AGENDA #6b
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Recommended Budget Ordinance for the 2005-06 Fiscal Year
DATE: June 27, 2005
The attached budget ordinance would approve a final budget and set the tax rate for the 2005-06 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, a decrease of 5.3 cents from the 2004-05 combined tax rate.
INTRODUCTION
The recommended final budget would allow a decrease in the General Fund tax rate of 4.2 cents (from 51.6 cents to 47.4 cents) and in the Transportation tax rate of 1.1 cents (from 5.9 cents to 4.8 cents). The resulting combined tax rate would be 52.2 cents with one cent on the tax rate equaling $530,000.
Real property was revalued as of January 1, 2005. On
average, real estate property values increased 20%. We calculated the equalization rate,
that is, the rate at which the Town would continue to receive the same amount of total
tax revenues as in the previous year, exclusive of growth.
The chart at the right shows the equalization rates for the General and
Transportation Funds and the comparison with prior year tax rates and the
recommended final budget.
A major issue in development of the 2005-06 budget proposal has been the potential tax rate increase for debt service. In 2005-06, payments for previously authorized debt will increase by about $285,000, and payments on new debt, mainly for the Town Operations Center, will add $1,750,000. The total increase in debt payments will be $2,035,000, equivalent to about 3.8 cents on the tax rate. The tax effect of the Town’s increased debt service of 3.8 cents is greater than the combined tax rate increase over the equalization rate of 2.9 cents by .9 cents.
The Downtown Service District tax rate included in the recommended final budget is 5.3 cents, a reduction from the prior year’s rate of 6.2 cents to the equalization rate.
COUNCIL DECISIONS AT BUDGET WORK SESSIONS
The decreases and increases presented to the Council at the June 15th Budget Work Session 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 October 1. Pay adjustments include $81,780 for special adjustments and $664,220 for general step and merit adjustments averaging 3.78% in the General Fund. At the June 15th Budget Work Session, the Council discussed the possibility of using the allocation of $664,220 for general step and merit adjustments under an alternative plan that would use a 3% step plan for salaries up to the job rate. We have included an alternative amendment that retains the $81,780 for special adjustments and allows the use of a 3% step table. Because of the variation in the number of employees above and below job rate within the various departments, the allocations for general step and merit raises vary slightly from the budget plan using the 3.78% pay plan.
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
· 746,000 Pay adjustments as noted above.
· 62,000 Information systems GIS analyst (9 months).
· 11,400 Equipment Operator for vacuum flusher truck (3 months) - offset by revenues from the Stormwater Management Fund.
· 8,720 Increase Recreation Specialist from part-time to full-time (Apple Chill).
· 70,000 Incentives to retain police officers (9 months).
· 50,900 Budget Analyst (9 months).
· 15,900 Increase Recreation Specialist from part-time to full-time (Special Olympics).
The base budget includes a decrease in the cost of medical insurance additions of$156,560 from $300,300 in the Manager’s Recommended Budget to $143,740.
Operating Costs
· 422,700 Level provided for human service contracts, hotel/motel allocations and contracts with other agencies as follows:
Human Services
o 206,000 Human Services Advisory Board Recommendation.
o 500 Cultural Arts Dinner.
Affordable Housing
o 110,000 Orange Community Housing and Land Trust.
Economic Development
o 9,000 Chapel Hill Visitors Bureau ($58,000 included in the base
budget).
o 30,000 North Carolina Athletics Association.
o 6,000 Orange County Economic Development Commission.
Service to Seniors
o 18,900 JOCCA.
o 30,000 Friends of the Chapel Hill Senior Center.
o 12,300 Orange County Retired Senior Volunteer Program.
· 7,500 On-line Inspections permits.
· (51,580) Elimination of Rental Licensing costs.
· 29,700 First year costs for purchase of a vacuum flusher truck.
· 48,610 Fire Department equipment.
· 18,450 Homelessness initiative.
· 1,900 New Fire Department 1-ton crew cab truck for daily use (first year cost).
· 20,000 IFC Shelter.
· 25,000 Additional contract with Chapel Hill Public Arts Commission.
· 19,000 Increase in allocation to Human Services Advisory Board.
· 10,000 ArtsCenter.
In addition, the base budget in the recommended final budget includes the following items which were not included in the Manager’s Recommended Budget:
· 9,900 Increase in natural gas because of a 13.4% increase in natural gas rates.
· 13,000 Allocation for the Emissions Measurement Program.
· 7,000 Inclusionary zoning ordinance contract preparation.
For the Budget Work Session on June 15th, we included a reduction of $144,780 for middle school resource officers. The reduction was off-set by a budgeted reduction in reimbursement for school resource officers from the Chapel Hill-Carrboro Public Schools. We have received notification that the Chapel Hill-Carrboro Public Schools will be able to restore the funding for the officers. As a result, we will not need to hold three police officer positions vacant as we proposed in the June 15th report. We have restored the Police Department budget and the revenues from the Chapel Hill-Carrboro Public Schools.
Transfer for Capital Improvements
· 886,000 Total proposed additions for Capital Improvements. (See “Capital Improvements Fund” below for details.)
Revenues Changes
· (75,000) Elimination of the rental licensing program.
· 92,000 Increase in inspection fees and permits.
· 40,000 Increase in planning fees and permits.
· 33,500 Increase in parks and recreation fees.
