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The Farmville town council needs to increase the tax rate. There’s no argument on that point, facing a shortfall of just over $1 million and looming federal concerns. The question remaining is how high will it go? Council members offered multiple proposals during their Wednesday, March 13 meeting, unable to settle on a number yet. 

Outlining the issues

But before we touch on the proposals, let’s detail the issues. First is the health insurance rate, which will jump. Health insurance is one of the top three expenses for the town each year. Farmville has been lucky, however, as it hasn’t seen a rate increase in several years. But part of that health insurance pricing is based on the number of employees who accept it. Farmville, like many smaller towns and cities in Virginia, buys their health insurance through the state. That allows smaller operations like Farmville to have more buying power. The rate varies based on the tier that you’re placed in. 

That’s where the surprise comes in. The town of Farmville has 137 employees eligible for health insurance. Up until this year, more than 100 had accepted the town’s plan. But this year, several people withdrew, dropping the town into a lower tier. Virginia had shopped around, only recently deciding to stay with Anthem as a provider. That delayed the details, with Farmville only learning earlier this month that instead of a 1.6% rate increase, because fewer than 100 employees took the insurance, the town will see a 12% rate increase. That 12% increase translates to an extra $244,582.78.

Issue number two is pretty simple. Costs have gone up significantly. The town is having to spend more to pay for everything from repairs to day to day items. At the same time, the American Rescue Plan Act (ARPA) funds are gone and federal grant funding is up in the air. That means either the town has to scale back planned projects or make cuts in other areas. 

A federal issue 

And beyond the shortfall is something the town hopes to get out in front of. Discussions started popping up in December about all municipal bonds losing their tax exempt status. This might be done as a way to find more federal revenue and reduce the national debt. The U.S. House Ways and Means Committee is discussing removing the exemption on interest repayments on municipal bonds, estimating they could generate $250 billion in revenue over 10 years. 

“We’re looking at an expansion of the fire house,” Farmville Mayor Brian Vincent said, giving an example of what impact that removal could have. “(The expansion is) an $11 million project currently that we were going to fund through municipal bonds. If municipal bonds cease to be tax exempt, that price tag jumps. That’s something local governments have to think about, because there’s a bit of uncertainty right now as far as where federal cuts are gonna come from.”

It’s worth pointing out beyond just municipal bonds, the town also primarily funds its bus system through federal dollars as well. 

What are the tax rate alternatives?

Currently, the Farmville tax rate stands at 13 cents per $100 of assessed value. A penny on the tax rate in this decision roughly adds up to $80,000. By comparison when looking at similar sized towns, Brookneal stands at 17, Blacksburg and South Boston are at 26 cents, Bedford is at 28, Crewe is at 30 and South Hill stands at 31. 

To trim from the deficit, Farmville Town Manager Dr. Scott Davis suggests postponing the sidewalk study until next year, saving $110,000. He also proposed doing away with $160,000 for a generator. Those two decisions would trim $270,000. If those two are delayed, then the town budget balances out at a tax rate of 21 cents, not counting the concern over federal dollars or municipal bonds. 

Council member Donald Hunter asked if the town could postpone the planned exercise station and keep the grant to help fund it. That project currently sits at $268,000 in the budget. Davis explained that no, in order to keep the grant, the project would have to be completed during this upcoming budget cycle. However, he hoped to get some funding help for the exercise station from some local groups in the weeks and months ahead. 

Plus, other council members argued, the “fit park” could be an attraction to bring people to town. 

“We will draw people from out of town and guess where they’re going to go with their kids once they go to the splashpad and the fit park?” said council member John Hardy. “They’re gonna run and grab something to eat at one of our local restaurants or they’re going to do some shopping downtown.” 

Farmville Mayor Brian Vincent also saw the “fit park” as a benefit. 

“While we may not have any controls when it comes to the school system, we can create a quality of life in this town that says we value families, children and young professionals and we want them to move here,” Vincent said. 

Scott Davis echoed those comments, saying there needs to be something for the community in the budget. 

“If you’re going to increase a tax, it’s good to have something in the budget for the community to use,” Davis said. “I know they get a lot out of services. But there’s also sometimes the need for something tangible,” speaking about the “fit park”.  

Detailing the tax rate proposals

So what happens with the tax rate? Vice Mayor Chuckie Reid was content setting the rate to balance out at 21. Council member Thomas Pairet suggested 22, to get ahead of the potential federal issues. Council members Daniel Dwyer, John Hardy and Sallie Amos all suggested 23 for the same reason. That would be 23 cents per $100 of assessed value. The group agreed to move forward with discussions based on 22 cents as the proposed rate. 

“This was not easy at all,” Pairet said, speaking about considering a tax rate increase. “I know that we all worry a lot about this. This has not been done on spur of the moment. We have all talked to each other from time to time.” 

The rate stood at 14 cents per $100 of assessed value in 1997, then dropped to 10 cents in 2009, before rising to 12 cents in 2011. It bumped up to 13 cents in 2021. 

And for anyone asking why Farmville doesn’t just simply try to expand, it can’t. The General Assembly has forbidden annexation since the early 1970s. 

“The town of Farmville itself cannot grow physically because we are limited as far as our boundaries are concerned,” Pairet said. “So therefore, whoever lives in the town of Farmville, the only way we can increase that is by trying to attract people to come and live in the town of Farmville, to where we can create more of a tax base. But right now, with what we’re facing, we have limited options about where to get this kind of financing from in order to balance our budget.” 

This is not final 

Again, no decisions have been made. This is not a final vote. There will need to be another vote and a public hearing, before anything actually would change. That hearing has to be advertised in the Farmville Herald beforehand as well. 

Vincent said he wanted people to understand this was not an easy decision. 

“We look at these decisions and try to make decisions that will do the most good for the most people,” Vincent said. “It’s not always an enjoyable process.”