AGENDA #1

 

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Public Hearing on the Recommended Budget and Capital Program 

 

DATE:             May 8, 2002

 

INTRODUCTION

 

The purpose of this memorandum is to provide background information for the Council’s public hearing on the recommended 2002-2003 budget, the 2002-2017 capital program and on use of transit grants and downtown service district taxes in 2002-2003.

 

We suggest that the Council receive comments tonight in a combined hearing format in which citizens may make comments regarding any one or more 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 to be 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 both one of the most important functions and responsibilities of the Mayor and Council, and 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 May 5 and in the Chapel Hill Herald on May 3.  Letters inviting citizens to attend and speak at the forum were e-mailed or mailed last week to about 200 community organizations and community leaders.  A copy of the notice is attached.

 

The Council held budget work sessions on February 13, February 27, and on March l.  Public forums on the preliminary budget report were held on January 23 and March 26, followed by additional budget works sessions on April 3 and 24.  The next work session is scheduled for May 15th 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 24th.  Under State law, the Council must adopt an annual budget or an interim budget by July 1st.  The Council may adopt an interim budget in order to allow time for the General Assembly to act on important issues affecting the Town’s budget.  We understand that legislation may be introduced that could result in protection of the utility franchise taxes that ordinarily are received by the Town.  If enacted, the Council might then be able to budget those funds, totaling about $2,045,000.

 

We believe that the latest practical date for adoption of a final budget is August 1, because the Council must set a tax rate no later that that date.

 

SUMMARY OF THE RECOMMENDED BUDGET

 

Under the recommended 2002-2003 budget, most services would continue as in past years, but would be limited to approximately the same base level as in the current year.  The limitation on services is primarily due to the expectation that the State is likely to withhold significant revenues of about $2.9 million that normally would come to the Town.  With the expected revenue reductions, the recommended budget is based on a proposed tax rate increase in the General Fund of 6.6 cents, from 46.1 cents to 52.7 cents.

 

For the Transportation Fund, fare free services for all routes would continue next year, with no proposed increase in the current Transportation tax rate of 4.3 cents. 

 

The proposed combined tax rate would total 57.0 cents for the 2002-2003 budget year. 

 

Key factors influencing the proposed budget and tax rates include the following:

 

General Fund

 

·        Estimating revenues based on the assumption that $2.9 million in State-shared revenues may be withheld by General Assembly to address State budget deficit.

·        Continuation of most current General Fund services, with base budget limited to approximately the same level as in current year.

·        Absorption of the full-year cost of pay increases funded for only eight months in 2001-2002 ($250,000).

·        Reducing the allocation for capital improvements by about $400,000 (from $637,000 to $238,000).

 

Transportation Fund

 

 

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 elderly and handicapped people.

 

The estimated amount of federal and State operating assistance to be requested for 2002-2003 is $2.5 million, or about 27% of the cost of the transit system.

 

Capital Projects:

 

Up to $1,542,400 of federal funds would be requested.  In addition, State grant funds would be requested to help cover matching costs.  Proposed uses of grants are:

 

·        Replace three vehicles and purchase of two expansion vehicles for shared ride services and two expansion vans for services provided to the mobility impaired.

·        Acquire land for the construction of a new transit/operations facility and begin engineering and design work.

·        Purchase associated capital maintenance items, including air conditioning compressors, bus tires and engine rebuilds.

·        Purchase automatic vehicle locators on all vehicles and connect to dispatch system.

·        Purchase automatic vehicle locators, stop annunciators and automatic passenger counters for the remainder of the transit bus fleet.

In addition to the operating and capital grants, about $88,000 of federal funds would be requested for short-range transit planning projects.

 

 

SUMMARY OF THE RECOMMENDED CAPITAL PROGRAM

 

Below are highlights of the Town’s Capital Improvements Program. Because of budgetary constraints resulting from the potential withholding of State revenues next year, the proposed capital improvements program for next year is limited primarily to existing debt payments and new payments on projects currently underway as follows:

 

·        $478,000 of capital projects with cash financing in 2002-03 as part of the annual budget, including maintenance and renovation projects at three Town facilities, an annual payment on the acquisition of a new site for relocating the public works compound, the first of three payments to the Chapel Hill-Carrboro City Schools as part of an agreement providing the Town access to the gym at the Meadowmont Elementary School, and a joint project with the County for updating aerial topographic maps.

 

·        Ten-year installment financing is included for three capital projects: renovations at the Hargraves Center/A.D. Clark Pool and the Inter-Faith Council Shelter, and repairs to the Chapel Hill Museum roof.

 

·        Except for the installment debt projects mentioned above, the program would allocate no capital repair and maintenance resources for the maintenance of Town buildings and none to parks in 2002-03. No funding is provided for the construction of new sidewalks, greenways or bicycle facilities in 2002-03.

 

 

USE OF DOWNTOWN SERVICE DISTRICT TAXES

 

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.

 

The current tax rate for the downtown district is 6.2 cents. The Downtown Commission has requested that the tax rate for 2002-2003 remain at 6.2 cents.   The tax rate of 6.2 cents would produce about $70,000 in revenue for the district next year.

 

State law requires using the district tax funds in accord with the Council's service plan for the downtown.  The plan as amended in 1995 allows the Council flexibility to use these funds for any service permissible under State law for the Downtown Service District.  For example, district tax funds could be used to supplement police protection or pay for additional streetscape projects or to purchase holiday decorations.  These funds are now allocated for promotional events and publications, marketing, and supplemental sidewalk cleaning.

 

These services are provided through a performance agreement with the Chapel Hill Downtown Commission. 

 

MANAGER’S RECOMMENDATION

 

That the Council refer comments and questions to the Manager for consideration and follow-up reports as needed in the budget process.

 

ATTACHMENT

 

1.         Copy of notice mailed to citizens regarding public hearing (p. 6).

 

ATTACHMENT 1

 

 


PUBLIC HEARING

BY THE MAYOR AND TOWN COUNCIL OF CHAPEL HILL

ON THE PROPOSED BUDGET AND CAPITAL PROGRAM

 

7:00 pm, Wednesday, May 8, 2002

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, May 8th, regarding:

 

·        the Town Manager’s recommended budget for Town services and projects in the service year from July 1, 2002 through June 30, 2003.

·        the Manager’s recommended capital program for 2002-2017.

·        how to use Downtown Service District taxes in the year beginning on July 1, 2002.

·        how to use the 2002-2003 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 2002-2003 service year and the proposed capital program for 2002-2017 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 2002-2003 budget, most services would continue as in past years, but would be limited to approximately the same base level as in the current year due primarily to the expectation that the State is likely to withhold significant revenues of about $2.9 million that normally would come to the Town.  With the expected revenue reductions, the recommended budget is based on a proposed tax rate increase in the General Fund of 6.6 cents, from 46.1 cents to 52.7 cents.

 

For the Transportation Fund, fare free services for all routes would continue next year, with no proposed increase in the current Transportation tax rate of 4.3 cents. 

The recommended budget includes the following key issues for 2002-2003:

 

·        Continuation of most current services at a base budget level the same as in the current year.

·        A capital improvements budget limited primarily to existing debt payments and new payments on projects already underway.

·        Elimination of employee pay increases needed to remain competitive in the Triangle labor market.

·        Postponement of the issuance of bonds for capital projects until next year.

·        Continuation of fare free Transportation services next year, with no increase in the current Transportation tax rate of 4.3 cents.

 

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