City hopes to cover expenses in 2021-22 budget with surplus revenue generated this year
By Natalie Anderson
SALISBURY — With the city expected to finish “well in the black” in the current fiscal year budget, city officials are considering using an approximate $1.5 million surplus to offset expenses in the upcoming 2021-22 fiscal year budget.
During a budget work session Thursday, City Manager Lane Bailey brought to the council a few suggestions for balancing the remaining $1.27 million that has not yet been budgeted in the general fund. Bailey, who is tasked with preparing and recommending a budget each year by June 30, said the city is on track to finish at least $1.5 million over the revenue that was conservatively projected around this same time last year due to better-than-expected sales tax and property tax revenue.
Using the surplus would cover approximately $910,000 in capital expenses for the 2021-22 fiscal year, including Main and Innes street improvements, the installation of a sidewalk on Old Concord Road, Police Department LiveScan and video software and Bell Tower Green Park. Additionally, the current budget includes $75,000 for paving Church, Jackson and Fisher streets surrounding the park.
In the city’s fund balance, which is partially used as a savings account, Bailey is projecting a gap of $357,000. The options he discussed with council members include appropriating money from the fund balance to plug the hole, cutting the gap amount from expenses or raising taxes by 1 cent or more. Bailey added that cutting additional expenses is not a viable option, since the city has held the line on discretionary spending over the last few years.
Council member David Post suggested using the surplus or dipping into the fund balance to cover the additional expenses in the 2021-22 budget since balances would look similar to pre-pandemic levels.
“I don’t think that’s a bad place to be given the bumps in the road we’ve had,” Post said.
With all council members expressing they’re strongly against a tax increase, using the surplus for the 2021-22 fiscal year and dipping into the fund balance seems like the best options.
Included in the budget is a 5% across-the-board pay raise for all sworn Salisbury Police officers on July 1, a 5%-15% pay raise for certain public works employees on July 1 and a 2% cost-of-living adjustment for all employees on Jan. 1. These wage increases are intended to help with retention and vacancies across the police and public works departments.
Not included, but previously discussed, is an additional 1.5% pay raise for sworn officers to keep up with surrounding competitive wages, a 1 point percentage raise on the city’s match to employees’ 401K and the construction of Fire Station 3 on Mahaley Avenue. Additionally, Bailey said about $258,000 in additional funds are needed to offset other areas with recruiting challenges, such as firefighters. To cover these additional expenses without a tax increase, Bailey suggested appropriating an additional $479,000 of the fund balance. For the construction of Fire Station 3, Bailey and council members agreed to “wait and see” if funds passed in the latest federal stimulus package or anticipated federal infrastructure dollars could help.
The city expects to receive $7.1 million from the county’s share of the $1.9 trillion American Rescue Plan passed by the federal government in March.
But other needs that stimulus dollars could also help with include three fire trucks over the next three years, a decontamination building at Fire Station 2 on South Main Street and a telecommunications upgrade needed by 2024.
Council member Brian Miller suggested allocating some fund balance toward the city’s ongoing debt for its lease with Hotwire. About $19.5 million remains, and the city is set to pay off that debt in 2029. The idea is that doing so would lower the annual payments and free up more money to allocate toward expenses in future budgets, pulling “some of that benefit forward” for an immediate impact on citizens now.
But being able to take that route requires more time, analysis and legal consultation that cannot be completed before the budget presentation on May 18 and a public hearing on June 1, Bailey said. He proposed moving forward with dipping into the fund balance and gathering more information about paying down the loan with the Local Government Commission. The only consequence, however, is the fund balance availability dropping below the recommended 30%. The city is currently at nearly 32% for the current budget, including the projected surplus.
Council members agreed with Post that city leaders would not feel comfortable with that rate dropping below 24%.
Bailey said council members can gather for more work sessions between May 18 and adoption.
Contact reporter Natalie Anderson at 704-797-4246.
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