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Council weighs budget

By Mark Wineka
Salisbury Post
Fares for city bus riders will stay where they are.
As for water-sewer rates for Salisbury-Rowan Utilities customers? Be prepared, they’ll be going up, just not as much as earlier proposed.
During its first budget work session, the Salisbury City Council came to a consensus Tuesday that it could not double bus fares.
The individual fare would have increased in the original budget proposal from $1 to $2, and the senior citizens/handicap fare would have gone from 50 cents to $1.
Mayor Susan Kluttz and her council colleagues said increasing the fares would represent too big of an economic hit to lower-income residents.
It also would be counterproductive for the city to be encouraging citizens to think green and ride the bus ó especially during free Ozone Days ó while at the same time raising fares, Kluttz said.
Councilman William “Pete” Kennedy said increased fares would reduce ridership and hurt downtown businesses. City Manager David Treme said other retail locations such as the mall, Wal-Mart and Magic Mart also would be affected.
Treme had recommended fare increases to address a projected $66,620 shortfall in the transit fund. The options for making up that shortfall were reducing routes, which would reduce revenues again; increasing the general fund appropriation to the transit fund, which could affect the property tax; or raising the fares.
Council members haven’t exactly identified yet how they will make up the $66,620, which would represent almost a quarter of a penny on the property tax rate.
One cent on the property tax rate of 59 cents per $100 valuation raises $280,023 in revenue for Salisbury.
The council spent two hours on the budget Tuesday and will reconvene for a second budget work session at 10 a.m. Thursday.
“We haven’t moved very far today in all we have to accomplish,” Kluttz said.
City buses operate within a projected $1,969,448 annual budget, for which the state and federal governments provide some of the funding.
The recommended transit budget calls for $747,740 in operating expenses; $261,638, administration; and $960,070, capital.
The city is responsible for 80 percent of the operating expenses, but only 15 percent of the administration costs and 10 percent of the capital costs. A big portion of the 2008-2009 fiscal year capital costs will be the purchase of two buses for a total of $781,000.
The increased costs of gas and oil and parts for buses which are no longer covered by warranties represent much of the reason for the city shortfall, if the fares aren’t raised.
Purchasing Manager Dewey Peck noted that diesel fuel costs $1.72 a gallon more today than it did at this time last year.
The proposed transit budget does not include projects aimed at providing regular service to Livingstone and Catawba college campuses, an extension of service to handicapped citizens and extra runs to the Community Park on Hurley School Road.
One bright spot: Ridership is up. Through only 10 months of this fiscal year, which ends June 30, the buses had 140,000 riders, compared to 145,000 total for the previous fiscal year.
A change in the Salisbury-Rowan Utilities cash position as of Tuesday morning could provide some of the extra revenues that will be used to ease the increase in water-sewer rates.
Treme had recommended a 9.7 percent average residential water-sewer increase. A customer’s average monthly bill would have increased from $62.38 to $68.43.
Council asked Treme to reduce the increase to 5.7 percent, which has been the average for about the past five years.
“I can make that work,” Treme said Tuesday.
Management Services Director John Sofley reported that the utility looks to be $700,000 over revenue projections from last year. It would mean that the city could pay for a $600,000 sampling point relocation (or alternative disinfection system) this fiscal year and not have to include it in the next budget.
Sofley said removing that $600,000 item from the 2008-2009 budget could put the rate increase in the 5.9 percent to 6.3 percent range.
Acting Utilities Director Jim Behmer said the N.C. Department of Environment and Natural Resources is requiring the sampling point relocation for the waste treatment process.
Councilman Mark Lewis asked whether the city should consider, given the tough economic times, the possibility of financing that project and others with revenue bonds rather than pay all the expenses at one time.
Treme expressed some concern that if the utility financed “every little thing,” it would be doing itself a disservice in the long run.
The proposed utility budget of more than $22.2 million represents a $2,788,265 increase over last year.
Of that increase, 46.19 percent would go toward operating and deferred capital costs.; 19.61 percent, the increase in debt service for Phase I wastewater capital improvements; 17.85 percent, for personnel, including three new positions; 8.36 percent, for higher fuel and chemical costs; and 7.99 percent, for a $222,716 increase in transfers from the general fund.
Besides the sampling point relocation, high priority items in the utility budget include $300,000 set aside for protecting the city’s water rights and infrastructure during Alcoa’s federal relicensing for the Yadkin Hydroelectric Project; $50,000 for economic development projects; and $250,000 to pay for contracted land application (a 25 percent increase) of sludge from the treatment plants.
If the three new positions are approved, the utility will have 94 full-time employees, which is down from 99 employees in the 2003-2004 fiscal year.
One of the bigger issues the council expects to tackle Thursday is how to address code enforcement needs for commercial maintenance downtown and deteriorating housing.
Representatives of many neighborhoods showed up at last week’s public hearing and urged the council to fund a code enforcement position not included in the budget proposal.
Contact Mark Wineka at 704-797-4263 or mwineka@salisburypost.com

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