BERLIN – Officials in Berlin are expected to consider a two-cent property tax rate increase as the budget process moves forward.
Following discussion at this week’s work session, Mayor Zack Tyndall instructed staff to include a rate of $0.835 per $100 of assessed valuation in the tax rate ordinance to be considered by the council following a public hearing April 24. While council members have mixed feelings on an increase, Tyndall said it would help balance the budget.
“To cover the $220,000 deficit, we suggest a two-cent increase on the tax rate and then covering the remaining capital items, which should be a delta of about $100,000 or so, with impact fees,” he said.
On Monday, Tyndall and town council members discussed the tax rate during an enterprise fund budget work session. Tyndall said the town needed to overcome a $220,000 deficit in the proposed budget. Noting that that figure had been about $325,000 last week when officials were working under the assumption Worcester County would not be providing the requested extra $122,000 in EMS funding, Councilman Steve Green asked what had changed. Tyndall said he was simply basing the budget on the assumption that the town would receive its usual $465,000 unrestricted grant as well as the requested $122,000 from the county.
“We’ve asked for it and we’re relying on that,” he said.
Green said he’d been present when the request was made to the commissioners and didn’t feel comfortable including the additional $122,000 ask for the extra EMS shift.
“I don’t believe we’re getting that,” he said, adding that it was safer to plan for a $300,000-plus deficit.
Councilman Jack Orris said he thought the town could eliminate the deficit by using $400,000 of the $500,000 sitting in the capital reserve fund for town hall renovations. He said that money had initially been surplus funding.
“The only reason it’s in capital reserves is because we assigned it,” he said. “If we want to take the route of unassigning some of that that can help us out.”
Orris said he thought the remaining $100,000 could be used for planning for town hall renovations, as the municipality didn’t yet have any quotes or proposals.
Tyndall said he’d caution the group against using one time funding such as the reserve fund to balance what will be reoccurring expenses.
Green said the elephant in the room was the pay study officials were currently reviewing. The town earlier this year hired PaypointHR to conduct a compensation and classification study.
“I’m ready to talk about it,” Green said.
Green said that while no one wanted to talk about individual salaries in open session, the study identified three separate tiers of employees and those tiers could be discussed.
Councilman Jay Knerr said he didn’t see a reason to wait. Councilman Dean Burrell said until officials decided what aspects of the study to fund they were just blowing smoke. He added that employees felt as if they were always the last part of the budget process.
“If I was working here that would be a hard pill for me to swallow…,” he said. “Those folks need to be compensated accordingly. We’ve got to stop saving staff for last. Where they need to be is up front.”
Burrell asked Tyndall what he saw as the path forward. Tyndall proposed a two-cent tax increase and using impact fees to cover some capital expenses.
Saleh stressed that ongoing budget expenditures shouldn’t be funded with one-time money such as the proposed transfer from reserves.
“Next year expenditures are not going to be any less,” she said. “They’re just not… the prices have doubled for everything.”
Knerr and Green returned the discussion to the pay study, as some of the increases proposed in it were substantial.
“It says we need to raise the salary of 24 people that are substantially below market,” Green said. “That’s tier one.”
He said the goal of the study was to formalize the town’s employee compensation structure and create a step and grade system for staff. That being said, Green reported that the study called for single year increases beyond $8,000 for 13 of the town’s 62 positions. He said the study called for one position to increase three times that much. In total, the increases suggested by the study would cost the town more than $317,000.
“The Town of Berlin, with the budget we have, we cannot do that in a single year,” he said.
Instead, Green proposed capping single year increases at $8,000 for FY 2024 and setting up the step and grade system.
“It’s still significant increases for these folks,” he said, adding that capping the increases and setting up the step and grade system would cost a total of $226,262 for the town.
Burrell said he’d support a two-year plan to implement the study’s findings. Tyndall, however, said it kept the town’s workers below market rate.
Saleh said it sounded like officials were again putting employees last and reminded them her department had recently lost an employee to a job with better pay.
Green said the reason he’d brought up the pay study during the discussion was so employees weren’t left to be the final part of the budget.
Officials went on to make suggestions for potential cuts to the budget, including removing some funding for replacement for one playground structure and cutting the funding for one-time payments to employees, as most would have their salaries adjusted through the pay study. Green suggested cutting the $21,000 budgeted for a new IT server and $20,000 planned for police car video. Tyndall said he’d incorporate those after checking with the town’s IT firm and police department.
Orris continued to advocate for using $400,000 from the capital reserve so fewer cuts would be needed. Tyndall said that funding was meant to be used for other things. Saleh said if the decision to un-restrict the funding was made, the town’s projected deficit would be eliminated.
“But what are we going to do next year?” she said.
Noting that Green had indicated he wasn’t opposed to a two-cent increase and that Knerr had referenced a one cent increase, Tyndall asked Orris what tax rate he proposed.
“The way I had it figured there’d be no need to increase the tax rate,” Orris said.
Burrell and Councilwoman Shaneka Nichols said they weren’t yet ready to weigh in on a tax rate. When staff asked what rate to include in the ordinance up for discussion Monday, Tyndall instructed them to use the $.835 figure and to re-run the budget based on that and including the cuts identified during Monday’s discussion. For a $400,000 property, the amount of annual taxes would jump approximately $80 if the tax rate climbs to $.835.
