County, town to feel state budget crunch

By Lisa Majors-Duff and Lynn Hotaling

Jackson County commissioners learned last week (Feb. 7) that Gov. Mike Easley plans to withhold more than $151,000 in reimbursements - $129,959 from inventory taxes and $21,855 from the elderly/disabled property tax exemption - to help cover an estimated $900 million shortfall in state government.

Though it wasn't discussed during the Sylva board's Feb. 7 session, town Manager Richard McHargue indicated Sylva's projected $66,000 loss in state revenue is mostly due to the governor's decision to target utility taxes.

The largest part of Jackson County's loss in state funds will not dramatically affect this year's budget, finance officer Darlene Fox said. The inventory tax reimbursement was budgeted through the capital reserve fund to finish work on the second story of the law enforcement center currently under construction.

The other almost $28,000 to be withheld from Jackson County will have to be cut from the general fund, Fox said.

Sylva is "in better shape" than many of the state's municipalities because "the town budgeted conservatively," McHargue said.

In addition, the town received some $49,600 in inventory, beer and wine and intangibles reimbursements that was not included in the current year's budget. That revenue, combined with some unused salary money, should offset the $66,000 shortfall, McHargue said.

The effect the cuts will have on Sylva's budget for the upcoming fiscal year is not yet know, McHargue said, but the state's outcome is not likely to improve.

"The question is whether (the governor) will withhold money from local governments again," McHargue said, adding that the state's League of Municipalities is lobbying vigorously against a repeat of this year's cuts in local government funding.

Jackson County officials faced similar budgetary concerns during the last fiscal year, when Gov. Easley withheld some $575,000 in local funds to cover an estimated $800,000 shortfall. A portion of those funds were eventually returned and included in this year's budget.

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