Town of Haw River 
Town Council Special Called Meeting 
Monday, May 22, 2016 

The Town Council of the Town of Haw River held a Special Meeting of the Town Council on Monday, May 22, 2017 in the Haw River Municipal Building at 6:30 pm to receive the Manager’s Proposed Budget for Fiscal Year 2017-2018. 
 
Council Members Present: Mayor Buddy Boggs, Lee Lovette, Kelly Allen, and Steve Lineberry 
Council Members Absent: Jeff Fogleman
Also Present: Manager Jeff Earp, Clerk Eveker 
 
Mayor Boggs called the meeting to order and gave the invocation at 6:30 pm. 
 
Manager Earp presented the Council with the following 2017-2018 Budget Message and proposed budget. 

To the Honorable Mayor and Town Council Members,

On behalf of the Town of Haw River staff, I am pleased to present to you the fiscal plan for FY 2017-2018. The budget is in balance and has been prepared in accordance with the guidelines set forth in the Local Government Budget and Fiscal Control Act (N.C.G.S. Chapter 159, Article 111).

The 2017-18 operating budget totals $4,073,396. This year we have no capital projects ongoing. This proposed budget continues the Town's commitment to meet the public's needs for quality and cost-efficient government services.  A public hearing of the FY 2017-18 Budget has been scheduled at the Council's regular meeting on June 5, 2017 at 7:00 p.m. A copy of this budget document will be placed on file with the Town Clerk and will be available for public inspection during normal business hours from now until the June 5, 2017 public hearing.

The 2017-2018 fiscal year budget provides funding to meet the council objectives in regard to
the future sustainability of the town and addresses several identified needs of the town.  The staff and I look forward to working with each of you to implement this budget and to continue our service to the fine citizens of the Town of Haw River.

The following are the priorities that this Manager's proposed budget is built upon:

•	Town having the ability to increase our present service level with no property tax increase.
•	Town having the ability to enhance and foster economic development opportunities.
•	Town having the ability to enhance emergency services in Police and Fire Service to make sure no citizen or visitor goes unserved.
•	Addressing water/sewer needs while keeping cost in check with use of grant and other funds.
•	Address several capital equipment needs that will maintain our assets and create efficiencies within our operations.
•	Continues to address recruitment and retention issues with our work force with the budgeting of developmental pay effective January 1, 2018.

Revenue Neutral Statement for Revaluation Cycle

As this is a revaluation cycle year. The Town's overall property revaluations decreased from FY 16-17 valuation of $151,488,256.00 to FY 17-18 valuation of $148,643,772 a difference of $2,844,534.00 which represents a 2% drop in valuation. The staff has determined that the revenue neutral position for the town is a tax rate of .4892. The new evaluation makes each penny of our tax rate worth $284.00 less than last year.  Even with the loss of valuation, I am recommending that the Tax Rate remain at .48 cent per hundred dollars of valuation.

The Town's General Fund Budget is based on slightly increased sales tax revenues.  The general fund budget also relies on fund balance to create a balanced budget.  We have been very fortunate over the last several years to be able to have revenue increases above projections that have allowed us to use none of the fund balance budgeted.  Please be reminded that fund balance used to balance our budget is used to offset onetime expenses such as capital or grant matches in normal years.  This year we are proposing to use $83,236.00 of fund balance to offset reoccurring cost to bring service levels and assure medical response to calls in the fire department. In future years, we will be working to secure grants funding to offset these costs. The Town is also experiencing stable ad valorem tax collections by the county and DMV, which has increased the overall collection rate and resulted in increased revenues of real property and vehicle taxes annually.  In regard to major medical insurance, the move last year to a higher out of pocket/deductible plan and self-fund part of that for our employees/retirees with the use of a Medical Expense Reimbursement Plan (MERP) resulted in approximately $30,000 of savings. Our new rates for employees and retirees went up .003% the lowest increase in that last 5 years. The Town also had a 10% premium increase in Worker's Compensation insurance cost, which equated to an increase of approximately $4,673.00 annually. Property Liability insurance will cost $21,356.00 a decrease of $1790.00 from last year.  There are also several capital issues that were addressed in the General fund budget to include:

General Fund - Fund Balance

Non-Recurring
$105,600

Recurring
$83,236

Governing Body Administration	Seating Offices&	$4,500		
	Front Entrance	$2,500		
Public Building	Maintenance	$5,000		
Police	Police Vehicles Building Upgrades & Data Storage	$65,000

$8,800	

PIT Firefighters	

$83,236	
Fire	Bunkbeds
& Lockers	
$3,000			
Public Works	NIA				
Sanitation Parks & Rec	NIA
Bocce Court	
$3,000			
	Picnic Tables	$4,500			
	Security System	$5,000			

The general fund budget also allows for the Town to continue toward its goal of re-development of the Old Mill facilities and downtown area.

