Most of us agree that a municipality exists to provide for the common good of its citizens. Without question museums, art centers, sports facilities, and other facilities should be considered useful facilities that benefit its citizens.
The challenge that business owners face is the cost benefit of any service we provide. We certainly understand that a municipality cannot make decisions based upon pure business logic but neither can it be ignored. Obviously, if tax rates have to be increased to fund city operations (directly and/or paying off bonds) this will have a negative impact on recruiting and retaining businesses and residents to and in our city. Often the ones that are most affected by a property tax increase are also those with the ability to move to another area with lower total costs.
The City of Rocky Mount publishes financial and budget information on the web, www.rockymountnc.gov/finance.html and www.rockymountnc.gov/budget.html, but it is not sufficient enough in and of itself to get a clear picture on specific entities. As a result, we requested a line item revenue and expense history for the Rocky Mount Sports Complex, Imperial Centre (Includes Booker T), Maria V. Howard Arts Center, and Children’s Museum & Science Center. This uncovered a 2013 deficit of $3,750,197.90 for the listed entities.
Current property tax rates are $0.58 per $100 of assessed property values (5% property tax rate increase in 2012-2013). It will take $646,585,844 of assessed property tax value to fund the 2013 shortfall of $3,750, 197 that this deficit presents via the Children’s Museum, Imperial Centre (Includes Booker T), Art Center, and Sports Complex.
We believe whenever the city looks at any expenditure or service it should consider the property values needed to support it. According to the City of Rocky Mount “Comprehensive Annual Financial Report” for the fiscal year ending June 30, 2012, property tax receipts were based off of property values of $3,081,120,506.
To cover the $3,750,197 deficit, property tax values have to increase by $646,585,844 or 21% of current assessed tax values. Just in case you fell asleep while reading we are talking about a $3 million deficit which is funded by property taxes assessed on $647 million of property! You could argue another solution is to find savings in other areas of the City to cover this deficit.
We believe local citizens and business leaders should address our concerns with our City leaders and candidly discuss where the money will come from and reflect on the benefit received from each expense. Based on our current economic condition, the revenue will most likely come from tax increases. This reasoning follows property valuations most likely have not increased significantly and thus could not fund such a huge expense.
Our next blog will review the same entities performance for the last six years.