BERLIN – Merchants, real estate agents and residents voiced their opposition to the town’s proposed 29% tax increase at a meeting Monday.
As the Berlin Town Council introduced an ordinance that would set the town’s property tax rate at $.88 per $100 of assessed value on Monday, citizens once again expressed their frustration with the drastic increase. In advance of the May 13 public hearing on the proposed increase, officials agreed to host another budget work session April 29. Currently, the council is set to adopt a tax rate May 13 and a budget June 10.
“Honestly, I think it’s a good foot forward, but I can’t vote for it the way it is right this moment,” said Councilman Zack Tyndall, who suggested the work session.
As officials formally introduced an ordinance that would change the town’s tax rate from $.68 to $.88 in front of a packed council chamber, Mayor Gee Williams outlined the issues facing the town’s finances — the sewer system’s debt, capital projects and economic development. Williams said that while the town had relied on new development to cover sewer debt for many years, he believed the utility needed a more dependable source of revenue. In addition to the need to pay back the money borrowed from the general fund in recent years, the wastewater utility has outstanding debt of about $15 million.
“Even with Berlin’s revitalized growth, there is not enough revenue to retire the current sewer debt, or to fund other ongoing capital projects that are needed in a town with much older infrastructure,” Williams said. “This has required borrowing that when combined with much higher than projected spray irrigation operating costs, have caused most of the depletion of Berlin’s general fund reserves over the past five years.”
The mayor said to correct the issues, the town needed to raise its water and sewer rates and implement a “sewer customer utility fee charge” to provide a consistent source of funding.
“According to our engineering consultants, this is a common practice in other communities with a sewer utility,” he said.
Williams said other issues included capital projects — the town’s new $3.2 million police station and a request for more funding from the Berlin Fire Company — as well as economic development.
“The pushback from the Berlin business community is disappointing given the town’s longstanding annual commitment of $330,000 for economic and community development,” Williams said. “Berlin has successfully supported economic development within our town. Since upgrading our Economic and Community Development Department from one part-time position to two full-time town employees, the number of downtown Berlin businesses has doubled to over 70 in the past 10 years.”
Though many residents and merchants have asked for an incremental tax increase instead of the 29% jump, Williams said it wasn’t feasible. He said that a 30% increase spread over a three-year period would require additional borrowing from general fund reserves until 2021.
Under such a scenario, he said the town would have $1.8 million in its reserves at the start of fiscal year 2022. He believes the town should maintain a reserve account of $4.5 million, as that represents a year of operational expenses for the town.
Following Williams’ comments, residents and merchants approached the council to express their concerns — as they have for weeks — with the proposed tax increase.
Stephanie Fowler of Salt Water Media read a letter of opposition to the “unprecedented hike” that was signed by 50 Berlin businesses.
“As merchants, we are accustomed to taking a red pen to our budgets and finding ways to trim the fat when times are tight,” she said. “We are used to making hard cuts in order to keep our lights on and our doors open … Ask any small business owner if they have ever forgone a paycheck to make ends meet. We do what needs to be done.”
She said that when the town released its proposed budget, many merchants began reviewing it and had found thousands of dollars of potential cuts. Fowler questioned the town’s hurry to restore its levels of reserve funding.
“Is there something greater, something we don’t know about looming on the horizon that is going to require a cache of funds?” she said. “The borrowing has occurred for several years and it appears as though this administration expects the citizens and merchants to fix it before the tourists go home.”
She said merchants were disheartened by officials’ lack of consideration of what the tax increase would do to residents and businesses.
“We trust you to watch the town’s checkbook as we watch our own,” she said. “This administration seems willing to saddle us with an excessive tax increase without first doing the hard work of scrutinizing each and every line item and without first balancing the budget. It is unprincipled and unfair to task your citizens and merchants with purchasing the rope to rescue you from this hole when you will not put down the shovel that digs it.”
Resident Larry Smith brought up several concerns, including the $90,000 annual cost of special events, and questioned whether elected officials were voting for their own interests or those of the residents.
“I have a real problem with people on this council who have an interest in the community,” he said.
Cameron Drew, a member of the board of directors for the Coastal Association of REALTORS, said the organization’s members sold $102.5 million in real estate in Berlin last year.
“The real estate industry is a huge factor in your town’s overall economic health and you are scaring away both prospective homebuyers and current homeowners,” she said.
Drew said that according to United Way data, 47% of Berlin’s residents live below the poverty level or live below the United Way’s Asset Limited, Income Constrained, Employed Threshold.
