Town of Highlands employees will not be getting a cost of living raise during the 2020-21 fiscal year following a vote by the board of commissioners on Thursday, May 7.
During the preliminary budget presentation by town manager Josh Ward the necessity of a 2-percent cost of living adjustment was brought up for board discussion. The total cost to the town, giving each employee a 2-percent raise, would have amounted to $63,400.
“Our employees do a fantastic job and they serve the public every single day, but in the economic climate we are in right now I just can’t see giving a COLA,” commissioner Amy Patterson said. “So many of our citizens are out of work, their businesses are closed, and they are wondering how they are going to make it through these uncertain times. It seems like we should all be in this thing together.”
Patterson added that town employees have strong job security, even in rough economic times, and an insurance package that is better than most people working in the private sector.
Commissioner John ‘Buz’ Dotson, agreed with Patterson and added that he would be willing to consider a COLA that was in line with the Social Security adjustment of one percent.
Mayor Patrick Taylor asked if the COLA could be pulled from the budget but then reinserted at the mid-year budget review session if economic conditions improved over the next six months. Ward asked for a board vote on the matter due to the COLA’s effect on departmental budgets and the document as a whole.
“I can look into whether or not the COLA can be added back mid-year but we do need a decision on this today because it will change a number of the sheets within the budget,” Ward said. “We are just a few weeks out from the complete budget being presented and we will need that time to make the adjustments.”
The commissioners voted 3-2 to remove the COLA with Patterson, Dotson and Brian Stiehler voting for, and Donnie Callaway and Marc Hehn voting against.
Employee health insurance
During a budget work session in March, Ward had informed the board that the town’s health insurance provider had come back with a rate increase for the upcoming budget year.
The amount of increase was uncertain at the time, but Ward was able to shed more light on the situation Thursday.
“For our current insurance plan, the rate increase would be 10.9 percent, so with that in mind we went and looked at other alternatives,” Ward said. “Each proposal we got back came with a rate increase. Some of the plans offered the same level of coverage, some better and some not as good.”
Ward recommended a plan with Medcost, the town’s current provider, at a rate increase of 12.9 percent.
“The reason I chose this plan is because it does feature a copay, where many of the other plans did not,” Ward said. “The increased cost to the town amounts to $74,790 and the increased cost to the employees comes to a combined $13,206.”
Ward added that the town did not have an increase in insurance cost prior to the current fiscal year and since that time claims have increased.
“The rate of increase is based on the previous years claims, and we have had a bad claims year as a town,” Ward said. “Hopefully, in the coming fiscal year we see our claims come back to more normal levels and we can not have a premium increase next year at this time.”
The board voted unanimously to go with Ward’s recommendation.
No tax increase
Ward informed the board that based on the revenue and expenditure projects for 2020-21, the town’s property tax rate and fire tax rate will remain unchanged from the current fiscal year.
“Despite having to budget conservatively due to the current economic conditions related to COVID-19, we feel like our revenue numbers are ones we will be able to reach,” Ward said. “The property tax rate will remain at 0.1565 per $100 of assessed value and the fire tax, which we increased last year, will remain at its current rate.”
Ward added that 0.015 of the town’s property tax rate will be earmarked for road repair and street paving projects. That amount was previously earmarked for parks and recreation projects.
Along with holding the line on the tax rates, the town is also going to keep the current water and sewer service fees and electric service rate.
Ward did note that the North Carolina Local Government Commission has advised towns to prepare for up to a 25-percent reduction in sales tax revenue in the next fiscal year.
“We have always taken a very conservative approach to budgeting sales tax revenue, just because it is so dependent on economic factors outside of our control,” Ward said. “Even when we tighten those projected numbers for next year, we are still in good shape on the revenue side.”
Highlands has a $4.9 million general fund reserve and a $2 million undesignated fund balance currently. Ward did not anticipate any appropriations from those funds in 2020-21.