By MIKE WILLIAMS
There will not be a 3-cent increase in the Town of Pulaski’s real estate tax rate to pay for some capital improvement needs.
Pulaski Town Council will likely instead use about $140,000 from the town’s $1.7 million reserve fund to put toward those needs.
Pulaski Town Manager Shawn Utt had proposed raising the town’s 34 cent real estate tax rate to 37 cents, and earmark the money raised for capital improvement needs only.
Utt told council during their work session Tuesday night, that he did not have clear direction from council on the tax rate issue following last week’s meeting.
He asked that council decide whether it would raise the tax rate or use reserve funds as a one-year stop-gap measure as had been mentioned last week.
Vice Mayor Greg East opened discussion, saying he had given the issue a lot of thought and was leaning against an increase in the tax rate.
“I think we have a lot of housekeeping to do,” said East. “I think we (council) need to hold ourselves accountable, and in doing so take money out of the reserve fund.”
He noted the roughly 19 percent reserve fund – $1.7 million at the end of June 2016 – is “a good place to be.”
East said withdrawing about $100,000 from reserves for the most needed capital improvement items “wouldn’t in any way jeopardize our reserve funds.”
“At the same time, I believe it would send a clear message to the public that we are holding ourselves accountable, and that we need to adopt with this budget a plan to reduce anywhere we can and become more efficient,” East continued.
“I think a tax increase is easy,” East said. “It’s easy to go out and ask the public to give us a three-cent tax increase. It’s a dollar here and a dollar there.”
East said council had to remember it does not know what the county might do on the middle school issue. “There could be a significant increase on that end potentially,” he added.
East said council had to be careful on just making it easy on themselves “without having done our due-diligence to reduce the town’s expenses.”
“If we come back next year and we truly have done that and we have exhausted every measure, and we’re standing here looking at a 3-cent increase, then in good conscious I could support it. But not until we have had that exercise,” East told council.
Councilman Joseph Goodman disagreed.
“You hear all the time that government needs to cut back,” he said. “I don’t like tax increases, but we are stuck in a very precarious situation of – do we invest back into the town and into our staff to make sure everyone has the resources they need to grow our community.
“I think it’s actually easier to take money from reserves than to ask the citizens. Our citizens don’t care if we take money from reserves, but we will hear it if we have a tax increase.
“I think we have to do what’s best for growing our community and that is through a tax increase and permanently fixing it toward capital improvements.”
Goodman said the one thing council has done a “horrible job at” the last ten years is capital improvements.
“Maybe we’ll get a grant or an attorney general settlement – something – and the money fairy comes and gives us something. That’s not going to happen much anymore. D.C.’s not going to have the grants like before,” he said.
“So why not make the tough decision – the really hard decision,” Goodman asked. “When someone asks why we did that (raise the tax rate), we can say we wanted to make sure we had the right equipment and are fixing stuff. We’re not Pulaski County Schools, we’re not fixing things with duct tape. We’re going to fix it right. It’s the same argument with the middle school. Do we fix it or build a new one? At some point, you can’t fix it anymore.”
“I hate it, but I really think the tax increase is the correct thing for where we are right now,” Goodman stated, adding council might want to tie a sunset clause to the increase.
“We know the county’s reassessment is coming up in the next couple of years so – it’s automatic – it expires when reassessment occurs,” Goodman said.
“For the next two years let’s make sure we have money in our budget for capital improvement, and not go rob the piggy bank and say, ‘we’re getting close to 15 percent, but we’re above that so it’s okay.’ All it takes is one generator to fail again and the insurance company say, ‘well it was 30 years old, sorry.’”
Goodman said the town had built the reserves it has now because it was lucky.
“We’ve sold land, Shawn (Utt) did some amazing work coming up with budget surpluses. If we take it from reserves now and have a catastrophe … we need capital improvement funds every single year,” Goodman continued.
“When we started this process four years ago, our reserves were at $600,000, which is a nightmare situation,” East countered. “I certainly agree we don’t want to go back down that road. I’m talking about $140,000. I’m not talking about capital improvement needs for the next 20 years. We’re talking about this year.”
“Taking money from the piggy bank – our reserves – is short-sighted. We have money in our reserves because we sold land for $500,000. Because we sold cell tower rights. There’s only one thing left for us to sell, and then the ability to have the epic success we’ve had with growing our reserves goes away,” said Goodman.
“Until we have budget surpluses in the hundreds of thousands of dollars, the current reserve fund is not going to grow very much,” Goodman continued. “And,” he said, “robbing it to do something because we don’t want to make the tough decision because we’re going to say the same thing government says every year – let’s find more cuts – it just doesn’t work.”
“We’re talking about $140,000,” East responded.
“You say $140,000 like it’s not a lot of money,” Goodman shot back.
“It is a lot of money,” East said, adding the reserves are at $1.7 million.
“I think we need to step back and evaluate, and if we still feel next year like it (tax increase) needs to be done, it will still be there as an option,” East said.
Mayor Nick Glenn stopped the back-and-forth by asking councilmen H.M. Kidd and Lane Penn their opinions.
“I hate tax increases,” said Kidd, noting in this situation, “we damned if we do, and damned if we don’t.”
“I have a hard time supporting tax increases,” said Penn. “Come July I’ll have been on council 19 years, and 17 of those years we’ve raised taxes on something – real estate, decals, meals – maybe we’re doing something wrong. We should not have to raise taxes every single year to balance our budget.”
Penn said he would vote against any tax increase.
Glenn then asked council if there was a motion to raise the tax rate.
“I can see the consensus of council,” said Goodman. “I won’t offer a motion to raise the tax rate. Again, I believe taking money from reserves is egregiously short-sighted. You may think it’s not a bad idea this year or next, but I certainly would not make that mistake in my own home. However, I hear council and I’ll let council rob the piggy bank.”
No motion was made and the real estate tax rate will hold steady at 34 cents per $100 of assessed value.