Ashland budget raises tax on cigarettes, lodging

You could call it smoke and mirrors.

Cigarettes and hotel rooms will help in part to balance the proposed Ashland budget for the coming fiscal year.

Taxes on cigarette sales will generate approximately $50,000 more in the coming fiscal year in the budget proposed by Town Council.

Tuesday, Ashland Town Council unanimously backed an $8,072,917 spending plan that raises the town’s cigarette tax by three cents, its lodging tax by 2 percent and transfers $670,769 from the general fund to adjust for diminished revenues. The tax increases generate a combined $135,800.

Following two budget work sessions with Town Council, Town Manager Charles Hartgrove had proposed increasing lodging by 1 percent and cigarettes by six cents.

Mayor Faye Prichard proposed the specific increases backed by council March 19, saying they help fund town needs while not overburdening citizens. The formula also decreased the general fund transfer originally called for in Hartgrove’s budget.

“My notion here was, while we obviously need to invest in the infrastructure of the town and there are some things that cannot wait, our citizens have not necessarily enjoyed an increase in income,” Prichard said. “An increase on these two items would be an increase on things that are not necessities in family life.”

In presenting the full budget, Hartgrove said he still has concerns about the economy. While it is showing signs of improving, those trends don’t reflect in municipal budgets immediately. As a result, Hartgove said the 2014 and 2015 fiscal years will likely be two of the most challenging for the town to meet its revenue needs.

Overall, the budget marks a 2.3 percent increase over the recently amended 2012/2013 budget.

Included in the budget is an across-the-board raise of 3 percent for all town employees, the first such measure since 2008 and one expected to cost $107,997 in the proposed budget.

The budget also consolidates a $50 monthly employee fringe benefit stipend into a flat $600 bump, something Hartgrove said is revenue-neutral and eases accounting and payroll procedures.

The town also adds one new position in the budget. As a result of unfunded mandates from the state and federal level, the town will need to hire an additional engineer to handle the local stormwater management program. The current position is budgeted at $60,820 for three-quarters of the upcoming fiscal year, as the town would not hire a candidate until the fall.

Healthcare costs for the town are expected to increase 6.4 percent in the coming fiscal year. However, the town has not seen any rise in healthcare costs over the past two years.

On the capital side, the proposed budget adds $780,000 to the town’s capital projects fund to pay for projects that will be underway in the coming fiscal year while also setting aside funds for other capital costs as they arise.

The only hint of dissent among Council came from Vice-mayor Dr. George Spagna, who said he had trouble with the idea of everyone in town not paying directly for the services they receive, as they would through an increase in the town’s real estate levy.

“I had suggested that, though it might be a little bit painful, doing something on the real estate tax, from my perspective, made sense simply because, quite frankly, I don’t smoke and I don’t stay in the town hotels,” Spagna said. “I feel like if I’m going to increase taxes, maybe I should raise my own taxes instead of passing the burden off to the anonymous people out there who pay the taxes I just raised.”

However, Spagna sided with the proposed budget plans and pointed out that as the economic picture improves, real estate assessments may begin to even out.

With council’s consensus to move forward with the budget, it will be advertised in an upcoming edition of the Herald-Progress. The public will be awarded the chance to weigh in on the proposed spending plan before its adoption later this spring.

 

Posted on Thursday, March 21, 2013 at 1:20 pm