For the Town's Powell Bill Fund budget, we are projecting no increase in revenues, and expenditures will reflect the Town's approved paving projects.   These expenses totaling
$245,000 have been budgeted and will require a Powell Bill Fund balance appropriation of
$97,300.00 which will bring the total fund balance down within the States limit. Powell Bill Fund -Fund Balance	$97,300
Powell Bill	Paving, Tractor	$97,300

The Water and Sewer Fund budget reflects a 2% increase in rates which is a result of Burlington increasing their rate to us.  The Water and Sewer revenues have also been greatly impacted because of the work done to limit inflow and infiltration into our system. That work and the effects of a relatively dry year will keep our utilities stable for the coming year.  We have budgeted for a 25% inflow and infiltration rate in the 17-18 budget. We have also budgeted appropriately for repairs and replacement of our capital needs.  The budget reflects expenditure of $70,000 of fund balance to cover onetime capital items included below:

Water Sewer Fund- Fund Balance	$70,000

Utilities Water/Sewer  Mower
2 Trucks

$6,700 (not funded with Fund Balance)
$70,000

The Stormwater fund remains stable and we are preparing to begin the post construction work to comply with the Jordan Lake rules when the final rules are revealed.

This budget recommends that the tax rate remain steady at $.48/$100 valuation. The budget also reflects no employee COLA salary increase for the Town staff due to the February funding of the salary study.

The department heads did an excellent job in preparing their budget recommendations and prioritizing items and issues that were important to their departments.  As you will note some of their recommendations were funded and others were not able to be funded at this time.

This budget was prepared based on citizen requests and objectives for the town, council's objectives, and department head objectives have been taken into consideration as well. I am indebted to the employees and council members who sent me their suggestions on budget efficiencies.  As your Manager, I am committed to sustaining the important financial reforms that have restored the stability and credibility of our town. Whatever circumstances we face, be assured that I will lead this Town in a fiscally responsible way and keep my pact with the
citizens and Council to put their interests before all others.

I present this document, the Town's Proposed Budget for Fiscal Year 2017-2018, in the strong belief that it provides the surest path to overcoming the Town's financial challenges, and that it respects both the interests of the taxpayers and our responsibility to future generations.

This proposed budget by no means meets all of the "wants and needs" of the parties involved, but I feel the immediate needs of the Town are efficiently met.

Budget Overview

The total projected operating budget is $4,073,396, which is approximately a 2% decrease over our current amended operating budget ($4,171,307), and consists of:  General Fund - $2,120,596 (10% less than the current $2,350,230); Water and Sewer - $1,685,100 (8.7% more than the current $1,550,667); Powell Bill fund $245,000, (1.2% less the current $247,900). Storm Water fund $22,700 (Less than  1% higher than the current $22,500).

This budget includes the following debt service expenditures:

Fire Department Truck payment	$ 47,574	
Police Cars	$ 18,935	
Grapple Truck	$ 20,511	
Pump Station Replacement Bonds	$ 33,500	
CWSRF LOAN (slip lining project)	$ 25,000	

I am proud of the job that has been done within the Town's Departments to maintain costs and prioritize expenditures in the 2017-2018 Budget.

