AGENDA #1a
BUDGET WORKING PAPER
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Potential Budget Adjustments
DATE: June 12, 2002
This memorandum and attached tables provide a summary of budget adjustments made by the Council to date that affect the proposed tax rate for next year, and additional recommendations for the Council’s consideration. The additional recommendations would include an allocation of $88,000 for traffic calming needs recently discussed by the Council.
Actions to Date
At the Council’s last budget work session on May 15, the Council tentatively approved adjustments to the proposed budget that would allow a reduction in the projected tax rate increase from 6.8 cents (including additional revenue shortfalls) to about 5.0 cents. These changes included use of one-time sales tax revenue ($235,000), use of revenue from the proposed increase in off-street parking fees ($215,000), a transfer from the Off-Street Parking Fund ($200,000), a reduction in the allocation for street reconstruction ($65,000) and use of fund balance ($35,000). With these changes the tax increase could be reduced to about 5.0 cents.
Recommended Additional Adjustments
In addition to the adjustments on May 15, the Council has discussed allocating funds for traffic calming needs. The additional expense could be offset from additional parking changes discussed on May 15 (which are expected to generate about $38,000 in revenue), and from a reduction of $50,000 included in the original budget for a projected increase in Landfill tipping fees of $2. It now appears that the County will not propose an increase in tipping fees for next year. With this proposed change, $88,000 would be available for traffic calming projects ($50,000 for projects already under consideration and $38,000 for potential new projects).
In addition to these adjustments, we believe it is reasonable to add back about $30,000 in State Library Grant funds deducted on May 15, based on the Governor’s most recent proposal that State Library funding be reduced by only 11% next year.
With the two changes noted above, the proposed tax rate increase would be about 4.9 cents.
Potential Availability of Utility Franchise and Beer and Wine Revenue
As the Council continues its budget discussions to set a potential final tax rate, we hope that the N. C. General Assembly will pass legislation that will secure the franchise and beer and wine tax revenues for local governments, precluding the withholding of these revenues. If such legislation is enacted, we estimate the Town would receive an additional $2,250,000 that is not included in the present budget proposal.
If the Town were to receive an additional $2,250,000, we recommended that the Council consider using these funds as follows:
With the additional changes noted above and the use of $822,000 from the franchise and beer and wine tax revenues, a final tax rate increase could potentially be reduced to 2.9 cents.
Funding for the proposed pay adjustments of 3.78% could be made available in the proposed budgets for other funds, including Transportation, Parking and Housing through reallocations and use of reserves.
Recommended Adjustments to Budget Schedule
We recommend changes as discussed above as potential final decisions on the budget for next year, contingent upon the outcome of legislative action to secure the franchise and beer and wine tax revenues for local governments.
As of this writing, the Council had tentatively agreed to reserve Friday, July 26, 2002 at 8:00 a.m. as a time to consider a final tax rate and budget for 2002-03.
ATTACHMENTS
ATTACHMENT 1
6-12-02
Summary of Potential Changes in Proposed Tax Rate Increase
Tax Rate
Deficit Equivalent
Original Recommended Budget ($2,712,000) 6.6 cents
Additional Revenue Reductions
of May 15
Powell Bill (60,000)
Library Grant (11% reduction) (34,000)
Subtotal (2,806,000) 6.8 cents
Recommended Adjustments on
May 15 to reduce tax rate increase
One-time sales tax revenue 235,000
Revenue from off-street parking
fee increase 215,000
Transfer from Off-Street Parking Fund 200,000
Reduction in street reconstruction 65,000
Use of fund balance 35,000
Subtotal (2,056,000) 5.0 cents
Additional Recommended Adjustments
Allocation for traffic calming (88,000)
Additional parking revenue from
Council discussion on May 15 38,000
Reduction in tipping fee cost 50,000
State Library Grant (11% reduction) 30,000
Subtotal (2,026,000) 4.9 cents
Potential Use of Utility Franchise and Beer &
Wine revenue if secured by legislation 822,000
Proposed Final Increase ($1,216,000) 2.9 cents
ATTACHMENT 2
6-12-02
Proposed Use of Potential Revenue from Franchise and Beer and Wine Tax
(Estimated at 2,250,000)
Reduction of 2.0 cents in tax rate
(from 4.9 cents to 2.9 cents) $ 822,000
General Fund Pay Adjustments
(Step Increases and Average Merits of 3.78%) 614,000
Additions to Capital Improvements Budget 814,000
Total $ 2,250,000
Costs of Recommended Pay Adjustments
(Step Increases of 3.78% below Job Rate and Average Merits Increases of 3.78% above Job Rate)
General Fund $ 614,000 (Fund from franchise tax revenues)
Transportation Fund 152,000 (Town portion – $73,000, available
in Transportation Fund)
Parking Fund 12,000 (Available in Parking Fund)
Public Housing Fund 28,000 Available in Housing Fund
Total $ 806,000