Salisbury budget calls for increases in tax rate, water/sewer, Fibrant, garbage

SALISBURY, NC (WBTV) - City Manager Doug Paris made his 2014-15 budget proposal to the Salisbury City Council Friday morning, and it includes rate increases for key city services based on revenue losses from the General Assembly and upcoming projects.

The council will conduct a public hearing on June 17 at 4p at the City Hall.  Workshops on the budget are set for June 23 and June 24 at 10a.

Paris provided WBTV with the summary that was presented to council:

In accordance with §159-11 of the North Carolina General Statutes, the proposed budget for

the City of Salisbury is hereby submitted for the fiscal year beginning July 1, 2014 and ending

June 30, 2015.

This year's budget will be a challenging one. We are facing two contradictory pressures: the

City's revenues from the State of North Carolina will significantly decrease this year due to the

General Assembly not continuing sales tax hold harmless funding, while at the same time our

community is requesting additional projects and services for the upcoming year.

SALES TAX HOLD HARMLESS FUNDING:

Last session at the General Assembly there was a concerted effort in the House of

Representatives to extend the sales tax hold harmless funding for a group of cities that included

Salisbury. Representative Harry Warren, Representative Julia Howard (Mocksville), and

Representative Carl Ford assisted in this effort. The House passed a bill to extend the funding;

however the bill did not have support in the Senate. The Senate decided to end the funding,

and use the funding historically distributed to those cities to help balance the state budget. The

distributions end effective FY 2014-2015.

Our city depended on this revenue stream to provide for General Fund services. The tax rate

proposed for next year includes a 2.45 cent increase to replace this revenue. Without this

replacement revenue we would be required to cut services and reduce staffing in a year that

citizens have requested more services from city government.

COMMUNITY IMPROVEMENTS:

This budget includes requested community improvements comprised of new projects and

service expansions for the City of Salisbury:

1. Newsome Road widening and bicycle lane installation (new project)

2. Bringle Ferry Road sidewalk project (new project)

3. Transit expansion presented at the City Council retreat (service expansion)

4. Enhanced street lighting in the West End (service expansion)

These are new projects and service expansions that citizens have communicated interest in at

meetings you have attended. They are ultimately projects that improve the quality of life in

Salisbury. This budget includes a proposed .45 cent property tax increase to fund these new

projects and service expansions.

OVERALL IMPACT:

This budget includes a total property tax increase of 2.9 cents. If the Senate had passed the

House version of the sales tax hold harmless bill - we would only be proposing a .45 cent

property tax increase this year for the new quality of life projects. The bottom line is that the

Senate's action to not take up the House version of the bill will hurt us financially. This is no

fault of our staff or our citizens.

While we understand there are additional citizen requests for funding and projects, as well as

additional departmental requests for expanded budgets – we did not feel it was appropriate in

this economic climate to propose a property tax increase above 2.9 cents. For a benchmarking

reference, Kannapolis is proposing a 4 cent increase, Rowan County is proposing 3.75 cent

increase, Granite Quarry is proposing a 2 to 2.5 cent increase, and China Grove is proposing a 2

cent increase.

SOLID WASTE EFFICIENCY:

Two years ago we discussed full cost recovery for our Solid Waste operation. At the time, full

cost recovery would have required a $14 per month fee. City Council took the action to set the

fee at half cost recovery ($7 per month) and asked staff to improve the efficiency of the

operation. This budget includes continuing this service in-house and recommends an $8 per

month fee, an increase of $1 per month. Over the last two years the staff in Public Services

have become more efficient. The $1 increase will go to cover the annualized cost of an

automated single-arm trash truck and new trash bins for this truck to use. Our old trash bins

are dated and lack the lip on them that the newer bins have. When the automated truck raises

the bin to dump it the entire bin falls into the trash truck. This causes work stoppages, counter

to the goal of improving efficiency, and results in safety issues when removing the bin from the

truck. With the direction we are headed, we expect full cost recovery to stabilize around $8 per

month. This is a great value. As a comparison, Granite Quarry charges $11 per month and

Spencer charges $15 per month.

EMPLOYEES:

This is the third year that we have proposed salary increases for employees. Two years ago, the

budget included the first proposed salary adjustment in many years, a flat $1,000 salary

increase, added to the base salary, for each employee who has exceeded satisfactory

performance during their last performance review. Last year the budget included a proposed

2.25% salary increase, added to the base salary, for each employee who has exceeded

satisfactory performance during the last performance review. This year we are proposing a

2.5% merit pool for employees. The 2.5% merit pool is funded through the elimination of

vacant positions, not the property tax increase.

BROADBAND FUND:

The City of Salisbury continues to operate a broadband utility in challenging market conditions.

Over the last several years we have worked to find our sweet spot. During FY 2013-2014 we

expect the fund to break even without any interfund loans. This is the result of much hard work

by our dedicated staff.

Through the continued hard work of our City team - there are no budgeted interfund loans to

the broadband fund this coming fiscal year.

We have been working with programmers to comply with continually changing requirements.

As a result of our content providers' requirements, the existing video tiers will be changing,

along with their names, and will debut during June. Since we began this utility we have not

recommended a rate increase. As the video tiers change, a small rate increase for video

programming will become effective to offset the increased cost of programming. We are also

now required to pay all local broadcasters to retransmit their programming. The current

monthly cost to local broadcasters is $2.84. We are recommending that we transfer the

retransmission fee to our customers, like our competitors. If customers have a concern about

the impact on their video bill, customer service representatives will be on standby to help

customers switch to a lower priced video tier. More information on the new tiers and prices

will be available in a separate handout.

In addition, effective July 1, we will upgrade all residential internet customers to 50mbps up

and down, free of charge. We can offer this benefit to our customer base with a de minimis

cost impact. With this upgrade in internet service, we will offer the highest base residential

internet speed in North Carolina.

Like last year, let me be clear. It is not time to celebrate. We must continue our hard work in

this area. With the new tiers, pricing recommendations, and cost control by our staff – there

are no budgeted interfund loans during FY 2014-2015.

WATER & SEWER FUND:

Management within Salisbury-Rowan Utilities (SRU) has worked just as hard as our General

Fund department heads to manage costs. Over the last 20 years the annual rate increase has

averaged 7%. The last two years there was no rate increase for our customers. For FY 2014-

2015 we are proposing a 2.9% rate increase to cover ongoing operational cost increases that

include: increased operational maintenance to replace broken/leaking sewer infrastructure, the

operational cost increase of SRU employee healthcare, and the operational cost of a 2.5% merit

pool for SRU employees.

IN CONCLUSION:

The goal of this budget is to strike a balance between the cost of new projects and service

expansions our citizens desire, while not burdening our citizens with an excessive property tax

increase. The largest impact to this budget is the loss of sales tax hold harmless revenue, which

necessitates the majority of the proposed property tax increase.

We have been alarmed by the actions of the NC General Assembly to place cities in difficult

financial positions. Earlier this week the Senate passed a bill to eliminate privilege license taxes

(PLT) beginning in FY 2015-2016. It is my understanding the House will concur with the Senate

version of this bill. If the General Assembly does not assist cities with replacement revenue for

PLT, we will be required to raise property taxes or cut services in the amount of 1.5 cents during

FY 2015-2016.