Local governments

For towns and counties who are now in the midst of developing annual spending plans, the related combination of the state’s budget shortfall and the lagging economy are producing an unprecedented situation.

“I said last year that that was the most difficult budget we have ever had to deal with,” Galloway told the Waynesville town board last week at a budget work session. “Forget that. Last year wasn’t even close to this year.”

Waynesville held its first budget workshop last week, and the challenges it is facing are representative of what is taking place throughout the state. And from the dire warnings of Galloway, it appears aldermen and county commissioners will be faced with a difficult budget season.

Galloway said Waynesville is anticipating having to take $954,000 from its fund balance to meet spending needs. In addition to the state’s withholdings of the beer and wine tax, utilities franchise tax, senior citizens tax exemption refund, and inventory taxes, the town is also facing a huge increase in its health insurance costs. All told, insurance costs are expected to rise as much as $500,000 this year.

The slow economy is also directly affecting the town in other ways. Galloway has budgeted for a $100,000 decrease in sales tax revenues due to reduced consumer spending and a $100,000 reduction in investment earnings. Census figures also reduced the town’s population by 631 citizens, reducing monies returned by the state that are based on population.

“In all actuality, we were prepared to handle our own problems — the reduced sales tax, the insurance hikes, and all the others. What we were not prepared for was the state’s shortfall,” said Galloway.

But Galloway — and probably other managers — are already fearing for next year. At a recent League of Municipalities meeting, Galloway said there was some discussion that other funds may be reduced or even disappear next year.

“They started talking about the Powell Bill money. That is the first time I’ve heard that even mentioned as a possible state withholding,” said Galloway.

Powell Bill monies are allotted to towns for road repairs, bridge construction and other road-related projects. Waynesville received about $350,000 from Powell Bill monies last year.

Galloway said the state’s fiscal crisis has been partly caused by its support of “great programs” like Smart Start and trying to get teachers salaries up.

“You can’t knock those, but it’s hitting us hard.”

Library

Findlay held an emergency meeting with the board of the Fontana Regional Library System last week after learning from the state that the system would lose $50,000 in expected funding for May and June. That reduction comes on the heels of another $25,000 reduction earlier in the budget year, which means the system has lost almost 5 percent of its $1.5 million total budget for this fiscal year. State aid, though, has been reduced from an expected $318,500 to $269,065. That comes in addition to an earlier 7 percent budget reversion.

In order to handle the cutbacks and not have to close libraries, shorten hours or lay off employees, Findlay and the board enacted a number of emergency measures.

° New and increased fees will be levied.

° The purchase of books, videos and other materials will be frozen for the remainder of the year.

° Out-of-region training and travel will be completely eliminated.

“We don’t want to, but we are going to have to charge for services we never have charged for in the past,” said Findlay.

Board president Barbara B. Reitt of Highlands said the Fontana system is committed to maintaining the same level of service at its six libraries despite the cuts.

“The library patrons in the Fontana system have paid for their libraries with their taxes, and we must do everything possible to continue to serve them well,” said Reitt.

Budgets for libraries have been increased by the state just one time in the seven years she has been with the Fontana system, said Findlay.

“We had been tightening our belts already. There is not fat or superfluous positions,” said Findlay.

The six libraries operated by the Fontana system include the headquarters at Mariana Black Library in Bryson City and branches in Franklin, Nantahala, Cashiers, Sylva and Highlands. Findlay said the regional system is the primary library for homeschoolers and charter school students.

As Findlay surveys the options for dealing with further budget cuts, she does not like what she sees.

“If more cuts are on the way, we are looking at summer reading programs, for crying out loud. That is one of our basic programs,” said Findlay. “If education is important to this state, we need to look real hard at what we’re doing.”

“It’s devastating to all the progress we have made over the years,” said Findlay. “I’ve been in public libraries for 30 years, and it’s as bad as I’ve ever seen it.’

Jennifer Pratt is head of the Haywood County library system, which stands to lose about $17,000 in state aid. It is not in as bad shape as some smaller systems, but the cuts will have an effect, she said.

“We’re probably going to end up losing about $8,000, and it will come out of books and AV money,” she said.

Pratt said many of the regional library systems depend much more heavily on the state aid because they don’t receive as much local funding. Cuts at Fontana and the Nantahala system (serving three far western counties) will be “frightening,” she said.

Schools

Associate Superintendent Anne Garrett in Haywood County said communications with the state are changing on an almost daily basis. That means that school officials are on edge as they try to formulate spending plans.

“We first got word that all spending for non-instructional personnel was to be frozen,” said Garrett. “Because of that we were worried about Central Haywood High School and other programs for at-risk students and remediation.”

The following day, however, a clarification cleared up that worry. Now, said Garrett, the state is asking systems to at least wait before they begin hiring for next year.