like coffee, training, freezing salary increases and limited hiring to essential job functions. While these measures where taken, there was some optimism things might improve. Unfortunately, the economy has remained flat and the changes made over the last three years just aren’t enough to sustain the Town, now or in the future.
According to Dover, approximately 77% of the Towns operating budget is personnel. I asked Dover and Morrell about speculation around police and fire personnel being targets if there is a reduction in force, because they make up 60% of the operating expenditures. According to Dover and Morrell, they don't know where the cuts will come from. Dover stated, “Our meeting was with every department head, not just fire and police.” He continued, "we asked every department head (approximately 20) to evaluate their departments and come back to the table with recommendations on how they can help balance the budget." Dover explained, the town’s staff (approximately 500 employees) is based on historic growth trends. "We have to hit the reset button because the growth we experienced several years ago is not likely coming back."
I asked Dover and Morrell about the possibility of property taxes increasing. Dover stated, "everything is on the table but you have to understand, property taxes represent a very small portion of our revenue. It would require a 50% increase in property taxes to cover budget shortfalls." Morrell interjected, "I would have a difficult time taxing citizens (of which most are already struggling) and we (the government) have not done our due diligence."
We also spoke about rumors around assumptions the Town wasted $4 million on the water reuse project. Many believe this money could have been used towards the operating budget. According to Dover, the money allocated for the reuse project was a federal grant. This money was specifically allocated for the reuse project and would not have been permissible for the operating budget.
Nevertheless, some tough decisions with objectivity have to be made. No one wants to see an increase in property tax or job cuts. The town manager, mayor and council have their work cut out. We understand there is a problem that needs a solution. Our local government has always been competent. Lets see what the solutions are before we make assumptions. The first reading of the town’s budget is tonight (May 8th).
We'd like to know - would you favor a property tax increase? Answer the poll question below.