AGENDA #1b
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Potential Additions, Reductions and Changes to Recommended Budget for 2001-2002
DATE: May 30, 2001
While these changes would allow the Council to reduce the recommended effective tax increase for next year, it is still unclear what the State budget may propose for next year, and what impact that budget will have on local government budgets throughout the State. There is currently discussion in the Senate about the possibility of additional sales tax authority for local governments in exchange for the local government reimbursements, but the specifics of this proposals are not yet clear. The initial Senate budget recommendations released on Thursday do not provide detailed information on this proposal. Additional information is expected after Memorial Day.
We will provide any additional we may obtain on the State budget at the budget work session or as soon as information becomes available.
The attached table shows the amounts for each of the potential items for consideration, and the tax rate equivalent for each item.
DISCUSSION
Below is a brief discussion of each the items in the attached table. Additional detailed information on most items is included in separate agenda items on the various topics.
Estimated Increases in Sales Tax and Powell Bill Revenues ($285,000)
We have recently received additional information on the Town’s population changes as a result of the 2000 Census, and the effects the population change will have on the distribution of sales tax revenue and Powell Bill funds for street maintenance. This analysis from the League of Municipalities indicates that the significant change in the Town’s official population from 44,429 to 48,715 will result in additional sales tax and Powell Bill revenue for the Town next year. We have reviewed this information carefully and concur with the analysis from the League.
For the sales tax revenue, we estimate total increases of about $180,000 next year based on an increase in the County population resulting in a greater distribution of the two half-cent sales tax revenues to Orange County, and a larger distribution to the Town of both the one cent tax and the two half-cent taxes. The distribution of all sales tax collections within Orange County is based on the relative populations among the Towns within the County. For next year, we estimate the Town will receive a larger share of the distribution based on the increase in population.
For 75% of the Powell Bill revenues distributed based on relative populations in the State, the increase in the Town’s population to 48,715 is expected to result in an increase of about $105,000 in additional revenue.
Reduction in Vehicle Replacment Costs ($90,000)
A separate agenda item in this packet provides detailed information on the vehicle replacement fund. The change proposed by our consultants to consider financing all vehicles and equipment (other than Police patrol vehicles) for seven years instead of five years, would result in savings for next year of about $90,000 in the proposed contribution from the General Fund for this program. We concur with the consultant’s recommendations and recommend this program adjustment to the Council.
Additional Net Revenue from Commercial Garbage Collection Fees ($293,000)
If the Council authorizes additional fees for more than one weekly pickup, we believe a reasonable estimate of the additional revenue would be about $293,000, net of estimated administrative costs of about $18,000. Several budget working papers provide additional detailed information on this topic.
Estimated Increase in Cable Franchise Fees ($35,000)
Based on our latest review of cable franchise fee collections for the last two quarters which appear to have increased significantly due to additional internet service revenue, collections this year (cash basis) total $336,000. Based on this revenue level for the current year, we recommend increasing our budget estimate of revenue next year by $35,000, from $300,000 to $335,000.
We have researched the possibility of using Community Development Funds for El Centro Latino and Club Nova contributions and do not recommend funding from this source. (Please see agenda items # 6c.)
Fund Public Works Lube Pit and Vehicle Washing Facility from Bond Funds ($85,000)
As discussed in agenda item #2b, we have determined that unallocated 1996 bond funds could be used for renovations and improvements to either current or new Public Works facilities. Agenda item # 3e provides additional information on the need to proceed with these projects. We recommend using unallocated bond funds to complete these projects, resulting in savings of $85,000 in the proposed Capital Improvement Fund budget.
Lease Purchase Town Hall Generator ($100,000)
Another agenda item provides information on the need for an emergency generator for the Town Hall at an estimated cost of $120,000. We recommend the Council consider financing this equipment over a 7-year period, with annual payments of about $20,000. Financing this item would result in a reduction of $100,000 in the current year’s Capital Improvement Fund budget.
Fund Library Capital Maintenance Project from a Capital Contribution from Accumulated Library Gift Funds ($58,000)
Estimated fund balance in the Library Gift Fund will total more than $500,000 by the end of the fiscal year. The Library staff is in the process of developing a capital replacement program for Library needs that would involve using a portion of major gifts and contributions for periodic capital replacement needs. Next year’s Capital Improvements Fund budget includes about $58,000 for interior and exterior painting of the Library and other miscellaneous capital maintenance costs. In view of our overall budget considerations this year, we believe it is reasonable to recommend that $58,000 in needed Library improvements be funded by a capital contribution from accumulated Library gift funds. We recommend the Council’s consideration of this proposal and that the Council refer the proposal to the Library Board of Trustees for discussion and consideration.
Reduction in Proposed CIP Allocations for Carpet Replacement and Space Needs Study ($85,000)
Agenda items # 3c provide additional information and recommendations on these projects. We recommend that proposed reductions for these projects be used to reduce the overall budget by about $85,000.
Increased Costs for Grants to Others ($72,000)
At the work session on May 3, the Council agreed to fund additional grants to others totaling about $72,000 as outlined in the Manager’s budget message. These include the following:
· $ 23,000 Chapel Hill Public Arts Commission
· $ 17,800 Human Services Advisory Board’s additional requests to agencies
· $ 10,000 El Centro Latino
· $ 10,000 Club Nova
· $ 11,500 Bicycle and Pedestrian Board Programs
Increased Funding for Sidewalk Construction ($50,000)
We recommend that the Council consider increasing funding for sidewalks in the Capital Improvements Fund by $50,000.
SUMMARY
We will continue to keep the Council informed on the State’s budget proposals and potential impacts for local governments as more information becomes available.
We are available to provide any additional information on any of the above topics or any other changes or reductions that the Council may wish to consider it its budget deliberations.