THE DAILY SOUTHERNER
In the world of municipal finances, revenue sources are limited.
There are property and sales taxes and user fees for services, such as water, sewer and electric.
Conversely, expenses come from a seemingly endless list of sources.
While it is a municipality, the Town of Tarboro is also a business. Its day-to-day operations fall on the shoulders of a group of managers who report to town Manager Alan Thornton.
All, ultimately, are responsible to the eight-member town council.
The bottom line is for the town to live within its means but because of prior management practices that is becoming increasingly difficult.
In order to get a quick snapshot, Finance Director Karla McCall presented council members with a series of pie and bar graphs when they met for a planning retreat Saturday at The Fountains at the Albemarle.
The general fund is measured primarily by fund balance while the water and sewer fund, electric fund and solid waste fund are known as enterprise funds, which generate income from fees and operate in a manner similar to a private business. Net assets and operating income, as well as a fund balance, measure the enterprise funds.
Tarboro’s general fund fund balance has increased 90.8 percent from June 30, 2011 to June 30, 2012. This increase reversed a trend of decreases — 45 percent in fiscal year (FY) 2008-2009, 21.6 percent in FY 2009-2010 and 5.0 percent in FY 2010-2011 — that saw the general fund balance drop from $2,364,785 to $967,564.
“The policy of the town has been to pay as you go,” Town Manager Alan Thornton told the gathering. “We don’t really have any capital resources left to do that anymore … we will look a other funding options.”
While the fund balance at the end of FY 2011-2012 showed improvement, it fell short of the recommend levels, which recommend a balance equivalent of three-to-six months of operating expenses.
Total general fund revenues increased 4.9 percent in FY 2011-2012 and 7.6 percent in FY 2010-2011, but a nickel property tax increased generated approximately 46 percent of the total fund balance increase.
Property tax revenues in FY 2011-2012 increased $404,440 from the previous year based largely on an increase in the property tax rate from 36 cents per $100 valuation to 41 cents per $100 valuation.
An increase in sales tax revenue generated an additional $233,751 although revenues through the first seven months of FY 2012-2013 are flat.
In FY 2011-2012, largely because of the property tax increase, revenues exceeded expenses by nearly $1 million — $9,938,914 versus $8,992,454.
Property tax revenues accounted for 39 percent of the town’s income, followed by sales taxes (18 percent) and charges for services (15 percent). Five other revenue sources generated between 2 and 7 percent of the town’s total.
The great majority of the town’s expenses — 71.8 percent — fell into one of two departments, either public safety (42.9 percent) or public works (28.9 percent). Parks and recreation accounted for 11.1 percent, followed by administration, finance and planning/economic development.
When looking at the Water and Sewer enterprise funds, one finds that operating revenues decreased .7 percent and operating expenses increased by 3.8 percent in FY 2011-2012.
The revenue reduction was attributed to a variety of factors, including the use of low-flow toilets and aerators and a continued effort to educate consumers on conservation. Another factor was the weather, which was such that water use for lawns was down.
Revenues were also down in the Electric Fund, where usage was down in 11 of 12 months and electric sales declined for the firs time in five years.
“We had a mild winter and that made a difference,” explained council member Rick Page. Additionally, it was pointed out that while summer was hot, the spring and fall were both mild and allowed persons to not use air conditioning.
Utilities Director Buddy Harrison added another impacting factor — conservation.
“We’re partially to cause for it because we do energy audits and we tell people to conserve whenever they can,” he said with a smile on his face. “Plus, we’ve had a couple of big plants convert to LED lighting, so that makes a big difference, especially when you’re talking about thousands (of dollars) monthly.”
The Solid Waste Fund saw an increase in revenues of 3.5 percent and an increase in expenses of 9.1 percent from 2010-2011 to 2011-2012. A rate increase in FY 2011-2012 from $19.25 to $20.25 per month generated $33,865, but an increase in fees at the county landfill drove the rise in expenses.
Thornton told both staff and council that the overall financial picture for the town is good.
(COMING THURSDAY: The cost of protecting the Tar River.)