City budget compromise ends in .04-cents tax hike

Salisbury’s City Council will not adopt a separate tax rate for residential and commercial property owners and will instead implement a 4-cent tax increase on all properties.

In a budget work session Monday night, council members worked to fill a $1.4 million budget hole created by expiring grants. In the end — after four weeks of discussion — the council decided a tax increase the best course.

The council will meet on the budget for a final time Monday night. The fiscal 2018 spending plan totals $58 million, with $26 million in property tax revenues as the primary cash source. The budget keeps total spending virtually flat.

The new tax rate will be $0.9832 per $100 of assessed value. All city properties currently pay $0.9432.

The the average median house in the city is valued at $117,000. Current taxes at .94 adds up to an annual tax bill of $1,103. With the new tax rate of .98, that same home will pay $1,150.

The council also dipped into its sewer and water surplus fund to slash by half a proposed increase in those services.

The budget had contained a 15 percent hike in water fees; that increase will now be 7.5 percent. For the average water-user/homeowner, the increase will amount to about $5 per quarter.

The account holding city sewer and water impact fees contains $2.5 million; the council will take $1.6 million of that money to forgo the larger rate hikes.

In his original budget proposal, Mayor Jake Day had advocated separate tax structures for residential homeowners and landlords or commercial properties. To encourage homeownership, Day’s budget would have given residential properties a tax cut, while raising the tax on rental properties by 0.08 cents.

Landlords were overwhelmingly opposed to the tax hike and many declared they would pass the increase onto their tenants. The result was that both renters and landlords united in opposition.

Statistics show that 69.1 percent of the city’s housing inventory is rental housing and 85 percent of city rental properties are valued at less than $100,000.

Sensing council members concerns about taxing homeowners and landlords at different property tax rates, Day had offered five revenue-altering options.

“I am extremely pleased with the budget compromise reached at Monday’s work session,” said Council President Jack Heath. “It demonstrated what can be accomplished when reasonable people work together to resolve a problem.”

Councilman Jim Ireton also lauded the final compromise. “I worked hard to find a compromise on each of the budget numbers so it would be fair and wouldn’t hurt the working poor,” he said.

Day had previously said that if the council were to raise taxes on all property owners, he would have no choice but to institute possibly hurtful cuts to keep the rates unchanged.

On Monday, however, he showed support for the final spending plan.

“This budget represents a continuation and expansion of Salisbury’s efforts to grow our economy, improve our quality of life, and make Salisbury one of the great small cities of America,” the mayor said, “and we are doing it while shrinking government spending from FY17 to FY18.

“While I’m disappointed that tax cuts for homeowners and businesses were eliminated, I’m proud that we have started a new conversation about how to create a path to homeownership for more Salisburians with a thoughtful compromise,” Day said.

 

 

Greg Bassett is editor and general manager of Salisbury Independent. Reach him at gbassett@newszap.com

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