Roanoke Rapids City Manager Kelly Traynham is proposing a 64 cents per $100 tax rate for the upcoming fiscal year.

The lessening of the tax rate comes during a revaluation year in which property values increased and the revenue neutral rate is 57.86 cents per $100. The current tax rate is 66.1 cents per $100.

The city manager presented the proposed $19,852,046 financial plan to city council Tuesday night and, as she described, was a first run through of her budget message. 

A budget work session is anticipated.

“The budget provides sufficient funds to maintain the current level of city services while beginning to think strategically about future needs and capital projects,” she said in the draft of her budget message. 

The proposed 64 cents per $100 tax rate, she said, will allow the city to cover increased costs, include funds for necessary capital projects, and deferred maintenance.

Traynham addressed the proposed tax rate in the general fund revenue highlights of the preliminary budget message. “The city has not effectively raised taxes in 10-plus years despite the cost of living continuing to increase and substantial increases caused by inflation and the worldwide economy,” she wrote. “The city departments have leveraged other funding sources and competitive prices to manage costs or deferred maintenance due to lack of funds.”

Since the 2020 revaluation the annual average increase in the tax base is 1.34 percent, Traynham wrote. “Personal property and real property tax is slowly gaining value and signs of incremental growth are taking place.”

The proposed ad valorem tax revenue for the upcoming budget year is $9,673,346 while the current year is $7,599,702. In 2023 that figure was $7,221,507 estimated and the actual amount was $7,283,185. “The proposal to use a tax rate above the revenue neutral rate will generate funds that can be used for outstanding deferred operational and capital needs while anticipating declining sales tax revenues. The FY 24 and FY 25 tax base will fluctuate until all revaluation appeals are finalized and until the city’s audit is complete for each respective fiscal year.”

No early consensus

The city manager did not immediately get a consensus on using the proposed tax rate from the council.

Mayor Emery Doughtie said during discussion, “The thing that bothers me is the budget keeps going up. We have less and less people that own homes. We’re taxing them more and more.”

The mayor said, “It doesn’t take anybody smart to figure out that’s one reason why people are moving outside of the community because of taxes. That’s why sales taxes are going down because people are moving away.”

Doughtie said he believes the budget “will be a shock to quite a few people, myself included, because most everybody’s property went up anywhere from 30 to 50 percent. It’s going to be a big tax increase on a lot of people. For businesses it might not be critical at all but for somebody who has a modest home, and might have a modest income … they might have less to spend on groceries.”

Councilman Wayne Smith said he liked the fact that the tax rate was proposed at 64 cents per $100. “To me it’s showing the citizens we’re trying to do something so I appreciate you doing that.”

Smith said after the meeting, however, “The revaluation is probably about 8 cents. It’s stated there’ll be no tax increase but a tax reduction but actually to me a revaluation is a tax increase. It shows on my property and it shows on the property we’ve got in Darlington and it shows on everyone’s piece of property in Roanoke Rapids.”

Smith also said he was going to see if the budget can be cut. “I want to compare what the increases are on each one of the department heads and see how much of an increase each department head is doing. I was sincere about her cutting it (the tax rate) 2 cents. I’d like to see it cut more.”

Other revenues

Sales tax collections increased significantly through the pandemic and were impacted positively when the state began collecting sales taxes on internet purchases.

However, Traynham said, “Sales tax revenue is showing signs of cooling off and will be dependent on consumer behavior.”

Staff is projecting conservative, but stable sales revenues in the upcoming fiscal year — $3,887,200.

The city expects to receive approximately $521,793 in Powell Bill Fund revenues, money from the state which is used to maintain, repair, construct or widen streets, bridges, bike paths, greenways, sidewalks, or drainage areas.

As the current fiscal year comes to a close, investment earnings continue to outpace budgeted amounts due to recent interest rate increases, the city manager said. The city anticipates receiving $240,000 in the upcoming fiscal year.

The city expects to see another increase with a revenue estimate of $90,000 from state-collected alcoholic beverage taxes.

The proposed budget is balanced without the use of fund balance.

General fund expenditure highlights

The proposed budget includes a 3 percent cost of living adjustment for employees with a full-year cost of approximately $500,000.

The city’s state-mandated retirement contributions continue to increase, she said, with the rate going from 12.85 percent to 13.6 percent for general employees and 14.1 percent to 15.1 percent for law enforcement. The impact of this increase is $140,000.

Traynham noted that after being quoted a double digit increase for medical insurance, the city’s carrier and staff negotiated the rate down to an approximate 7 percent increase.

The city will enter the upcoming fiscal year with approximately $1,087,519 in currently obligated tax-supported debt among three financial instruments. They include the annual payment of $952,137 on the 2017 Series A theater bond loan and $135,382 on the remaining debt service.

The city will satisfy two debt instruments this fiscal year which will free up $210,000 in the upcoming fiscal year.

Closing comments

Traynham said following the meeting, “It’s a state law that you have to advertise the revenue neutral rate. In 2020, and this was during the pandemic, I don’t think there was a whole lot of growth. There was some sort of anomaly there. Four years before that … property values went down and the city had to adjust its tax rate up.”

Traynham said communities use these adjusted tax rates “to help catch up on things. The city of Roanoke Rapids has not done an intentional tax increase to bring in more revenue since I’ve been employed by the city. We have frozen positions and things like that on the books that haven’t been filled because of those cutbacks.”

Asked if that presented an opportunity to unfreeze positions, she said, “Only if we did some major restructuring in some places. For the first time in years we’re pretty much fully staffed with the exception of a few certified positions. A year ago we had over 20 vacancies.”

While there have been reductions in force, she said believes the key is, “Employee recruitment retention. It’s good management. It’s hiring and bringing in good leadership.”