Pulaski Council holds hearings on tax, rate increases

No one from the public came forward to speak or made comments online during a series of public hearings held Tuesday evening by Pulaski Town Council.

Hearings were held on a proposed real estate tax rate increase, an increase in the cigarette tax, 8 percent increases in the town’s water and sewer rates and connection fees and the town’s proposed budget and capital improvement plan for the next fiscal year.

Town Manager Darlene Burcham explained to council that, for the first time in state history, all counties in Virginia can – as of July 1 – impose a cigarette tax.

Burcham told council Pulaski County and other localities in the New River Valley are interested in establishing a new standard cigarette tax of 40 cents per pack. The new standardized tax would actually raise the Town of Pulaski’s current tax from 25 cents per pack.

“This will yield significant revenue to the town if you approve the increase,” Burcham told council.

Councilman Greg East said setting the standardized tax rate is a good move.

“Previously, with Pulaski County not having the tax, we basically had a mass exodus of cigarette sales to the county, so this should help our local businesses,” East said.

Burcham said the cigarette tax is “one of those taxes I call a user tax in that it is paid only by the people who choose to buy cigarettes. So, this helps to spread the burden of taxes to others.”

The town’s budget proposal is based on a proposed 2 cent increase in the town’s real estate tax rate from 34 cents per $100 of assessed value to 36 cents.

Burcham reminded council that one of their stated budget priorities for the year is to replenish the town’s fund balance [reserve.]

“The last several years the town’s fund balance has decreased and that’s unfortunate,” Burcham said.

The two-cent increase is designated specifically to the fund balance so, in four or five years, the town can replenish the fund balance to a level comparable to previous years, she added.

“Our auditors would indicate to you the current fund balance level is inadequate,” Burcham said. “You should have enough money available to operate without additional revenues for at least six months and you do not have anything like that.”

East noted the town has about a 6 percent fund balance, but it should have 15 percent, according to the auditors. Burcham said the fund balance now is at between 6 and 8 percent.

Councilman Brooks Dawson said had the town continued on the path it was on previously, there would not be a fund balance.

“You would see a town that would go into the negative with no safety net to handle any issues that could arise. That’s not a path we want to go down,” Dawson said.

Dawson continued that there is a “laundry list” of things that have been done to control every expense and “get our house in order” before going to the taxpayers for more revenue.

At Dawson’s request, Burcham outlined some of the actions and strategies taken to cut expenses and raise revenues aside from tax increases.

“Council expressed the desire to have a realistic budget with good information on revenues and expenses,” Burcham said.

“We have dissected every possible activity in the town government where we might have savings or reductions.”

As an example, Burcham said town staff worked to account for all town phones and determine if all were needed. She said a couple were found sitting in offices not being used.

Such expense cutting is a process, Burcham explained.

Department heads were asked to participate in the budget process and capital improvement planning – something she said they indicated they had not participated in for some time.

Burcham said they looked at what expenses the town is bearing that should be borne by customers due to the special needs or services they might have. For instance, she said if a person pays a utility bill with a debit card and there is a charge from the bank on that transaction, the customer will now pay the charge rather than the town paying it.

“Train station rental fees do not cover our costs,” Burcham said, noting the town must pay someone to clean the station after its rented.

Noting that adjustments to fees and charges are being made, Burcham said the town is “looking at every aspect of the budget for savings including streamlining processes to save time and money.”

Burcham told council this is the first year in some time there has been a competitive process for insurance rates and the town was able to save money and insurance will cost less next year.

“You have a very lean group of employees who do a tremendous job,” Burcham stated. “They are very good at taking direction and looking to do things differently and have reduced expenses in every area.”

“It’s like a kind of cleansing,” Burcham said. “In the past we have kind of lived for the moment. That doesn’t work any longer. This budget positions us to be able to weather whatever comes in a much better fashion.”

Burcham said the budget process was made more difficult this year with the unexpected departure of the town’s finance director. She commended employees Brady Deal and Jackie Morris for their work on the budget.

Councilman Michael Reis noted that the last real estate tax increase in the town was in 2015.

Councilman Jamie Radcliffe said, with this budget proposal, “the town is on the right track – the track we tried to go on years ago but got voted down.”

Burcham also said the town has been very successful in obtaining grants. But she said sometimes getting the grant is the easiest part, and the hardest part is making sure you administer the grant correctly.

“Crossing all the ‘T’s’ and dotting all the ‘I’s.’ Otherwise, you put the town in a payback position. There has been hiccups in past grants,” she said.

“Council asks if there are more grants we can get. Yes, but I don’t think we should apply for any more grants unless we have someone whose fulltime job is to monitor grants and make sure they are properly implemented. So, the one new position in this budget is a grants manager,” Burcham said.

Council took no action on any of the increases Tuesday. Rather it will vote on each at its June 15 meeting.

By MIKE WILLIAMS, The Patriot