Village of Pinehurst leaders decided not to raise property taxes, reversing their earlier decision, instead opting to balance the Fiscal Year 2021 budget by dipping into cash reserves and delaying or deferring capital projects. The budget, adopted in a virtual meeting with very little comment from the public, stands at $21.3 million, 3% less than the current year. The Fiscal Year 2021 begins on July 1.
The decline of local sales tax revenue as a result of the economic consequences of the COVID-19 pandemic was cited as a reason for the cutback in overall spending. Across the state, the pandemic is threatening businesses and reducing consumer spending, resulting in less sales tax being collected.
Decision Not To Raise Property Taxes
According to Village Manager Jeff Sanborn, the request by the Village Council not to raise property taxes next year was “based primarily on the concerns of the impact on our community due to the economic impact of COVID and what that is doing to our residents, business owners and property owners.”
The previous Village Council had intended that property taxes be increased by half-cent per $100 of valuation each year for four consecutive years beginning in FY 2021. This council made no indication of their plans for future property taxes increases.
Taking a Cautious Approach
In a move that shows financial flexibility, the Village will monitor the amount of revenue collected and decide to move forward on capital projects or defer them into later years. Some of the plans that may need to be postponed are improvements to Magnolia Road, Wicker Park and Cannon Park. Hiring for the new position of Transportation Planner could also be put off and the Welcome Center closed.
“We have approved some projects to go forward as the fiscal year starts on July 1,” said Mayor John Strickland. “But we have deferred many others to see how revenues come along, especially in sales tax. We will not know the results of that for some months. Other programs that are in the budget will only be approved as revenue seems to support them, so we are being very cautious with the budget.”
Use of Reserves to Balance the Budget
The Village will use $1.5 million from its cash reserves to balance the budget next fiscal year. Also called a fund balance, cash reserves are essentially any money left over after the end of the year. Those monies are allowed to be carried over year-to-year and used at the discretion of the Village Council.
Even with the use of $1.5 million, the Village will be able to keep within the recommended guideline of a fund balance equalling 40% of annual expenditures.
~Article and photo by Sandhills Sentinel Reporter John Patota.