MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Public Hearing on the Recommended Budget and Capital Program
DATE: May 12, 2004
INTRODUCTION
The purpose of this memorandum is to provide background information for the Council’s public hearing on the recommended 2004-05 budget, the proposed establishment of a Stormwater Management Fund, the recommended 2004-2019 capital program and on use of transit grants and downtown service district taxes in 2004-05.
We suggest that the Council receive comments tonight in a combined hearing format in which citizens may make comments regarding any of the topics.
OVERVIEW OF THE TOWN’S BUDGET
Through the Town's annual budget process, the Town Council makes decisions on the level and types of services to citizens. The Town’s service year begins on July 1, in accord with State law.
Adoption of a budget determines in many respects the level of resources available for Town services over the coming budget year. Normally, there are limited options for adding to the budget after it is adopted.
The budget process is one of the most important functions and responsibilities of the Mayor and Council, and is a key opportunity for citizens' participation in Town government.
BACKGROUND
Process for Participation by Citizens
Citizens may make comments to the Mayor and Council by letter, fax or e-mail at any time in the budget process.
Notices of the budget forum and hearing were published in the Chapel Hill News on April 28th. Letters inviting citizens to attend and speak at the forum were e-mailed last week to about 200 community organizations and citizens. A copy of the notice is attached.
The Council held budget work sessions on February 11th and 18th with the Town’s Advisory Boards, and held work sessions for presentations by Town Departments on February 25th and 27th. Public forums on the preliminary budget report were held on January 28th and March 24, followed by additional budget works sessions on March 30th and April 28th. The next work session is scheduled for May 19th and the Council may hold additional work sessions as needed.
The budget process adopted by the Council includes consideration of adopting a budget on June 14th. Under State law, the Council must adopt an annual budget or an interim budget by July 1st.
SUMMARY OF BUDGET OPTIONS
The Manager’s recommended budget for the General and Transportation Funds for 2004-05 is presented as a base budget that would continue most General and Transportation services as in past years, and includes recommended additions to the base budget for the Council’s consideration.
General Fund
Under the recommended 2004-05 budget, services would continue as in past years. The General Fund base budget of about $40,323,000 could be funded without a tax rate increase; $197,000 would be available for priority additions.
The recommended General Fund budget of about $43,335,000 contains additions, including the implementation of the Stormwater Management Fund, and would require a tax rate increase of 3.5 cents. Without the Stormwater Management Fund, the recommended budget would require a 6.4 cent tax rate increase.
In the Council’s April 28th Budget Work Session, the Council instructed the Manager to report on budget options that would significantly reduce the proposed tax rate increase, and we are working on development of a revised proposal. The revised proposal will be presented for consideration at the May 19 Budget Work Session.
Transportation Fund
The Transportation Fund base budget and recommended additions would continue fare-free services for all routes. The Transportation base budget of about $11,130,400 would require a .6 cent tax increase to continue serving the higher level of ridership resulting from implementing a fare-free system. The recommended Transportation budget of about $11,384,200 includes additions and would require a tax rate increase of .8 cents.
Stormwater Management Fund
The original recommended budget for the Stormwater Management Fund would total $2,031,200. The Council requested, and we have provided, an alternative budget for the Stormwater Management Fund totaling $1,760,000. The Stormwater Management Fund would: pay for programs necessary to meet the requirements of federal stormwater management regulations; provide for the development of a master plan to identify and schedule stormwater management capital improvements in future years; provide a comprehensive public education and participation plan; and enhance stormwater management services provided by the Town. The fee under the alternative budget would be $39 per year, per Equivalent Rate Unit (ERU) of 2,000 square feet of impervious surface. Fees would be assessed to both residential and commercial properties, as well as to properties that are exempt from ad valorem taxes. Most residential properties in Chapel Hill would be assessed between one and three Equivalent Rate Units.
