May 14, 2007


I have at something in common with Southern Shores Mayor Don Smith; I'm outraged. Southern Shores Town Manager Web Fuller has proposed a town budget that would increase taxes this year. The Coastland Times (Thurs. May 6,2007) quoted Mayor Smith as saying:
"I'm just outraged," ...He related the town had already increased taxes 25% and this increase, at 15%, would create a 40% tax increase over the last 4 years.
Tax increases are certainly a good thing to be outraged about, especially if your paying them. Mayor Smith has a long and loud history of opposing taxes, any taxes, anywhere. There in lies my rub.
There are 2 ways to develop a budget. One way is to take a tax rate target and spend money until you get to the target level then stop. This method makes for great rhetoric and bombast, but it makes for lousy budgets. When revenues are rising money gets spent freely. When there not, important things can get cut.
The second way to develop a budget is to lay out the services that the you need to provide. Set a level for each service; we'll pick up trash once a week, pave 3 miles of roads each year and provide 2 police officers on duty 24 hours a day. Those are standards that are measurable and meaningful. Once the standards are set you project the expenses necessary to meet those service levels; add in your capital projects and commitments and you know how much money you need. Next, you calculate what revenue you can expect from the taxes you don't control. Sales, occupancy and land transfer taxes make up a large share of local budgets so its important to get them right, next you add in fees and miscellaneous revenue and make any adjustments necessary. Finally you calculate the gap between the your expenses and revenue from sources other than property tax. That number generates a tax rate. The services set the target not the tax rate.
This is the hard way, but it is the right way. Using the second method insures continuity in services and actually serves to hold taxes down. You spend only what you need to spend to provide the services that taxpayers want. When shared revenues drop, as they have this year, taxes will go up.
The first method leads to bigger tax increases over time. The CT reports that Southern Shores has been using non-recurring revenues for regular expenses. This is like spending a one time windfall to pay your mortgage. It works fine for a while but eventually the money runs out and the bills come due. It sounds like this may be what is happening in Southern Shores. The budget proposed by Manager Webb Fuller was actually smaller than the budget the Southern Shores Board adopted last year.
Don Smith is outraged about taxes. I'm outraged about leadership. Maybe the CT reporter left out the part of the discussion where Mayor Smith said he would look carefully at the proposed budget or outlined what in the spending plan he thought could be cut. I doubt it, but its possible. No, I believe the CT reported the full extent of the Mayor's remarks, from the hip and off target. I'm outraged that Don Smith would rather provide political theater than good government to Southern Shores.
Mayor Smith didn't vote to adopt the budget last year and my bet is he won't support the budget this year. He will leave the heavy lifting to the rest of his board. Good budgeting makes for good government but good budgeting is hard work. It's a lot easier to be outraged.

Note to self: Find out if Nags Head is planning a resolution demanding a rebate on shared revenues if SS raises taxes.


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