AGENDA #7a1 | Recommended Budget Ordinance for the 2006-07 Fiscal Year

AGENDA #7a(1)

MEMORANDUM

TO: Mayor and Town Council

FROM: W. Calvin Horton, Town Manager

SUBJECT: Recommended Budget Ordinance for the 2006-07 Fiscal Year

DATE: June 26, 2006

The attached budget ordinance would approve a final budget and set the tax rate for the 2006-07 fiscal year at 47.4 cents for the General Fund and 4.8 cents for the Transportation Fund for a combined tax rate of 52.2 cents, the same rates as in 2005-06. The tax rate for the Downtown Service District would be set at 9.0 cents, an increase of 3.7 cents over the prior year rate of 5.3 cents.

INTRODUCTION

The attached budget ordinance would approve a final budget with changes authorized by the Council in budget work sessions. Subsequent to the preparation of the Manager’s Recommended Budget, the final negotiations for medical insurance were completed. The Manager’s Recommended Budget included an estimated 11 percent increase in medical insurance, and the final negotiations brought the medical insurance rates down to a 6.8 percent increase over prior year rates. The $116,000 savings in the General Fund were applied to changes desired by the Council including the establishment of an Economic Development Officer position, grant matches for grants approved by the Council, and additional financing for Southern Community Park. The savings from medical insurance in the Transportation Fund were applied to the increased cost of Workers’ Compensation insurance.

The final budget ordinance includes a reserve in the Downtown Service District Fund for parking initiatives that would be considered after the Parking Committee meets in the fall.

COUNCIL DECISIONS AT BUDGET WORK SESSIONS

The changes to the base budget included in the Manager’s Recommended Budget as well as changes made by the Council in Budget Work Sessions and in regular business meetings are included by fund in the list below. Pay adjustments authorized by the Council have been distributed to the appropriate funds and are proposed to begin on September 26, 2006. Pay adjustments include $92,000 for special adjustments and 3 percent adjustments for employees.

General Fund

The recommended final budget for the General Fund includes the base budget recommendations as presented to the Council and changes directed by the Council as follows:

Personnel

General pay adjustments, as noted above ($590,000).
Special pay adjustments in the Fire and Inspections Departments, as noted above ($92,000)
Five Officers for Downtown Police Patrol (nine months) ($250,000).
Six Firefighters (three months) ($92,000).
Children's/Teen Librarian (nine months) ($37,000).
Traffic Technician (nine months) ($35,400).
Hargraves after-school tutoring program ($29,400).
Part-time administrative clerk, Manager’s Office ($18,100).
Internship program ($16,000).
Economic Development Officer (six months) ($50,000)

The base budget includes a decrease in the cost of medical insurance additions of $116,000 from $342,000 in the Manager’s Recommended Budget to $226,000. A portion of the medical insurance savings ($35,000) has been budgeted for additional workers’ compensation insurance, based on the estimates we have recently received.

Operating Costs

Level provided for human service contracts, hotel/motel allocations and contracts with other agencies as follows, including base budget and additions ($821,900).

Human Services
	Human Services Advisory Board Recommendation	$225,000
Arts
	Cultural Arts Dinner	500
	Chapel Hill Public Arts Commission	150,000
	Arts Center	10,000
Affordable Housing
	Orange Community Housing and Land Trust	124,000
	Affordable rentals	13,500
Economic Development
	Chapel Hill Visitors Bureau	85,000
	North Carolina Athletics Association	30,000
	Downtown Partnership	70,000
	Orange County Economic Development Commission	6,000
Service to Seniors
	JOCCA	18,900
	Friends of the Chapel Hill Senior Center	30,000
	Orange County Retired Senior Volunteer Program	12,300
	Orange County Senior Center	46,700

On-demand on-line video streaming of Council meetings (Town Clerk) ($31,000).
Downtown Economic Development Initiative ($60,000).
Police Mobile Data Terminals ($54,000).
Police software and licenses ($17,700).

Capital

891,000	Transfer for Capital Improvements as presented in Manager’s Recommended Budget. (See “Capital Improvements Fund” below for details.)
56,250	Aquatics Center, ½-year payment on $750,000.
45,000	Southern Community Park, ½-year payment on $600,000.
137,000	General Obligation Bonds ($4.95 million) to be issued in fall of 2006, ½ year payment.

