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Posted March 10, 2014 | comments Leave a comment

Front Royal leaders split over tax hike

By Alex Bridges

FRONT ROYAL -- A split Town Council approved a tax increase for Front Royal property owners on Monday.

Council voted 4-3 on a first reading to adopt a change to the town code that increases the real estate tax rate from 11 cents to 13 cents per $100 of assessed value. Council must approve the change on a second reading for the increase to take effect July 1. Other tax rates remain unchanged under the amendment to the code.

Mayor Timothy Darr broke the tie vote after expressing support for the increase he said the town needs to move forward on the Leach Run Parkway project and to build a new police headquarters.

"It's the cost of doing business," Darr said. "I, [just] as everyone else up here, doesn't want to have to pay more taxes."

Councilmen Bret Hrbek, Eugene Tewalt and Vice Mayor N. Shae Parker voted in favor of the increase. Councilmen Thomas Sayre, Hollis Tharpe and Daryl Funk voted against the increase.

"Why does that not surprise me?" Darr asked after the six members split on the vote.

In supporting the increase, Parker noted that past councils have reduced the tax rates once the increase has served its purpose.

"We aren't just saying that we need extra money," Parker said. "These are for actual purposes."

Tharpe's motion to include a sunset clause in the amendment that would cause the tax rate to revert to the previous levies once the town pays for the two projects received overwhelming support. However, Tharpe said he couldn't support the rate increase without having more information.

Tewalt said the town has a chance to see the long-awaited parkway move forward but can't take the funds from reserves to pay for the project.

"You can't just keep pulling money out of a bank account without putting money back into it," Tewalt said.

Tewalt explained that a 1 cent increase in the tax rate equates to about $110,000 in extra revenue.

"So that's not a lot of money," Tewalt said.

Parker said the town has been "pretty good stewards" of the taxpayers' money. Parker noted the money the town expects to collect from the increase still doesn't cover the entire cost of the two projects.

Sayre said he planned to bring more materials to the next meeting, when council would likely vote on the tax rates on the second reading. Sayre suggested the town take money from the "enterprise" funds, such as energy services, to help cover some of the cost.

Hrbek questioned the town's use of its enterprise funds to pay for other projects.

"It's immoral to overcharge water and sewer and electric users to hide how much it costs to run the government," Hrbek said.

Funk said he supported the projects but suggested the town delay the construction of the police headquarters, at least until they see designs. Funk said the town should try to pay for a portion of these projects with cash rather than borrow the money.

Council heard comments from two residents at a public hearing held on the change -- one for and one against the increase.

Linda Allen spoke at the public hearing in favor of the proposed increase. She also suggested council create special funds in the budget that the town could use for specific purposes. Allen commended the town for its financial security.

Matthew Tederick criticized council for blaming the police department on the need for higher taxes. Tederick accused council of not doing its job to properly manage the town's spending and claimed it had more than $10 million in savings it could use.

"Yet you're going to raise taxes and there's only one reason -- because you can and that is not right," Tederick said.

Finance Director Kim Gilkey-Breeden explained that the town would have approximately $7.8 million in reserves from all accounts if Front Royal received all expected revenue and spent what it planned for fiscal 2014. However, she noted that enterprise funds, such as energy services, are used for that particular purpose. If the town borrows from any of these funds to pay for other projects, it should repay that money, she said.

In related matters, council voted 6-0 to authorize town officials to buy 5.24 acres of property at the former Avtex site for a new police department headquarters. The property, once used as a parking lot for Avtex, lies on Kendrick Lane between Monroe Avenue and Adams Avenue. The town will pay $36,680 to the Front Royal-Warren County Economic Development Authority for the property. Town Manager Steve Burke explained that the money to buy the land comes from funds collected through a previous 2 cent increase in the real estate tax rate.

After meeting briefly in closed session, council voted 6-0 to approve a motion regarding the acquisition of property needed for the Leach Run Parkway. Specifically, the motion indicates that council supports the purchase of property at 1546 John Marshall Highway and at 1519 Happy Creek Road through the town's continued funding of the debt service of the EDA's capital-expense budget. The terms of the town-county fair funding formula calls for Front Royal to pay 34 percent of the EDA's debt payments.

Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or abridges@nvdaily.com


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