Wadesboro commissioners reviewed the proposed new town budget during their meeting on Monday evening.
Town manager Alex Sewell presented the 146-page document to the board, which originally had scheduled its budget presentation for the week before, but had been unable to hold the meeting as there wasn’t a quorum.
The town has made — or planned to make — several capital purchases over the last several months, including refurbishing the new police department, building a new fire department, adding the automatic trash pickup service and demolishing the Tollison building across from the town hall.
To compensate for the comparatively high spending this fiscal year, Sewell said he reduced the Fiscal Year 2017-18 general budget by about 6.6 percent ($329,658) compared to last year’s budget. The water and sewer fund went up by about 0.5 percent ($14,548).
“This increase is largely due to committing reserves to fund initial work for proposed infrastructure improvements and a transfer to the General Fund to help fund a fire rescue pumper,” Sewell said in his budget message.
The proposed budget is for a total of $7,711,849, with $4,699,929 in the general fund and $3,011,920 in the water and sewer fund.
Possible rate increases
As of Monday, the proposed budget did not include water or sewer rate increases for residents as long as the Anson County board of commissioners didn’t raise the county’s rates in the new fiscal year.
While the county budget has not yet been approved, the budget proposed on May 24 did include increases in water and sewer fees for both residential and industrial customers, which could raise the town of Wadesboro’s rates.
At the time of the meeting, the proposed budget did not include a tax increase, which the council named as one of its top priorities during its budget retreat earlier this year.
While the town has tightened its hold on its funds after making several large purchases, Sewell believes it will be fine — if the council is cautious.
“Despite obvious challenges, the general fund continues to generally trend toward financial sustainability (at least for the short-term),” Sewell wrote in the proposed budget. “Prior to FY 2014-15, the town was faced with increasing budget deficits over the course of approximately seven years. To maintain the same level of services, the town opted to cover these increasing budget deficits by increasingly spending fund balance reserves. While being able to weather economic downturns without cutting services is one of the many reasons to maintain a healthy fund balance, using reserves to cover budget deficits is not financially sustainable in the long-term.”
With the combination of cutting spending, boosting revenue and an improved economy, the town’s future began to look brighter.
“As a result, revenues exceeded expenditures in FY 2014-15 for the first time in approximately seven fiscal years,” Sewell wrote. “In 2015-16, expenditures exceeded revenues because the town opted to spend reserve funds to purchase a building to be renovated and used as a new police station (a top council priority at the time).”
The town went from a net of -$195,952 in FY 2009-10 to $479,081 in FY 2014-15, dropping to -$74,480 in FY 15-16.
This year, Sewell said he hoped the town would avoid using any reserve funds, and didn’t include the use of any in his proposed budget.
“However, it should be noted that $200,480 in street resurfacing projects from FY 2016-17 were delayed and are scheduled to be completed in FY 2017-18,” he wrote. “Further, the town received approximately $300,000 in loan proceeds for FY 2016-17 for automated trash equipment purchased in FY 15-16.
“Despite this general trend, there are reasons to be concerned about the long-term financial sustainability of the town of Wadesboro,” he continued.
The reasons include current and projected future population declines that lead to a lack of revenue necessary to maintain town services, delays in making capital purchases, and the high — and climbing — cost of health insurance.
Those rising costs mean that each year, the council will have to reduce or cut a service to pay for the insurance, raise taxes or use its fund balance to pay for it. None of those courses are attractive or sustainable.
Sewell’s notes weren’t all doom and gloom. He noted that the efforts of the town, as well as the Anson Economic Development Partnership, have helped to boost the economy in Anson County, and that the state and national economies have shown signs of improvement.
He still cautioned a conservative approach to the budget this year.
Sewell’s proposed budget left expenses over revenues by about $405,050, with that amount paid for by the town’s fund balance to cover street resurfacing, retiree health insurance and contingency funds.
Sewell noted that spending $184,036 to pay for retiree health insurance is “concerning,” since that line item is a reoccurring expense.
The $405,050 drawn from fund balance does take the town very close to the 35 percent ratio of available fund balance to expenditures that it has set as its own rule.
During the meeting before the budget presentation, Wadesboro Fire Chief Mac Sessions asked the council to allow him to purchase a used 2004 truck from the Spartanburg, South Carolina fire department.
The truck would cost $125,000, far cheaper than the $500,000 to $600,000 Sewell and Sessions have found they would need to purchase a new one.
A new truck could mean lower Insurance Service Office (ISO) ratings, which can, in turn, lower homeowners’ insurance.
Sessions estimated that the truck would last his department five to eight years, possibly longer. The town has one other 2004 truck, as well as ones from 1983 and 1987.
The truck would cost $10,000 to $12,000 to equip, and more in taxes, Sewell said.
Sessions said he believed he could remove some items from his current budget to free up funds, and Sewell had further suggestions for budget transfers, leaving a $2,000 shortfall Sewell said he could likely sort out and present a solution to the council by its next meeting.
While Sessions said he would like to install an exhaust system in the new fire department, he felt that a new truck is more important. As the department is being built, the necessary components should be able to be put in place to accommodate a future exhaust system for when the town can afford one in the future, he said.
The council approved the purchase. Final funding details will be confirmed during a meeting later this month.
Sewell said that while the town has the money in its fund balance, he hopes to see if he can figure out a way to keep the expense from driving the town below the 35 percent ratio of available fund balance to expenditures. Sewell typically creates conservatives budgets that intentionally underestimate the amount of revenues the town will bring in, and overestimates the amount the town will spend, in order to leave some grace room. As this year’s proposed budget is also written conservatively, it is possible the town won’t spend all that it has budgeted to.
Sewell added that town employees have continued to seek additional revenues from grant opportunities, reiterating that the town should be fine if it is cautious.
“Rome wasn’t built in a day,” he said, quoting one of his former professors, “However, it was built.”
Reach reporter Imari Scarbrough at 704-994-5471 and follow her on Twitter @ImariScarbrough.