The attached budget ordinance does not include the cost of debt service for the Community Center. Renovations are planned to begin in October. Financing will not be required until January of 2007, so the first debt service will begin in 2007-08. However, we intend to close the Community Center during construction. Some Community Center services are planned for alternative locations, but net reductions in revenues and costs for Community Center operations total approximately $100,000.

Revenues Change

4,200 Concept Plan Review Fee.

In addition, we have proposed changes in the recommended user fees and policies for 2006-07 (see Agenda Item #7a(2)) that will partially offset related costs.

With these additions to the recommended base budget, the final General Fund budget for next year would total $49,190,000. The General Fund budget would be balanced by using $1,879,000 in fund balance reserves and a property tax rate of 47.4 cents.

Transportation Fund

For the Transportation Fund, the final budget would include additions to base budget discussed by the Council:

Personnel

173,000 Pay adjustments for 3 percent raises.
163,600 3.5 Transit Operator II positions for new UNC routes.
12,500 .5 position for the Carrboro feeder route service.

The base budget includes a decrease in the cost of medical insurance additions of $35,000 from $94,000 in the Manager’s Recommended Budget to $59,000. The savings is budgeted for the increase in workers’ compensation costs.

Operating Costs

61,000 Fuel and other operating costs for new UNC routes.
38,000 Transfer to the General Fund for indirect cost related to raises and new

positions.

2,000 Internship program.

With these additions, the final recommended budget for the Transportation Fund next year would total $14,071,500. This budget retains the current tax rate of 4.8 cents.

Additional service requests may be made by the University or Carrboro. Any additions to the budget would be handled through amendments to the adopted budget, with funding for additional service being provided by the requesting party in accord with previous funding agreements.

Capital Improvements Fund

The final Capital Improvements Fund budget would include the recommended base budget of $283,000 for contractual obligations and recommended additions as directed by the Council. We have also included $13,800 from rent revenue for the Sports Arts building for maintenance and repair on that building. In previous years, Sports Arts building revenues and costs have been budgeted in the Multi-Year Capital Projects Fund. The budget with base and additions would total $1,349,050 and includes the following additions.

● 75,000 Extraordinary Maintenance, Emergency Repairs

● 25,000 Curb Cut Improvements - ADA Compliance

● 16,000 Jay Street Paving

● 280,000 Town Hall: Replacement of HVAC Units

● 70,000 Mobile 800 MHz Radios for Fire Apparatus and Command Vehicles

● 95,000 Fire Station #3 Capital Maintenance

● 163,000 Fire Station # 2 Capital Maintenance

● 60,000 Small Park Improvements

● 25,000 Building Condition Assessment Program

● 75,000 Parking Lots/Bike and Pedestrian Paths/Greenway Trails

● 47,000 Greenways

● 20,000 Cemetery Beautification

● 56,250 Aquatics Center, ½-year payment on $750,000

● 45,000 Southern Community Park, ½-year payment on $600,000

Downtown Service District Fund

The Downtown Service has a current tax rate of 5.3 cents and provides $70,000 for the Downtown Partnership. The final budget discussed by the Council includes the addition of a groundskeeper for the Downtown for nine months ($26,700). The budget also includes a provision for a reserve of $37,300 to address parking concerns. The Council established a Parking Committee which will meet in the fall. The reserve would be used at the discretion of the Council once the Parking Committee Report is received. A tax rate of 9.0 cents for the Downtown Service District will provide funding for these services.

Other Funds

Off-Street Parking Fund

The Off-Street Parking Fund has a budget of $1,603,600 and includes seven months of revenue for Lot 5, because of the plans for the Downtown Initiative. If construction is delayed, then both costs and revenues will need to be adjusted mid-year.

Housing Fund

The Housing Fund has a budget of $1,638,561 and includes an estimated subsidy from the federal government. Because the subsidy is now calculated on a calendar year basis, the subsidy must be estimated for the full year. If there is a significant change in the subsidy, the Council may need to amend the Housing Fund budget during the year.

Grants Fund

Grants already accepted by the Council for 2006-07 total $132,472 and are included in a separate Grants Fund.

Other funds have been adjusted to allocate the proposed pay adjustments and the revised increase in medical insurance. No other changes have been made in other funds.

RECOMMENDATION

That the Council enact the attached budget ordinances.