· 60,000 Increase in business license fees.
· 65,000 Increase in engineering fees and permits.
· 151,000 Net increase in commercial garbage rates.
· 10,000 Increase in compactor fees and yard waste container rental rates.
· 5,000 Increase in out-of-county library use fees.
· 41,100 Increase in transfer from Stormwater for vacuum truck and driver.
· 48,800 Increase in transfers from other funds for indirect costs related to
employee pay adjustments.
· 34,400 Increase in transfer from Parking for meter fee increases.
As we described under operations above, we have restored $144,780 in reimbursement from Chapel Hill Carrboro Public Schools for middle school resource officers.
With these additions to the recommended base budget, the final General Fund budget for next year would total $46,354,000. The General Fund budget would be balanced by using $1,515,000 in fund balance reserves and a property tax increase above the equalization rate of 3.2 cents.
Transportation Fund
For the Transportation Fund, the final budget would include the Manager’s Recommended Budget and additions to base budget including the following:
Personnel
· 192,400 Pay adjustments as noted above.
· 52,600 Paratransit Services Supervisor position (9 months).
· 58,530 Electronic Mechanic Specialist (12 months).
· 38,480 Services Attendant (12 months).
The base budget includes a decrease in the cost of medical insurance additions of$57,120 from $103,010 in the Manager’s Recommended Budget to $45,890.
Operating Costs
- 3,740 Employee training.
- 14,940 Maintenance and supplies.
- 14,750 Additional marketing supplies.
- 46,350 Transfer to the General Fund for indirect cost related to raises and new
positions.
- 5,100 Increase in natural gas.
Revenues
· 11,460 Additional advertising revenues.
With these additions, the final recommended budget for the Transportation Fund next year would total $12,255,300. This budget would allow a reduction of .3 cents in the current Transportation tax rate (from an equalization rate of 5.1 cents to 4.8.cents). The proposed decrease in the Transportation tax rate of .3 cents combined with the increase in the proposed tax rate for the General Fund of 3.2 cents would give a combined total tax rate of 52.2 cents for 2005-06.
The Transportation budget does not include additional service requests 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 $290,000 for contractual obligations and recommended additions as directed by the Council. This budget would total $1,176,000 and includes the following additions.
- 76,000 Extraordinary maintenance and emergency repairs.
- 25,000 Curb repairs in compliance with the Americans with Disabilities Act.
- 50,000 Small park improvements.
- 35,000 Greenways.
- 225,000 Police department generator.
- 70,000 Town hall generator.
- 90,000 Traffic signal system upgrade.
- 40,000 Parking lots, bike and pedestrian paths, and greenways
- 100,000 Town Hall telephone system replacement
- 75,000 Fire Station #2 capital repairs.
- 50,000 Library capital maintenance.
- 30,000 Parks and Recreation administration capital maintenance.
- 20,000 Cemetery beautification.
Other Funds
Stormwater Management Fund
The Stormwater Management Fund’s final budget would provide for development of the Master Plan and completion of priority capital projects, and also includes recommended additions as approved by the Council, including the following:
Personnel
- 10,863 Pay adjustments as noted above.
- 49,467 Accounting Technician II (12 months).
- 13,921 Town surveyor additional hours.
Operating
· 41,087 Transfer to the General Fund for a vacuum flusher truck and operator for 3 months
- 4,300 First year cost for the purchase of a staff vehicle.
Grants Fund
Grants already accepted by the Council for 2005-06 total $207,257 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 and natural gas costs. No other changes have been made in other funds.
RECOMMENDATION
That the Council enact the attached budget ordinance reflecting a 3.78% salary increase in accordance with the current pay plan and the other decisions made by the Council during budget work. If the Council would choose to implement the 3% step salary plan, the Council would adopt the alternative budget ordinance.
AN ORDINANCE CONCERNING APPROPRIATIONS AND THE RAISING OF REVENUE FOR THE FISCAL YEAR BEGINNING JULY 1, 2005 (2005-06-27/O-3a)
BE IT ORDAINED by the Council of the Town of Chapel Hill, the following appropriations are hereby made:
ARTICLE I
GENERAL FUND
Department Department Total
Mayor/Council 335,916
Town Manager/Town Clerk 1,148,746
Human Resources 641,809
Finance 1,067,847
Information Technology 841,826
Legal 256,414
Planning 1,043,076
Inspections 750,389
Engineering 992,349
Public Works 10,973,426
Police 10,490,472
Fire 5,917,471
Parks and Recreation 2,394,950
Library 2,065,938
Non-Departmental 7,433,371
GENERAL FUND TOTAL 46,354,000
OTHER FUNDS
Transportation Fund 12,255,300
Transportation Capital Reserve Fund 834,808
Debt Service Fund 4,817,200
Vehicle Replacement Fund 2,869,600
Fleet Maintenance Fund 921,957
Computer Replacement Fund 346,000
Public Housing Fund 1,600,750
Housing Loan Trust Fund 90,080
On-Street Parking Fund 596,660
Off-Street Parking Facilities Fund 1,292,970
Cablevision Public Access Fund 100,000
Library Gift Fund 90,000
Capital Improvements Fund 1,176,000
Downtown Service District Fund 70,000
Stormwater Management Fund 1,638,930
Grants Fund 207,257
TOTAL ALL FUNDS 75,201,512