SALISBURY — Faced with state cuts and requests for more services from Salisbury residents, City Manager Doug Paris is proposing a 2.9 cent property tax rate increase, 2.9 percent water-sewer fee increase, $1 monthly garbage fee increase and rate increase for Fibrant television customers.
“This year’s budget will be a challenging one,” Paris told City Council members Friday. “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.”
Nearly all of the proposed 2.9 cent property tax increase — 2.45 cents — would cover the loss of $659,000 caused by the expiration of “transitional hold harmless” allocations that the state has been making to a group of about 100 cities in North Carolina, including Salisbury.
The allocations were enacted by the legislature in 2002 to help communities make up the loss of shared revenue from a tax on business inventory, which had been repealed.
There was a concerted effort in the House of Representatives to extend the hold harmless funding, Paris said. N.C. representatives Harry Warren and Carl Ford, who represent Rowan County, and Rep. Julia Howard, who represent Mocksville, worked to extend the funding, but the bill did not have support in the Senate, Paris said.
The Senate decided to end the funding and use the money to help balance the state budget, he said.
“Our city depended on this revenue stream to provide for General Fund services,” Paris said. “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.”
City Council will hold a public hearing on the budget at 4 p.m. June 17 at City Hall. Budget workshops are scheduled for 10 a.m. June 23 and 24.
The following is the rest of Paris’ budget message, as delivered in his words Friday:
• Community improvements
This budget includes requested community improvements comprised of new projects and service expansions for the city of Salisbury:
Newsome Road widening and bicycle lane installation (new project)
Bringle Ferry Road sidewalk project (new project)
Transit expansion presented at the City Council retreat (service expansion)
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 a 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 percent 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 percent merit pool for employees. The 2.5 percent merit pool is funded through the elimination of vacant positions, not the property tax increase.”
• Broadband fund (Fibrant)
“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 fiscal year 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 50 megabits per second 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 fiscal year 2014-2015.”
• Water and 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 percent. The last two years there was no rate increase for our customers. For fiscal year 2014-2015 we are proposing a 2.9 percent 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 percent 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 N.C. 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 fiscal year 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 fiscal year 2015-2016.”