“What happens to their homes if they can no longer afford to live here?” she said. “They flood the market with new listings that few people want because the cost to live in Berlin is so high. If they can’t sell, we run into a foreclosure situation and blight takes over your neighborhoods.”
Drew, who presented a petition she said was signed by 200 people against the proposed increase, added the proposed tax increase would make it hard for agents to find buyers for homes in Berlin.
“Just because they can afford it, doesn’t mean they will want to pay it, especially when the level of trust and faith in this government is dwindling,” she said.
Resident John Apple told the council he’d provided Town Administrator Laura Allen with a variety of ideas that could have a positive impact on the budget. Among them were the concept of raising certain fees and reviewing the short-term rentals within the town.
Tyndall thanked Apple for his input.
“The work can be done if you put your mind to it,” Apple said.
Resident Jeff Smith said council members and the mayor had been elected to represent the community.
“When we elected you to represent us we trusted that you would do your jobs, that you would be responsible stewards of our town and our future,” Smith said. “And then we found out you weren’t. You have demonstrated not only financial mismanagement but fiscal negligence. We have lost our faith in you.”
Terri Sexton of the Treasure Chest spoke in support of the town’s spending on special events, which she said benefited residents as well as merchants, and also spoke in favor of the town’s billboard, which was cut in a recent budget work session.
“People need to know how to get to Berlin …,” she said. “Billboards are across the country because they work.”
Laura Arenella, who said she lived in Berlin and worked at Buckingham Elementary School, told the council she and her family would be selling two properties in Berlin if the tax increase was approved.
“I just hope you understand what you’re doing,” she said.
Resident Marie Velong pointed out that based on the mayor’s comments at the start of the discussion, the town would be implementing another fee — to fund ongoing capital improvements — in addition to those previously put forth.
“I really hope you’re listening to all these people,” she said. “This is just insane to expect people to put up with this amount of money.”
She added that officials now had the public input they kept saying they needed.
“You wanted people here,” she said. “They are here and they are telling you this is not acceptable on any level. You have got to do this incrementally and figure out how to cut your budget to match it.”
Resident Jim Hoppa asked whether the budget could be brought to referendum. Though officials didn’t have an immediate answer, they confirmed after the meeting that while the code did allow for referendum it did not apply to the town’s budget or tax levy.
Resident Ali Giska, who said she owned two properties in town, told the council she’d spoken to them last year, when she’d been seeking permission to offer an educational children’s program in the town’s parks. She said she understood the reason her request had been denied, as the council had wanted to protect the interests of taxpayers.
“I believed you when you said that you would protect us,” she said. “You told me that last year when you denied my request. I believed you. I still want to believe you. Please give me reason to still believe that you are here to protect the taxpayers.”
Resident Ted Eschenburg told the council he thought the town should sell Berlin Falls Park.
“Then you would get rid of that debt and you might even make some money in the process,” he said, adding that the town had to stop buying things it couldn’t afford. “Berlin does not have a revenue problem, it has a spending problem.”
Tyndall asked if the council could set another work session to review the budget. His peers agreed and set a work session for 6 p.m. April 29.
“I just think it’d be nice to discuss it as a group,” he said.
Resident Carol Rose, who said she lived in Tyndall’s district, said she’d heard him say in a radio interview that a tax increase might not be needed.
“I’m not quoting you verbatim but you said you were working very hard on budget reductions and there may not be a tax increase or if there was a tax increase it would be very, very small,” she said. “That’s March 29. Here we are and you’re asking for another session. What have you found in your hard work all these weeks?”
Tyndall said he had some ideas on ways to reduce the budget.
“I’m one of five,” he said. “I can’t do it alone. I’m confident that we wouldn’t have to go 29% which is why I asked for that work session.”
Rose said he wasn’t answering her question.
“You said you were working hard to find things,” she said. “What specifically have you found?”
Tyndall encouraged her to attend the work session.
“I don’t have both budgets in front of me,” he said. “I have been working hard. I hope you come on Monday night.”
At the close of Monday’s meeting, Councilman Dean Burrell said he appreciated all the public input but said there had been some unnecessary mean-spirited comments. He also objected to the idea that council members were voting with certain interests in mind.
“When someone questions my integrity as to why and how I cast my vote, I have to take exception to that,” Burrell said. “You may not agree with how I vote or when I vote, but rest assured my votes are my best votes at that time. I would never improperly cast a vote for anything that was not above board and not ethical.”
Councilman Troy Purnell said the council members had to make hard decisions in setting the budget.
“This has got to be one of the hardest decisions I’ve ever had to make up here …,” he said. “I know we need to stem the tide, find out what went wrong in the past and make sure we don’t repeat it.”