Tyrone eyes upcoming budget shortfall
The Tyrone Town Council met Feb. 26 for its annual retreat, and while there were a number of items on the agenda, few held such far-reaching significance as the discussion on next year’s budget that takes effect July 1.
Town Manager Richard Newbern provided the council with an overview of the various concerns associated with the upcoming budget. Inside that conversation were a number of financial realities.
Though the town receives revenues from franchise fees, fines, local sales tax revenues and other smaller sources, Newbern noted that the town’s largest source of revenue is in property taxes. And that is where another projected decrease in the county tax digest comes in.
Fayette County’s tax digest lost 6.35 percent of its value last year. In Tyrone a similar reduction was seen, with a corresponding value of approximately $418 million in 2009 turning into a value of approximately $391 million in 2010.
Newbern noted that the current forecast shows that the county could lose another 6-10 percent in value this year. A six percent reduction this year would translate into approximately $61,505 in decreased town revenue over last year while a 10 percent reduction would amount to approximately $102,508 in decreased revenue, Newbern said.
Newbern said that Tyrone for the 2010-2011 fiscal year budgeted for an 8 percent decrease, adding that a 6.2 percent reduction is anticipated.
“So far we’re running a little bit stronger than anticipated,” Newbern said.
And while it is not a silver lining to the dark cloud of a falling tax digest, the point remains that Tyrone has approximately $4.5 million in reserves on hand.
Newbern noted that department budgets were cut by 3 percent in 2009-2010, though those cuts were offset by increases in health insurance premiums and capital project costs. This year, said Newbern, the town is looking at expending money to cover drainage problems and additional increases in health insurance.
In terms of the millage rate, Newbern said the town has not changed the millage rate in eight years. The millage rate currently sits at 2.89 mills. One mill generates $354,699.
Newbern said there are three options that could be utilized to address the likely revenue shortfall. The council could cut expenditures, use reserve funds or adjust the millage.
The council will admittedly be wary of any millage rate increase.
”Since I got here it seems like we’re being pushed to raise the millage rate,” said council member Eric Dial. “Maybe we need to increase the millage but I think the majority of us have said that’s the last thing we want to do. So I hope the staff will think the same way as most of us do.”
Councilman Tracy Young agreed, saying that a millage increase should be the last resort.
Mayor Don Rehwaldt also weighed in on the issue, saying that the town is probably better off now than it had been anticipated to be a year ago.
Newbern said he would present a draft budget in early May.