That was the preliminary information offered by Elkin Town Manager Lloyd Payne during Elkin's first budget workshop held for town commissioners Monday night.
Because the town's water fund has been operating at a deficit and projections are that it will continue to do so, Payne proposed changing how Elkin charges customers for water usage.
"We now charge $3.30 per 1000 gallons with a $1.40 administration fee," Payne said. "That means that low-using residents pay as little as $4.70 per month for their water. We're proposing a minimum water bill per resident," said Payne.
The water fund is projected to operate at a deficit of $263,062 for fiscal year 2011. With the loss of revenue from the sewer with the new Yadkin Valley Sewer Authority, and the loss of revenue from the residential customers in the Pleasant Hill community, who pay Elkin for their water use, the town is looking at moving to a minimum bill for water customers.
"This percentage rate still wouldn't allow us to break even," Payne said.
The board discussed a possible minimum bill for residential customers of $10 to $12.
At $10 per bill, minimum, increase would generate an additional $58 to $59,000 per year for the town. A $12 minimum bill would generate revenues of approximately $99,000.
"The increase per resident could be 20 to 30 percent," Joe Walker, Elkin town board commissioner said.
"The cost of cleaning the water has not gone up," Mayor Lestine Hutchens said.
"It's not necessarily that the cost of operation has gone up, but the revenue we used to receive from the large industrial users is gone," said Payne.
"We have experienced a lot of the large users of the system going away with the businesses that have shut down or left Elkin. Those industrial users were paying large water bills, which helped to offset the cost of operation. The hole has gotten deeper for us, but we can't continue to take money from the general fund to operate the water.
"It (the water fund) should be a self sufficient and self sustaining fund," he said.
"There hasn't been an increase in water and sewer rates in five to six years," Payne said. "The cost of everything has gone up and local government is no different.
"One year is not going to get us to break even, but if we don't do something, we can't move toward breaking even. A little at a time is much better for taxpayers than waiting where we have no choice and having to raise rates significantly.
While discussing Elkin's diminishing tax base, Payne offered a list of the revenue streams the town has lost over the last several years.
"We've lost 25 percent of revenue, which is a huge loss to the town, in property taxes due to the closing of businesses and their moving of equipment, " Payne said.
"With the loss of Vaughn-Basset's equipment, we lost $784,000 in value, Wal-Mart, $368,000; Candle Corp., 1.26 million; Hugh Chatham, 15.6 million, (this occurred when the county miscalculated what properties should be taxed); True, Inc., $4.78 million; and Yadkin Valley Bank, $668,000."
"Losing the jobs is bad enough, but the buildings are still there and if millions of dollars is moved out in personal property, plus the loss of water use, the impact is phenomenal," Payne said.
Prior to the discussions about the water fund, proposed rate increases and long-term operating deficits at the water department, Payne discussed with the commissioners the overall budget and its projected $1.2 million shortfall.
"At this point, we have a deficit of $1.2 million," Payne told the commissioners.
However, he stressed that the steps the town must take to address the deficit have yet to be decided.
"This is just a snapshot of where we are now, there is no hard and fast recommendation at this point. This is where we start," Payne said.
According to figures provided to the commissioners during the meeting, projected revenues for Elkin in 2011 are $5,655,393. The total projected expenditures for 2011 are 6,839,298, of which approximately $832,000 is "front loaded," said Payne, into the 2011/2012 budget for the construction of Elkin Center, formally known at the Workforce Training Center.
The $832,000, said Payne, will be paid back to the town over the next five years, but must be included as a 2011/2012 because that cost will be incurred during the upcoming fiscal year.
That leaves the budget hole at approximately $1,183,905.
The town operates its budget with a cushion of $3,875,211, referred to as it fund balance.
Those are monies set aside in case of extraordinary expenses a town might incur, like the complete loss of the water plant because of a natural disaster.
However, the state's Local Government Commission, which oversees all state municipality budgets, requires that a certain percentage of a town's budget be maintained at all times.
Currently, said Payne, the town has "unreserved" in its fund balance $2,726,563. This money can be used to offset current fiscal year deficits.
"Although we can use this money, we have to be fiscally responsible and only use what is absolutely necessary," said Payne, which led into the discussions of capital projects that are on the drawing board for the upcoming fiscal year.
Those projected capital projects include:
• equipment for the water plant in the amount of $98,000;
• roof repairs at the Elkin airport, a T-hanger, and safety lighting and fencing in the amount of $66,296, (after a $300,000 grant from the Department of Transportation)
• a projected $300,000 for the tennis court project, $225,000 of which the town hopes to collect from the county, Elkin City Schools, the United States Tennis Association, and private donations;
• $45,000 for the Parks and Recreation Department for the purchase of a back-hoe and new fitness equipment;
• $111,000 for the fire department, $75,000 of which will be used for purchasing the services of an architect to design the new fire department facility. The new facility will be located on C.C. Camp Road across from the State Employees Credit Union.
• Street capital outlay includes $20,000 for the purchase of a used pickup truck;
• approximately $832,000 for the Elkin Center, or workforce training center, as it has previously been called, which, which will be paid back by 2014 using grants, county funds and Surry Community College, netting Elkin $221,000. The building will be completed this year and classes will begin in September of this year.
• public building repairs for roofing at the library, fire department, parks and recreation building, and the town hall will cost $71,954.
• a program designed to allow the town to scan and index all of the town ordinances and post to the Internet, as well as check the validity of the ordinances, will be a net cost of $11,000.
Payne continued to say that while there are a lot of projects proposed that would be good for the town, there's a point where the board must decide which one's are most important and beneficial.
Payne also broke down the town debt service for previous years' capital improvement. They are:
• The town's general fund debt service payments for fiscal year 2011 is a projected $132,790;
• Payment on the town hall building is $31,06
• Phase I of the Corporate Park, $64,844;
• Public Works facility, $36,880;
• The remaining principal on the town hall is $460,865;
• The corporate park, $89,741;
• And the public works facility, $275,000.
The projected cost for economic development includes an additional $33,000 to make Leslie Schlender, Elkin's economic development director, full-time. The proposed economic development expenditures is $144,047.
The general fund expense summaries are as follows; Governing body, $97,174; administration, $155,222; finance, $261,703; legal, $17,480, which includes the cost of adding town attorney, Ray Parker, as an employee of the town and the cost of his FICA.
Those expenses will a projected increase from the previous fiscal year of 1.9 percent.
Other expenditures include planning and zoning, $78,096; Main Street for $57,812; Economic Development, $144,047; Public buildings, $1,048,157, which includes the entire expense for the Elkin Center at a cost of $925,000, that will be funded with grants, leaving an actual net cost to Elkin of $221,000; police, $1,059,571; fire department, $364,869, garage, $58,043; streets, $397,017; Powell Bill, $207,980; sanitation, $213,969; recreation, $942,170; Elkin Public Library, $86,939; cemetery, $23,250; airport, $388,796, which does not include the cost to Elkin for the new medical helicopter base; debt service, $133,600; and non-departmental, $271,403.
The cost of providing health insurance to town employees has increased by 20 percent and the town saw an increase of 40 percent to its workman's compensation policy, due to the injury of an employee in the recreation department.
Town employees will also receive 2 percent across the board pay increase and will be eligible for additional merit pay in January 2011.
Elkin's current tax rate is 47.5 cents per $100 of property valuation. Each cent on Elkin's tax rate equals $42,925 in revenue to the town.
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