Southern Pines Town Manager Reagan Parsons has unveiled a preliminary $14.8 million budget for 2011-2012 that does not raise taxes, cut services or lay off employees.

“We’re in a solid holding pattern, not doing a lot of new and exciting things,” Parsons said Tuesday. “The focus is on maintaining existing services and capital. But we’re also not in dire straits financially like a lot of other communities across the country.”

Parsons and his staff began working on the budget in January amid tremendous uncertainty because of a slowly recovering economy and a large state budget deficit.

“Many questions remain as to how the state budget deliberations will ultimately effect cities and counties,” Parsons told the Town Council in an April 13 memo.

Two days later, he presented the preliminary budget to council members at their annual retreat.

“This is just the first step with the Town Council and the public,” Parsons said.

The council will conduct an initial public hearing on the budget at its May 10 meeting and the second at its June 14 meeting. In between, there will be plenty of budget discussions and updates.

While council member Mike Fields was glad the budget would maintain the current property tax rate, he questioned how much longer that would be the case.

“We’re on the verge of cutting services or raising taxes because our population and tax base are stagnant,” he said. “I don’t know if we can maintain, much less improve, services if the town doesn’t start growing. Growth is important because our population is tied heavily to state disbursements such as sales tax revenue.”

Mayor Mike Haney agreed.

“We have to budget so conservatively on the revenue side because there are so many unknowns,” he said.

The severity of the problem is underscored by the fact that North Carolina has lagged behind the national economy, suggesting limited growth in state-collected revenues during the coming fiscal year, which starts July 1.

In addition, the current rate of recovery from the recession indicates that statewide employment may not recover to pre-recession levels for another three years, according to a memo sent last month to Parsons by the N.C. League of Municipalities.

“Any caveats about the estimates are as important as the estimates themselves,” the memo said.

The most disturbing trend to Parsons, Fields and Haney is that fact that the town’s percentage increase in property tax revenue has declined in each of the past three years.

“It’s the worst three-year trend in recent history, and 2011-2012 is projected to be the worst single year in recent history,” Parsons said. “We try to provide bang for the buck in that the town’s services provide significant return on the tax investment made by our citizens.”

Haney commended Parsons and his staff for developing a budget that is only “painful on one level because we aren’t able to do all that we want to do.”

“The citizens of Southern Pines are receiving a high level of service for a reasonable tax rate, and now we’re getting squeezed due to flat revenue growth,” Haney said. “The uncertainty about future revenue is a very legitimate concern. We just have to be patient and wait for a better day.”

Contact Ted M. Natt Jr. at tnatt@thepilot.com.