SALISBURY — As part of the annual budget-approval process, Salisbury City Manager Jim Greene Jr. has asked various city departments to bring their budget requests piecemeal. On Tuesday, Salisbury-Rowan Utilities presented their budget proposal and the Human Resources department presented the request for the employee healthcare fund.

As part of the SRU budget, the department requested a four percent increase in water and sewer rates, which Raftelis President and CEO Peiffer Brandt said was in line with the department’s rate model that was developed recently. Raftelis is the consulting company working with SRU. The model proposed a four percent increase every year through 2030, which Brandt said was done to prevent large, sudden increases in one year.

The raised fee would represent an average increase of $2.61 per month to the average residential water and sewer bill for a customer using 4,000 gallons.

Brandt pointed to the Bureau of Labor Statistics’s Consumer Price Index for the South region, which showed a 27.1-percent increase since 2020 in costs, noting that Salisbury had only increased rates at 16.5 percent, including the proposed four percent, across the same period.

Another focus of Brandt and SRU Director Jason Wilson’s presentation was on the department’s rate of capital spending to the depreciation of its assets, which was flagged during the audit of the city’s finances as a potential issue. Currently, the department’s annual depreciation is at approximately $6 million, which means that the city needs to invest approximately $11.5 million annually to hit the state’s expected ratio of 0.5.

Wilson said that SRU currently has issues with fully capitalizing at its current reinvestment levels, adding that due to staffing vacancies, contractors being busy and other various issues, some of the department’s capital funds are rolled back into the general fund balance every year.

“If you look at our fund balance, we have a very healthy fund balance, but we want to make sure we’re still reserving that. We still need to complete those projects, so what we’re proposing is to set up capital project funds, or buckets, in a different account to be able to put project types in there,” said Wilson.

He added that implementing the capital project fund would allow the department to save for projects, using the example of being able to save $3 million a year for three years to fund a $9 million project. Brandt noted that because of that funding rolling back into the fund balance, the department had a healthy reserve of cash that could be pulled from to increase capital funding without increasing consumer rates.

“You actually have really healthy reserves, almost 700 days (worth of funding) for fiscal year 2025. Which is wonderful, but it’s to the point that we probably need to use some of these reserves and draw them down for some of these capital improvements, not increase rates to keep these reserves,” said Brandt.

After the presentation, Mayor Tamara Sheffield stated that it was important that SRU present their budget proposal early, because the department services almost every other local government in Rowan County, all of whom would need SRU’s rate information for their own budgets.

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The budget presentations on Tuesday included a presentation from Human Resources Director Ruth Kennerly and Finance Director Wade Furches about the city’s Employee Healthcare fund.

The recommendation from insurance broker Mark III Vice President Mark Browder was for the city to increase insurance premiums by at least nine percent, for both the city and employees, due to “surging healthcare costs.”

However, the request from the city Finance Department was for the city to increase its total contributions to the fund by 10 percent and raise the employee premiums by five percent.

Browder said that the city’s healthcare fund, which is a self-funded plan compiled entirely of city and employee contributions and administered by Blue Cross Blue Shield, had been facing increasing costs primarily from high-cost claimants. As a result, Mark III was recommending the second premium increase in two years after not raising employee premiums for the prior seven years.

The 10-percent raise in city contributions represents an increase of $426,900 in expenses.