Backtracking from last month’s proposal of no tax hike, Manteo’s finance officer, Shannon Twiddy, proposed a 1-2 cent tax hike in the budget she presented to the town commissioners May 18.

The reason is that when other towns raise their tax rate, Manteo gets a smaller proportionate of shared tax revenue, such as occupancy and meals taxes and the state sales tax. This means that when one town raises taxes, others are under pressure to follow suit or lose money. In her report, Twiddy said, "A review of shared revenue tax calculations show if Manteo has no (tax) increase, an estimated loss of $80,000 is expected. If Manteo increases the tax rate by one cent, there would be an estimated loss of $35,000, and if a two-cent tax rate is implemented, a gain of $8,798 on shared revenues which will also generate an additional revenue source on ad valorem tax assessment values.

This is a result of calculations based on Manteo not having a tax increase . . . and Kill Devil Hills increasing one cent and using a 5.5 (percent) rate increase for Nags Head." Since Nags Head is proposing a split increase, with everyone in the town getting a two-cent increase and oceanfront property owners getting a 16 percent increase, both to pay for the town’s beach nourishment project, this is a rough estimate. Last year Dare County increased the tax rate by two cents," she said, .Southern Shores increased the tax rate by 4.25 cents and Nags Head and Manteo both approved a one-cent tax increase." "I would ask the board to consider a one-cent tax increase," she continued, "which would reduce Manteo’s shared revenue loss from $80,000 for FY 11-12 to an estimated loss of $35,000 or a two-cent tax increase to net an estimated gain of $8,798 for FY 11-12." Shared revenues generate about 35 percent ot Manteo’s budget. Manteo has the largest tax rate of any of the county’s towns, but does not have the ultra-valuable oceanfront property that the other towns have.

The undesignated fund balance is expected to decrease from the 86 percent of yearly operating expenses at June 30, 2010 to 65 percent this year. On June 30,2009, it was 97 percent of yearly expenses, and for many years before 2009, the town had maintained an undesignated fund balance of close to 100 percent. The fund balance is still healthy at about $2.5 million. Twiddy said the Local Government Commission requires towns to maintain eight percent and recommends coastal towns, with their exposure to hurricanes, to maintain a 25 percent fund balance.

"As proposed," she told the board, the 11-12 budget includes an appropriation of fund balance in the amount of $109,720 to balance the general fund, but an additional amount of $353,800 will be needed as a loan from the General Fund to the Water and Sewer Fund . . ." for a total of $463,520.

She said the commercial solid waste truck is in bad condition, but with some work, it could last another year, at which point the town would need to budget for a new one. Mayor Jamie Daniels suggested that if it was in that bad shape and the town could afford it, that they should go ahead and budget it for this coming year.

The water and sewer fund is always a sore point, and the town has taken steps to address the shortfall in this department. A water and sewer rate study was done by the Rural Water Association, but their suggestions have not been brought before the board because Twiddy identified several problems with it. After the bugs are worked out, she will present a water-sewer rate hike proposal to the board. The town increased water and sewer rates once in 2008 and twice the next yer, at an increase of 15 percent each time. The hikes did not generate as much as originally thought because of decreased consumption and water loss due to leaks in the system. The town has identified the large leaks and some small ones ahd have plugged them and has has also undertaken a large (and expensive) meter replacement program, gaining the fund additional dollars. Still, the state has written the town, warning it that its rates must be adjusted to cover expenses.

Though the town has advertised a public hearing on the budget for June 1, they may readvertise it for later in the month to give the commissioners time to review it and have a budget workshop.

In other town business, the board approved the site plan for the proposed new Dare County Farm Bureau building.

The next meeting is set for Wednesday, June 1, at 6 p.m. with the public hearing, if held at that date, set for 4:30 p.m.

Billy Lee Emerson and Hunter Freeman of Withers and Ravenal made a presentation to Manteo commissioners at their mid-month meeting April 20, emphasizing a decentralized approach to stormwater treatment.

This approach would treat the water closer to its source rather than pumping it to local waters as is currently done. Freeman said sandy soil such as ours is ideal to handle run-off. Decentralized small-scale treatment would protect local waters from pollution.

In other business, the board:

* Approved a resolution asking the federal government to fund dredging at Oregon Inlet;

* Approved a resolution to oppose state funding cuts to the cultural and historical arts programs, which includes Roanoke Island Festival Park. The park is slated for a 50 percent funding cut for the next fiscal year;

* Approved a memorandum of understanding with the Coastal Federation for replanting and short-term management of the saltwater stormwater park on U.S. 64 in Manteo;

*The discussion on new water rates was tabled because of an error in the recent rate study by the N.C. Rural Water Association.