Theater takes heavy toll

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Lance Martin

Herald Senior Staff Writer

ROANOKE RAPIDS - A barebones budget proposing a 3-cent property tax increase and leaving nine vacant city jobs unfilled was presented to City Council Tuesday night.

The council's only formal action on the $13,257,077 budget was to plan for a work session on the plan at 5:15 p.m., next Tuesday, June 3 at the Lloyd Andrews City Meeting Hall.

At that time, the council will review the various facets of a budget that city staff believes provides needed services while dealing with limited resources, the financial drain of The Roanoke Rapids Theatre and several years of dipping into the city's emergency funds - the undesignated fund balance - to avoid a tax increase.

City Manager Phyllis Lee told the council members the city's fund balance is in danger of slipping below the state-mandated 8 percent level.

The diminishing fund balance is due in a large part to the impact of the theater. Lee said this year's expenses outpaced revenues by $739,947. That does not mean the city is broke, she said this morning. “It means we spent more than we have taken in - because theater expenses are in there and theater expenses outweighed the revenues.”

The proposed 2008-2009 budget approached funding the theater operations in a different manner - establishing an enterprise fund with $5,589,160.

The city has contributed $1.4 million from the general fund and expects another $3.3 million in theater revenue. Additionally developers George Ragsdale and Michael Dunlow contributed $250,000 to the fund. Lee said $606,000 was transferred to the fund from interest on bond money.

The $3.3 million in revenues is based on projections by Calvin Gilmore, the owner of the Carolina Opry in Mrytle Beach, who has signed a letter of intent to manage the theater. “That's not the final numbers,” Lee said. “We haven't seen the final budget from Mr. Gilmore.” Negotations with Gilmore are still under way.

In an interview prior to the budget's release, Lee said that since 2001 the fund balance has gone from $2.9 million to $1.6 million and could fall lower. “Unanticipated expenses associated with The Roanoke Rapids Theatre this past year have caused our undesignated fund balance to continue to fall. We estimate that by June 30, 2008, it may have fallen by as much as $700,000,” her eight-page report to the council reads.

Lee pointed out that not all of the budget problems can be placed on the theater's doorstep. The city's past attempts to keep from raising taxes and using fund balance money for that, contributed, too. “(In) 2001 is when you see things change,” she said, explaining 2001 was a revaluation year which can have the same affect as a tax increase or decrease.

Putting the theater in an enterprise fund is not only the proper way to account for the venue, Lee said following Tuesday's meeting, but it will not affect the fund balance in future years as the city expects the venue will become self-supporting.

Lee told council she is hopeful the proposed budget will get the fund balance up to 9 percent.

Lee explained, given the consumer price index, tax increases were something the city should have been considering all along. “We should have been adjusting the tax rate based on a tax increase in order to keep up with inflation to provide the same level of service each year without having to draw on the fund balance.”

Under the proposed budget, nine vacant positions will not be filled. Lee declined to go into detail but it is known three are in the Police Department and one each in Planning and Development, the Fire Department and the library.

The Police Department vacancies include one left vacant by the recent retirement of Capt. Andy Moody, the position left vacant by the planned retirement of Lt. Ron Baird and the position of deputy chief, left vacant by the promotion of Jeff Hinton to chief.

While these are considered key vacancies, Mayor Drewery Beale said in an interview before the budget's release to Council he doesn't believe not having someone to immediately fill Baird's position will hamper detectives investigating cases.

The city has reduced the allocation of hours of part-time employees by 25 percent. That move has already affected after-hours rentals and operations at T.J. Davis and Chaloner Recreation Centers as well as hours at the Aquatic Center. It could also reduce the rental hours at Kirkwood Adams.

The budget also affects capital projects, Lee told Council. The city will purchase only one new leaf machine and will purchase as many rollout garbage containers it can get for $26,000.

Only one critical public works issue will be addressed in the upcoming fiscal year, a long-standing drainage problem on Carolina Avenue and Eighth Street, which is budgeted at $50,000.

The only street resurfacing projects will come from money given the city by the state in Powell Bill funds, Lee said, in which the city is slated to get $580,000.

Under the proposed budget, city employees will be without a raise until at least January when the matter is reconsidered. The city will fund a 14 percent increase in its health insurance cost, Lee said.

The city will pass on to residents a 34 percent increase in the county's landfill tipping fee by increasing its solid waste fee from $172 to $188, Lee said.

The budget will fund the city's debt service of $2.3 million, of which $1.5 million is theater debt.

The city will not have to pay principal on the theater debt, Lee told council. That would have meant an extra $500,000 the city would have to account for in the proposed budget, she said.

Both Lee and Beale see the hiring freezes as temporary. “This is a temporary measure taken to minimize the need for a tax increase. These positions are vital to the operation of the city and should be returned to the budget as soon as possible,” the budget message says.

When budget planning was first discussed in February, Beale told Lee to plan the upcoming budget with no tax increase.

Beale said that was not a political move. “We really thought things would be better at the theater. I wish there could of have been no tax increase. You can't re-write the past.”

Beale hasn't backed off believing the theater project will ultimately be successful. “When we went into the theater project, every council member had the same feeling I got and still have got - this will be a good deal for the city.”

Now, with the city negotiating with Gilmore, Beale remains hopeful about the theater's successful future. “He brings to the theater something that we never had from day one - top management, marketing and different types of shows. He brings contact with 36,000 bus companies and 22 years at the Carolina Opry.”

Said the mayor: “Did we make some mistakes? Sure we did. But to sit back and do nothing,” would be a mistake, too.

Ultimately, the city hopes Gilmore will buy the theater “and we'll be out of the theater business and do what we do.”