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Members of the High Point City Council will spend the next few months deciding how to handle a $6.5 million shortfall predicted for next year's budget.

Just to continue services at the current level would require a 22-cent increase in the property tax rate, council members learned Friday at their annual retreat. The mayor and council members say that won't do.``We're proud that we didn't raise taxes for several years, and now some of these problems are surfacing and the commitments we've made are here,' Mayor Roy B. Culler Jr. said. ``I think there are some areas we can look at.'

A 22-cent property-tax increase?

``No way,' Culler said.

The existing tax rate is 52 cents per $100 of valuation. This year's budget totaled $119 million.

``My concern now is that the council is willing to bite the bullet and do what has to be done,' council member Judy Mendenhall said. ``There are no easy solutions. This is not going to be an easy year.'

In addition to a tax increase, the council discussed restoring a downtown tax district, adding user fees to some city services or eliminating some city programs.

``This time of all times we really need to hear from citizens,' Mendenhall said.

The $6.5 million figure doesn't include shortfalls in the water, sewer and electric funds, which are supposed to be self-sustaining.

``You aren't going to like all the information we're going to give you this morning,' City Manager H. Lewis Price said Friday. ``We do foresee difficult problems with the operational budget for next year.'

Council member Terry Moffitt said he was shocked to hear how much money is needed.

``We don't want to leave future councils in the situation we're in,' Moffitt said.

What's putting the budget in the red are right-of-way payments, reimbursements for developers and interest payments on new bond debt, Assistant City Manager Charlie Martin told the council. The council doesn't have much control over those expenses but could cut from other areas.

The city needs to pay the state $1.67 million as the first of three payments to buy land for the proposed U.S. 311 bypass and will owe $1 million in reimbursements to developers for the cost of water and sewer lines. The council voted last year to reduce the reimbursements - used to entice developers to High Point - to 50 percent instead of the entire cost of installing water and sewer lines.

Martin said the initial budget allows 5 percent increases for inflation but no new employees or services. Martin and his staff will produce a more detailed budget for the council to consider this summer.

The water and sewer funds would be $1.2 million short without a rate increase or additional cuts, Martin said. It would take a 15 percent increase in water rates and an 8 to 10 percent increase in sewer rates to make up the difference, he said.

Lloyd Shank, director of the city's electric department, told the council he will ask for a 10 percent increase to become effective April 1. The increase would mark the first time since 1968 that High Point has not set its rates to equal those set by Duke Power Co., Shank said.

High Point is paying a higher wholesale price for electricity and that has used up the profit the electric fund usually gives to help support general city expenses, Shank said.

Culler said he hasn't made up his mind about an increase in electric rates but says he knows he won't support an increase as large as 10 percent.

``I think we're going to have to look at operations,' he said.

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