County Manager Chris Knopf delivered to the Surry County Board of Commissioners his proposed budget for the coming fiscal year which begins on July 1.
His recommended budget for fiscal year 2024 — 2025 totals $102,976,616 marking a 4.9% increase over the current year. The recommendation included no increase to the property tax rate of 55.2 cents, which is still the lowest in the area.
“It is my opinion that priorities such as county public safety salary increases, facility and property needs, and debt service would be budget priorities. This recommended budget was developed was these items in mind,” he said.
“Many of the requests stand on their own merit, but with a finite amount of funding and so many requests, it was difficult to fund each request,” Knopf advised the board. “My goal was to recommend a budget that should enable the delivery of public services without significant hardship… The impact of inflation can be found throughout the budget”
Diminishing returns
One of the silver linings of the pandemic was that it drove up sales tax revenue for the county. As more people stayed home and shopped online, those sales tax dollars wound up coming back to the county from which the orders were generated.
Knopf said that gravy train is pulling away from the station. “The post pandemic boom in sales tax revenue has come to an end. The long run of double-digit revenue growth that began to slow in fiscal year 2022-2023 has become more pronounced in the current year.”
That decrease in sales tax revenue growth means that the county may have to dip into its savings to balance the budget according to the county manager. “Each year when we balance our budget, we balance it with our fund balance, that is money in our savings account.”
“At this point in time, (Finance Officer Laura Neely’s) best guess is that we will actually spend some of that fund balance allocation which would be the first time since I have been county manager. So that tells me we’re reaching a threshold and that we will have to consider going forward how much of that we want to continue to spend.”
He said a lot of things could happen that could wipe out the need to use the fund balance like a larger than expected sales tax payout “that may wipe out any need for fund balance, but at this point in time, which is different than previous years, it looks like we will have to spend some of that.”
“Inflation is still a major concern. I don’t believe we’re anywhere close to where the Federal Reserve would like to see inflation, we are still hovering above that. In many respects any economic and financial gain that citizens have had is pretty much wiped out by inflation… Inflation for the most part, on average, has cancelled (those gains) out.”
Knopf said that interest rates remain high, and he did not have a crystal ball to predict when they might come down. Those rates coupled with inflation and a tight labor market are yielding a forecast he called, “Somewhat of a mixed bag.”
“One thing is for certain, the sales tax boom which has really benefited local government in this state for the last four of five cycles is not going to be such an advantage for us. We’re seeing a flattening out, we’re not seeing a decline, but we are definitely seeing a flattening out,” he cautioned.
Proposed tax increases
While there is no proposed increase to the county property tax rate, there were some smaller changes proposed that would impact some residents based on where they live. For example, Elkin City Schools requested an increase of their school district tax rate to 12.6 cents from 11.6 cents.
Five volunteer fire departments also requested increases to their fire district tax rate. Central Surry, Pine Ridge, Franklin, and Skull Camp Volunteer Fire Departments requested between 9 and 10 cent increases while Pilot Knob Volunteer Fire asked for their tax rate to be increased 5 cents.
“Those are all requested increases that the board will take up next week at the budget work session,” which Knopf said was planned for June 11.
No part of the county budget will have been finalized before the work session and the public hearing on the budget to be held at the board’s June 17 meeting.
Highlighted increases
Among the budget increases in the proposed $100 million spending plan include $280,000 to fund a wage study at Department of Social Services, like the one the sheriff’s office had conducted. The answers from the study may help guide wage and hiring practices for a department that has struggled with staffing.
One such solution would be to increase wages across all county departments, and the budget hold 2% cost of living adjustment for all employees on the step classification system.
The budget includes an increase of $1,395,517 for the county’s local contribution to the health department of social services which “are going up significantly for the first time in a number of years” due to funding changes he said.
“The efficient delivery of emergency services requires sufficient personnel and the replacement of aging vehicles and obsolete equipment,” Knopf’s report said. The budget holds a proposed $781,049 for new ambulances, medical equipment, and squad cards.
For public education he said, “It is recommended that next year we increase the per pupil amount $25 to $1,305 from $1,280. For capital we are no longer going to be in a twofold funding model, we will go to a single funding model so that we will next year will have $312 per student.”
Increases were also approved for Surry Community College to replace vehicles and repair buildings and, “Surry-Yadkin Works will see a significant increase, almost by a third, because of their enrollment increase for next year.”
The full budget is available now for review on the county’s website: https://www.co.surry.nc.us/. From the main page, scroll down and find the link on the left side of the page under the heading: “FY24-25 Recommended Budget Available.”
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