Can Pinehurst improve its long-term financial outlook by adopting an inflation-adjusted tax rate? This is one of several big-picture policy questions that village leaders mulled during a two-day strategic planning retreat.
“We are in a situation right now, depending on the county’s (property) re-evaluation, where the fund balance will decline over a five-year horizon,” said Village Manager Jeff Sanborn. “This is the first time this has happened since I started.”
Sanborn, the former garrison commander at Fort Bragg, was hired to manage what is currently Moore County’s largest municipality in 2015.
Pinehurst’s property tax rate is set at 29.5 cents, and the village has a historical policy of adjusting to a “revenue neutral” rate following the county’s periodic re-valuations of properties tax values. A revenue-neutral rate would be a lower rate that, because of higher property values, would bring in the same amount of tax dollars as the current rate.
Sanborn said the existing revenue-neutral tax policy can hamstring a municipality, because over time it becomes more costly to provide the same level of service to residents, particularly with Pinehurst steadily growing in population. He noted the modest increases anticipated with inflation are usually more “palatable” to the public than a flat tax-rate increase.
“In the last 15 years, we have done a good job to make sure the tax rate is not bouncing up and down. I think it is very appropriate at the reevaluation to set the taxes at a rate that we can sustain over the next four years, until the next reevaluation,” said Natalie Hawkins, Pinehurst’s assistant village manager.
An inflation-adjusted tax rate would not resolve projected financial pressure “but it sure as heck can help,” she said.
Mayor Nancy Fiorillo said she would favor the proposed policy change.
“I think it is important to adopt a tax rate that goes with inflation...We projected out and our fund balance is going to decrease,” she said, noting the village has a history of not raising taxes. “If we put tools in staff hands to give us a realistic picture that would be more palatable.”
Councilwoman Judy Davis expressed concern that a tax rate tied to inflation created an unknown component.
Hawkins said the calculation that would be used is tied to “historical inflation,” rather than a projected inflation rate.
Sanborn recommended the next budget cycle include different models, with one being the option to adopt an inflation-adjusted tax rate.
Importantly, Hawkins reported that Pinehurst can expect significant non-residential development in the next five years.
“It could be upwards of $100 million, that is 2.5 times what we’ve seen over the previous five years,” she said. “That is something we need to take into consideration as we move forward.”
This potential growth takes into account projected growth in the medical community and anticipated development requests in preparation for the U.S. Open in 2024.
Managing future development and growth, as it relates to both commercial and residential interests, was a uniting thread interwoven throughout the two-day retreat.
Based on historical U.S. Census data, Pinehurst’s population is ticking up at a 9 percent increase every five years. The projected population when the 2024 U.S. Open gets underway will be 18,152 residents.
With growth comes concerns about traffic congestion and the need to coordinate with state transportation officials on future projects, parking limitations particularly in the heart of the village, potential expansion of the village’s extraterritorial jurisdiction, maintaining high quality public safety and other municipal services, and how to create a walkable and connected community.
On the second day of the retreat, the council ranked a list of 14 priorities that were identified by importance, and by urgency.
Items that rose to the top or near the top of both lists included:
* completing the update on the long-range comprehensive plan;
* developing a small area plan for the village “core area;”
* continuing to evaluate potential opportunities to expand the extra-territorial jurisdiction, particularly along travel corridors leading into Pinehurst; and
* consideration of an inflation adjusted versus revenue neutral tax rate.
In a separate but related discussion on growth, Hawkins said the village currently employs the equivalent of 143 full-time staff, a figure she believes will not be adequate based on projected demand for service.
There has been little change in Pinehurst’s staffing over last few years. Currently the village employs approximately eight staff per 1,000 residents; however, in 2009, the village employed approximately 11.6 staff per 1,000 residents.
“We have spent, since the Great Recession, a considerable amount of effort to be as efficient as we can,” Hawkins said.
But understaffing can lead to a decline in service levels to residents and also contribute to costly workforce turnover, she noted.
Basing her report on existing and projected workloads, with the benefits of automated processing and technology now maxed out, she anticipated the need to hire the equivalent of 9.5 full-time staff in the next five years.
Identified “holes” where positions are needed or will be needed include a police administrative assistant, fire inspector, code compliance specialist, building inspector,’ a downtown planner/economic developer, street maintenance worker, solid waste worker, recreation program administrative assistant, human resources specialist, GIS technician and a technology specialist.
“We have gotten as lean and mean as we can. We are just trying to keep up with everyday needs and we are limited in our ability to do what we want to do because there is isn’t a build-in for any extra capacity,” she said.
Village Councilman John Bouldry said public safety was a priority and that he has heard from residents who would like to see increased visibility within their neighborhoods through more frequent patrols and speed enforcement.
Police Chief Earl Phipps said hiring an administrative assistant would allow the department to solve cases fasters, which would put officers back on the roads faster.
“As we grow, administrative needs have pushed us to our limits. Having one person to relieve that pressure value would do us a tremendous amount of good across the organization,” he said.