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SU annex about fiscal wellbeing

By Staff | Nov 6, 2009

Mayor Jim Auxer

In November, the Shepherdstown Town Council is going to consider annexing a portion of Shepherd University that includes student housing on the West Campus. (East Campus student housing has been part of the Shepherdstown population for many years.)

This annexation proposal came without much fanfare. As a result, some residents have not heard much about the University’s request. (Please see the Oct. 30, 2009, Shepherdstown Chronicle which provides a comprehensive history of the proposal.)

After a series of public meetings, detailed discussions, and news articles, it became clear that further clarification of the issue would be beneficial. The intent of this column is to provide that clarification based on information that was available, but missed the mark in its delivery. My hope is that everyone can better understand the positives and negatives of this proposal.

The reason for annexing part of Shepherd University is to increase the population of Shepherdstown from about 1,150 to 1,810 by adding approximately 660 Shepherd University students to the population in time for the 2010 US Census. The point is to increase the number of people in the calculation for Shepherdstown’s share of monies from video lottery gambling activities in the State of West Virginia.

Video lottery funds have been used for many years by the Town to fund an array of programs and activities including grants to community groups, purchase and maintenance of equipment like garbage trucks, backhoes, utility trucks and snow plows, and capital improvement projects, including improvements to our parks, the recently completed Streetscape Phase I, and the proposed new Town Hall. Other upcoming projects that will use video lottery money include repaving streets and repairing sidewalks throughout the Town-both long needed improvements.

These funds cannot be used for certain activities, such as directly lowering sewer and water rates; however, indirectly, equipment purchases keep those rates from further increasing.

Also, the Town has followed a policy for several years that video lottery money will not be used for basic operating expenses such as salaries and benefits for town employees. However, from time to time, the Town has used these funds to offset budget shortfalls when revenue did not match projections.

This last issue involves the possibility of using this money for operating costs, an important consideration in this annexation decision. The Town, just as other communities and many businesses, is facing increasing costs to operate; but the Town does not have the ability to easily increase our revenue or income. We already have and continue to find ways to cut costs, but we have little control over many of the major cost items such as heating and fuel, insurance premiums, and routine maintenance. As a result, over the next 10 years, and beyond, it may become necessary to increase the use of video lottery funds to cover operating costs.

The alternatives to raising revenue? Adding $5 to a building permit application is not enough. The alternatives are increasing property taxes or reducing services, neither of which is an easy or desirable solution to the problem.

Video lottery money is distributed to communities in Jefferson County based on US Census numbers, but the distribution formula is determined by the WV Legislature and is subject to change. In other words, the amount of money the Town receives from one year to the next is not guaranteed. However, for now we are assuming the Legislature will not substantially change the distribution method and that the number of people playing video lottery will stay the same.

The net effect of the proposed annexation in terms of money means that potentially the Town will continue to receive the same amount of video lottery funds that it has for the last several years.

Because other municipalities in Jefferson County have increased their population while Shepherdstown has stayed basically the same, without annexation, after the 2010 Census is completed the amount the Town receives would be reduced by about 30 percent.

Another way to look at it is that during the next 10 years, the Town would receive approximately $3.3 million without annexation and up to $5 million if the land is annexed and the video lottery funding system is unchanged. If the issue were only about funding capital improvement projects, $3.3 million would very likely be enough money; but, as noted above, we are being forced to look increasingly to these funds as the way to keep the Town operating.

The net effect of the proposed annexation in terms of the demographics of the Town is that the potential majority of the eligible voting population (about 1,060 of the total 1,810) will be Shepherd University students who live in the dormitories. It is not clear how many of these students would actually qualify as voters in Shepherdstown or how many of them would register to vote in local elections and lose the opportunity to vote in their hometown. However, this would be a permanent change and could not be reversed if the video lottery situation was changed in the future.

The point is that, like it or not, video lottery money is an important and material part of the overall funding for the Town. We use it for capital improvements, equipment, legal bills, and various big-ticket items; every indication is we will increasingly need this money to fund basic operations of the Town.

The decision about annexation is about planning for the future. We all understand the decision to annex has unknowns due to the potential increase in voters.

However, if we take full advantage of this source of funds, we reduce the need in the near future to make even harder decisions about raising taxes or reducing services. In my opinion, the risk of financial problems to the town is a much more certain problem than student voters.

If you see annexation as a negative, please help us identify realistic options to increase revenue or cut the costs of operating the Town. This is something we have focused a great deal of attention on over the last couple of years and the alternatives to increase revenue are minimal.

Please review this information and ask questions for yourself of the Town Council and staff. Then, make your feelings known prior to or at a public hearing that is scheduled for Nov. 9. All of the Town Council members’ e-mail addresses are listed on the Town’s website () and you can always call or stop in at Town Hall to voice your opinions.