Key Factors Influencing the Budget
Key Factors influencing the proposed budget and tax rates include the following:
PROPOSED USE OF TRANSPORTATION GRANT FUNDS
Operating Assistance
Operating assistance funds would support services of the public transit system in the Chapel Hill/Carrboro area. We currently operate nineteen bus routes, demand responsive shared ride service and service for people who have disabilities that preclude use of regular fixed route services.
The estimated amount of federal and State operating assistance to be requested for 2004-2005 is $1,024,500 and $1,565,675 respectively, or about 23% of the cost of the transit system.
Capital Projects
Up to $718,664 of federal funds would be requested. In addition, State grant funds (10%) would be requested to help cover matching costs.
Proposed uses of grants are:
· Replacement of two shared ride vehicles, four supervisory vehicles, and nine vans for the mobility impaired services. Funds for ten expansion buses have also been requested and may also be purchased if funds are received.
· Purchase of technology for the bus fleet, including mobile data terminals for the demand response services and a new radio system.
· Purchase of associated capital maintenance items, including air conditioning compressors, bus tires, and engine rebuilds.
Planning
About $180,000 of federal funds would be requested for short-range transit planning projects.
SUMMARY OF THE RECOMMENDED CAPITAL PROGRAM
For 2004-05, the base budget for the capital improvements program would total about $561,000 and would limit costs to funding current installment debt payments and contractual obligations. This base level would include the following:
· $122,000 Annual installment payment on Town Operations Center land
· $163,000 Annual installment payment on renovations at Hargraves Center and A. D. Clark Pool
· $238,000 Meadowmont School Gym payment
· $ 38,000 Annual payment on roof repairs at the Town Hall and Fire Stations #2 and #3
Funding for a capital improvements program at this minimum level would require a transfer of $506,000 from the General Fund, and would be supplemented by $55,000 in estimated cell tower revenue in the Capital Improvements Fund.
Additional funding of $610,000 would be required from the General Fund for the recommended budget for capital improvements, with a total Capital Improvements Fund budget of $1,121,000 for 2004-05. The largest additional projects at this level of funding include:
· $ 50,000 Capital repairs to bike paths, paved trails and public parking areas
· $ 50,000 Small park improvements
· $100,000 Town Hall telephone system replacement
· $ 56,000 Design work for Community Center Capital Maintenance
· $ 51,000 Financing cost of installation of new Town Hall generator (Estimated total cost $340,000, includes $30,000 in reappropriated funds)
· $ 28,000 Financing cost of installation of a new Police Department generator (Estimated total cost $185,000, includes $23,000 in reappropriated funds)
The three projects listed below are recommended to be started in the second half of fiscal year 2004-05 and also are recommended for installment financing. As a result, there would not be any financing cost in 2004-05, because the first payment would begin in 2005-06.
The Town Council established the Downtown Service District in 1989-90 to provide supplemental services in a special district under procedures in State law. Most property with Town Center zoning is in the service district. A few properties used only for residential purposes have been excluded through the Council’s decisions on the district boundary. State law requires using the district tax funds in accord with the Council's service plan for the downtown.
The Downtown Service District Fund would continue at the current tax rate of 6.2 cents, and the funds generated (about $70,000) would be allocated to a new downtown economic development organization being created by the Council. The recommended General Fund budget includes a contribution of $70,000 to the organization.
OTHER FUNDS
For other operating funds, service levels in the recommended budget for 2004-05 would remain about the same as in the current year, including services for the Town’s public housing program and parking programs.
That the Council refer comments and questions to the Manager for consideration and follow-up reports as needed in the budget process.
NEXT STEPS
We will present a follow-up report to the Council at the Budget Work on May 19 that will recommend options for significantly reducing the necessary tax rate increase, as directed by the Council.
The Council is scheduled to consider adoption of a budget on June 14, 2004.
