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Martinsburg property values drop for fourth year, general fund could lose revenue

March 23, 2013|By MATTHEW UMSTEAD | matthewu@herald-mail.com

MARTINSBURG, W.Va. — Property values in Martinsburg have dropped for four consecutive years and the city’s general fund could lose revenue next year if the losses continue, city Finance Director Mark Spickler said.

Values this year dropped by about 6 percent, which was a smaller decline than last year’s decrease, Spickler said.

“I guess you’re going in the right direction, but it’s still not positive,” Spickler said Friday.

Altogether, the city has seen property values drop about 35 percent in the last four years, according to budget documents.

Given the economic conditions, Martinsburg Mayor George Karos said Friday the city’s proposed budget for the 2013-14 fiscal year, which begins July 1, is “extremely tight.”

The Martinsburg City Council is set to meet Tuesday at 5 p.m. at City Hall to vote on $29.9 million in budget recommendations for general operations, as well as water and sewer, sanitation, police, fire/EMS services and the city’s parking authority.

Karos said the city has received development-related inquiries that stand to generate more revenue as a result of the Raleigh Street Extension construction project. But Karos also is eyeing a municipal “home rule” bill now pending in the West Virginia Legislature that might ultimately allow the city to implement a 1 percent sales tax and ease the budget crunch.

Spickler said the city needs the money, especially since revenue generated from Martinsburg’s business and occupation taxes has not recovered from the economic downturn.

The city, in fact, has had to absorb a loss of more than $1 million in business and occupation taxes since the 2007-08 fiscal year, according to budget documents.

The tax is collected from anyone conducting business in the city and it is based on gross income. Spickler said the construction on the Raleigh Street Extension project in the current fiscal year has helped offset losses in other sectors of the economy, such as retail. Tax revenue from the Christmas shopping season was bad, Spickler said.

Last year, the city collected about $6.6 million in business and occupation taxes, and Spickler has projected the city will collect $6.5 million by the end of the current year, 

Spickler is projecting the city will collect the same amount of business and occupation tax revenue for the 2013-14 fiscal year, but admits it still could drop more, and noted the Raleigh Street project generated one-time tax revenue for the city.

Karos said many retailers have been interested in decreasing, if not eliminating, the city’s business tax on gross income, but state law, with the exception of a fledgling home-rule pilot program, has limited cities in the state from pursuing other revenue streams.

The pending legislation proposes to continue the pilot program and allow more municipalities in the state to take part in the initiative. Senate and House versions of the bill were pending in the House Government Organization Committee as of Friday, according to the Legislature’s reference and information website.

Because some types of businesses currently are exempt from paying sales tax, Spickler said it is more likely that city leaders would lower the existing tax rather than repeal it altogether.

As it stands now, revenue from the business and occupation tax, along with property and state tax revenue, are projected to account for more than 60 percent of the city’s $14 million general revenue budget for the next fiscal year, according to city documents.

While property values stabilized countywide this year after three consecutive years of decline, Spickler admitted he was a little surprised and disappointed that the values of property in the city continued downward.

Karos said he was disappointed that no pay raises could be budgeted for city employees for the next fiscal year. The last merit pay increase was given in 2011, according to city records.

Given the fiscally lean circumstances, Karos lauded the city’s department heads for containing costs and staying within budget. 

“We’re in better shape than other cities,” Karos said.

To balance the city’s general operations budget, officials have proposed to leave three positions at City Hall unfilled, in addition to not providing employees a pay raise. The budget as presented also does not allocate a total of $200,000 toward the city retirement, computer system and health insurance trust funds.

The city council’s Budget and Finance Committee recommended that the city closely monitor general fund revenue and expenses in the next several months and possibly revisit the unfunded items after July 1.

Aside from the general fund’s revenue concerns, the committee recommended the city address the parking fund’s operating deficit, which is being offset by $21,970 in unassigned funds, according to the recommendations. Two vacant positions are not funded due the deficit.

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