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Economic growth powers 2017-18 Kannapolis budget

By Josh Bergeron

josh.bergeron@salisburypost.com

KANNAPOLIS — City Manager Mike Legg on Monday used phrases such as “most in our history” and “beyond rebounded” when presenting a budget that projects significant growth in tax revenue without raising taxes.

Legg presented his proposed 2017-18 budget to the Kannapolis City Council. It keeps the tax rate at 63 cents per $100 in valuation but raises some fees to pay for infrastructure improvements.

The budget projects a multimillion-dollar increase in tax revenue because of economic growth. Without the projected growth, Legg said, the budget would not be possible as proposed. It allocates money for the replacement of water and sewer lines downtown, new fire stations, water and sewer line expansions for potential economic growth in western Cabarrus County, additional city employees and other items.

The total budget, which is balanced, projects $68.13 million in expenses. That amount is $4.1 million greater than this year’s budget.

The general fund, the largest single source of revenue and expenditures, is $44 million in the 2017-18 fiscal year, which starts on July 1.

Legg said the city has “beyond rebounded” from the Great Recession. The proposed budget projects a $1.3 million increase in local sales tax, which Legg said is the most in the history of Kannapolis.

Legg called the city’s plans to redevelop downtown “a major driver of budget allocations.” The city will take on $25 million in debt to pay for water, sewer and stormwater improvements downtown.

The city will also take on $6 million in debt to extend water and sewer lines into western Cabarrus County.

Two fee increases are proposed to help pay for the infrastructure projects. The budget proposes a water and sewer fee increase of 40 cents per 1,000 gallons. That increase will add $3.20 per month to an average bill, Legg said. Also proposed is a $1.25 increase in the monthly stormwater rate for all tiers.

Neither of the big-ticket items in downtown redevelopment — a baseball stadium and a demonstration project that includes apartments, retail shops and a parking deck — shows up in the proposed budget. Both projects will begin in the 2017-18 fiscal year but won’t affect the city’s finances until the 2018-19 fiscal year, Legg said.

The City Council briefly discussed the budget during Monday’s meeting before agreeing to have a public hearing at 6 p.m. June 12 in City Hall.

Mayor Darrell Hinnant said he’s often asked how Kannapolis can afford to revitalize its downtown and build fire stations. The 2017-18 budget is the answer, Hinnant said.

“You all, staff, encouraged us to develop this 10-year plan so we’re not surprised when we need a new firetruck or we’re not surprised when we need to build a fire station or whatever it happens to be along the way,” Hinnant said. “The second reason that we can do what we do is growth. You’ve seen it already in this budget. You’re going to continue to see it. It’s going to get even better.”

Councilman Ryan Dayvault directed the council’s attention to a specific statement made by Legg in his written budget summary. Legg wrote that downtown investments, especially those in future years, will depend on economic growth.

“If the private investment does not follow the public investments, future budgets will be very difficult to balance without replacement revenues,” Legg wrote in his budget summary. “This is why it is so critical that, to the greatest extent possible, all barriers to growth be eliminated and all enhancements to growth be implemented.”

Even as the city spends money on downtown redevelopment, Hinnant said city officials don’t want the project to “suck the life out of” the rest of the city.

“We have a lot of other opportunities that are coming our way,” Hinnant said. “Many of those are going to be whether we can build a road, add on this, hook up water and sewer for somebody. … All of those answers have to be yes because we want those jobs and those investments in our community.”

Other notable items in the 2017-18 budget include:

• $10.5 million in funding, which requires a loan, to pay for the replacement of fire stations No. 2 and No. 3, the purchase of a ladder truck and fire engine, and completing Phase 3 of Village Park.

• $600,000 to hire 15 new employees, a third of whom will work for an in-house yard waste collection operation.

• $3 million in operating capital and vehicles, half of which is related to the yard waste operation.

Contact reporter Josh Bergeron at 704-797-4246.

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