ATTACHMENTS
1. Notice of Public Hearing and notice emailed to citizens regarding public hearing (p. 7).
2. Summary of General and Transportation Base Budgets and Recommended Options (p.10).
PUBLIC HEARING
BY THE MAYOR AND TOWN COUNCIL OF CHAPEL HILL
ON THE PROPOSED BUDGET AND CAPITAL PROGRAM
7:00 pm, Wednesday, May 12, 2004
Council Chamber, first floor
Town Hall, 306 North Columbia Street
Dear Citizen:
You are invited to express your views at a public hearing by the Mayor and Town Council of Chapel Hill at 7:00 pm on Wednesday, May12th, regarding:
· the Town Manager’s recommended budget for Town services and projects in the service year from July 1, 2004 through June 30, 2005.
· the Manager’s recommended capital program for 2004-2019.
· the Manager’s recommended Stormwater Management Fund from July 1, 2004 through June 30, 2005.
· the Downtown Service District taxes in the year beginning on July 1, 2004.
· how to use the 2004-05 federal and State transit grants for public transportation services, capital projects and transportation planning. (Note: If no comments are received the proposed Program of Projects may become the final Program of Projects).
The Town Manager’s recommended budget for the 2004-2005 service year and the proposed capital program for 2004-2019 are available for citizens to review in the Town Manager’s and Clerk’s Offices in Town Hall, at the reference desk at the Chapel Hill Public Library and at the Town’s website.
Under the recommended 2004-2005 budget, services would continue as in past years. The General Fund base budget of about $40,323,000 could be funded without a tax rate increase; $197,000 would be available for priority additions.
The recommended General Fund budget of about $43,335,000 contains additions, including the implementation of the Stormwater Management Fund, and would require a tax rate increase of 3.5 cents. Without the Stormwater Management Fund, the recommended budget would require a 6.4 cent tax rate increase.
The Transportation Fund base budget and recommended additions continue fare-free services for all routes. The Transportation base budget of about $11,130,400 would require a .6 cent tax increase to continue serving the higher level of ridership resulting from implementing a fare-free system. The recommended Transportation budget of about $11,384,200 includes additions and would require a tax rate increase of .8 cents.
The recommended budget for the Stormwater Management Fund would total $2,031,200. The Stormwater Management Fund would: pay for programs necessary to meet the requirements of federal stormwater management regulations; provide for the development of a master plan to identify and schedule stormwater management capital improvements in future years; provide a comprehensive public education and participation plan; and continue and enhance stormwater management services provided by the Town. The Fund would raise approximately $2 million through fees of $45 per year, per Equivalent Rate Unit (ERU) of 2,000 square feet of impervious surface. The fee would be assessed to both residential and commercial properties, as well as to properties that are exempt from ad valorem taxes. Most residential properties in Chapel Hill would have between one and three ERUs, for an annual fee between $45 and $135.
The Downtown Service District Fund would continue at the current tax rate of 6.2 cents, and the funds generated (about $70,000) would be allocated to a new downtown economic development organization. The General Fund would contribute a similar amount to the organization.
The recommended budget includes the following key issues for 2004-2005:
If you would like to express your views in writing at any time, please feel free to send a letter to:
Mayor and Town Council
Town of Chapel Hill
306 North Columbia Street
Chapel Hill, NC 27516
You may also send a letter to the Town:
Town staff will copy and distribute your letter to the Mayor and each Council Member.
If you would like to have additional information, please feel free to visit the Town Manager’s Office at Town Hall or to write to:
W. Calvin Horton, Town Manager
306 North Columbia Street
Chapel Hill, NC 27516
You may also call:
|
Annual budget |
Finance Department (968-2706) |
|
Capital improvement program |
Planning Department (968-2728) |
|
Downtown Service District |
Manager’s Office (968-2743) |
|
Transit grants |
Transportation Department (968-2755) |
or visit our website: www.townofchapelhill.org
We look forward to receiving your comments and questions.
Sincerely,
W. Calvin Horton
Town Manager