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FINANCIAL SACRIFICES AHEAD FOR WINSTON-SALEM

by Daniel Schere

daniel@yesweekly.com | @Daniel_Schere

The City of Winston-Salem is taking its first look at what might come with the budget negotiation process, and at Monday’s Finance Committee meeting a few council members had the chance to see exactly how the general fund might look on paper six months down the road.

The city is estimated to spend $178.4 million and generate $177.2 million in its general fund in Fiscal Year 2015- 16. With a projected shortfall of $1.2 million, it is a slightly smaller use of the fund balance than this fiscal year’s budget, which has seen the city spend $177.2 million and generate $174.9 million. Much of this is due to a new fund balance policy that requires 12.5 percent of estimated expenditures to be maintained in the city’s general fund.

The largest changes in expenditures were a $1.7 million increase in employment compensation based on a tiered merit system, and a $2.2 million decrease as a result of smaller transfers to other funds.

But on the revenue side, the city has had to make major adjustments in response to changes in tax policy by the General Assembly over the last two years. The legislature’s elimination of business privilege licenses is projected to lead to decrease of $2.3 million in tax revenue. Last fiscal year the city lost only $400,000 as a result of the change and the response was a onecent increase in city property taxes.

But with the elimination of the entire business privilege license tax program, and a voter approved $139 million bond package, residents can expect the tax rate to increase by 2.5 cents. The current rate is 54 cents per $100,000 of assessed property they own.

Property taxes are projected to increase $446,000 from growth in real property and motor vehicles. This will be accompanied by a projected $1.05 million increase from sales tax collections and $474,000 that is projected to come from taxes on beer and wine. The city will lose $133,000 as a result of a decrease in funding from the Governor’s Highway Safety Program.

Councilman Derwin Montgomery expressed regret at the idea that the elimination of the privilege license tax would have a detrimental effect on the city of Winston-Salem.

“You negate the $2.3 million that goes away from business licensing based on what our gap is currently, our forecast would actually have us above if the state had not changed the privilege licensing tax,” he said.

Montgomery’s sentiment is shared by others on the council who frequently make trips to Raleigh to voice their concerns about the effect of decisions made at the state level and advocate for projects in the coming year. Committee chairman Robert Clark said a delegation would be meeting with legislators in two weeks to discuss the agenda for next year. It totals more than $28 million and is composed of four parts that include transportation, public safety, economic development and water resources. The transportation section features projects like the redevelopment of Union Station, the eastern extension of I-74 and the Brookstown redevelopment. The public safety portion includes a wireless data network, improvements to the public safety center and Fire Station 19, a firearms training facility and a forensic science improvement grant. The economic development section includes $487,000 for an airport business park and the water resources portion is $3 million set aside for the 2007 Water Resources Development Act. At the end of the presentation, councilman Robert Clark asked attorney Angela Carmon whether the city would continue to receive revenue from sweepstakes operations. She replied that it should not be factored into the budget.

“Sweepstakes I think we should no longer count on to be in our revenue sources,” she said.

Carmon said revenue generated per year from sweepstakes was around $500,000. When Clark asked about the potential for replacement revenues, Carmon said she was not optimistic there would be any.

It is unclear whether the businesses will continue to operate in Winston- Salem due to a ruling by the North Carolina Supreme Court in November that determined there was no difference between sweepstakes with prereveal and post-reveal software. The city of Greensboro has decided to shut down all of its sweepstakes operations by March 1. They are currently legal in Winston-Salem in zones designated as Highway Business, but under the current rules those located outside of HB areas must relocate by June 30, or they will be forced to shut down. !

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