Published: Jul 11, 2012 10:27 AM
Modified: Jul 11, 2012 10:28 AM
MORRISVILLE - The Town Council wants to clear the air: Morrisville doesn’t have a surplus or a windfall.
At least not anymore.
Morrisville Town Council members recently talked about public confusion over a $700,000 surplus. Confusion, they say that may have colored residents’ opinion over a proposed two-cent tax hike the council considered and later rejected.
“I get out to the community quite a bit as one of the at-large members,” said Councilman Steve Rao. “We all know we are going to have to increase taxes. There’s a lot of citizens out there that are asking why would we increase taxes when we have a surplus?”
Rao, read from a November Cary News article that listed the $700,000 to $5 million surplus.
“This is a marketing problem,” Rao said. “We obviously don’t have a surplus.”
But the town did have a surplus.
Town manager John Whitson told the council in late October that an initial audit showed the town would have a fund balance of 51.73 percent or $11.1 million.
It’s the town’s policy to leave 25 percent to 45 percent in the fund balance, or the town’s savings account, in case of emergencies and to retain a good bond rating.
Dropping the balance to 25 percent would have left the council with an additional $5 million available to spend. At 45 percent the town had $700,000 to spend.
Beginning in February, the town council voted to spend the available funds, or the surplus, on various projects including $500,000 for reconstructing Crabtree Crossing and Slater Road. The council spent about $90,000 to relocate a historic tobacco barn to Shiloh Park, $100,000 for a traffic signal at Morrisville Carpenter Road and Town Hall Drive; $150,000 to help replace police cars and staff vehicles and about $190,000 for a unified development code review.
Questions over the surplus have added to fodder in the tax increase debate between Mayor Jackie Holcombe and Councilman Mark Stohlman.
Holcombe pushed for the tax increase, because she believes the town is overspending. Expenses are exceeding revenues and there is no long term plan to cut spending or increase revenue. In the 2013 budget Morrisville will take $800,000 from the fund balance to break even.
Stohlman argued that Holcombe gave “ a schizophrenic range of financial conditions for the town” and the town’s finances are solid, in a June 25 editorial in The Cary News.
He went on to say a “$5 million surplus had vanished.”
The council never voted to spend up to $5 million in fund balance.
Instead the council–including Stohlman–voted in January to keep the fund balance at 40 percent, leaving about $1.7 million available for spending.
Note: An earlier version of this story had incorrect information about the expense to revenue ratio. Town expenses are exceeding revenues.