Key Points
The key points to keep in mind as you review the proposed budget are:

1)  2017-2018 Tax Levy:  In this year's proposed budget, the property tax base decreased slightly. I am recommending that the tax rate remain the same at 48 cents per $100 evaluation.  Total property tax revenue is estimated at approximately $713,490 (100%).
2)   The General Fund Revenue Sources: The General Fund receives revenue from a number of sources, some are restricted, some are non-restricted, some are local tax dollars, and some are not.
3) Local Revenues in the General Fund Budget: The Budget Message provides an overview of the budget. A full review of the comprehensive budget will provide answers as to where the discretionary portions of the General Fund budget are allotted.
4)	What a Penny is Worth: Each penny on the tax rate will generate approximately $14,864.00 in General Fund revenue.
5)	Garbage and Recycling fee: The fee is recommended to stay the same at $9.50 per household.
6)	Storm water Fee: The budget calls for the storm water fee to stay the same at $2 a month assessment.
7)   Water/Sewer  Bill:  The Budget calls for the water and sewer monthly bill to increase by 2% moving the monthly minimum bill (including trash fee and storm water fee) from $43.95 to
$44.85. This is a $.90 increase per month.

	Budget Overview Comparison Chart	
							
	Final Budget	Final Budget	Final Budget	Final Budget	YTD Budget	Recommended	
	2012-2013	2013-2014	2014-2015	2015-2016	2016-2017	2017-2018	
GENERAL FUND	1,910,143	1,957,975	2,035,927	2,418,945	2,350,230	2,120,596	
							
POWELL BILL FUND	146,500	87,000	63,500	63,500	247,900	245,000	
							
WATER & SEWER FUND	
1,654,717	
1,734,130	
1,816,270	
1,435,750	
1,550,677	
1,685,100	
							
STORMWATER FUND	22,000	22,000	22,500	22,500	22,500	22,700	
							
TOTAL BUDGET	3,733,360	3,801,105	3,938,197	3,940,695	4,171,307	4,073,396	

Revenues

The General Fund budget recommends that the tax rate remains steady at 48 cents per $100 valuation. There is a fund balance appropriation of $188,836 to balance the general fund budget. This budget reflects an increase in sales tax revenues of approximately 1.5%.

The Water and Sewer fund reflects a 2% increase in water and sewer rates.  The City of Burlington enacted a 2% increase on their municipal water customers, and we have no choice but to raise our rates accordingly.

The following tables outline projected revenues by fund. Also shown is a comparison with the previous year's budget.

REVENUES		
	Approved
2015-2016	Approved
YTD 2015-	Recommended
2017-2018	
$	
%	
	Budget	2016 Budget	Budget	Difference	Difference	
GENERAL FUND						
Current & Prior Years Ad Valorem	699,000.00	699,000.00	712,000.00	13,000.00	1.86%	
Current & Prior Years Fire Taxes	278,000.00	278,000.00	281,000.00	3,000.00	1.08%	
Local Option Sales Tax	452 ,000 .00	452,000.00	468 ,000.00	16,000.00	3.54%	
Interest on Investments	2,860 .00	2,860.00	3,560.00	700.00	24.48%	
User Fees	121,100.00	121,100.00	125,500.00	4,400 .00	3.63%	
State Funds	252,450 .00	252,450.00	257,450.00	5,000.00	1.98%	
Grant Funds	208,391 .00	283,391.00	64,000 .00	(219,391.00)	-77.42%	
Loan Proceeds	140,000.00	140,000.00		(140,000.00)	-100.00%	
Miscellaneous	17,750.00	17,750.00	20,250.00	2,500.00	14.08%	
Fund Balance	75,000.00	103,678.86	188,836.00	85, 157.14	82.14%	
GENERAL FUND TOTALS	2,246,551.00	2,350,229.86	2, 120,596.00	(229,633.86)	-9.77%	
POWELL BILL FUND	247,900.00	247,900.00	245,000.00	(2,900.00)	-1.17%	
WATER & SEWER FUND						
Water Sales	935,240.00	935,240.00	970,000.00	34,760.00	3.72%	
Sewer Sales	573,710.00	573,710.00	605,000.00	31,290.00	5.45%	
Tap & Connection Fees	7,000.00	7,000.00	7,000.00		0.00%	
Surcharges	1,200.00	1,200.00	1,200.00		0.00%	
Interest on Investments	1,800.00	1,800.00	2,400.00	600.00	33.33%	
Miscellaneous	27,500.00	27,500 .00	29,500 .00	2,000.00	7.27%	
Fund Balance		4,227.22	70,000 .00	65,772.78	1555.93%	
WATER & SEWER FUND TOTAL	1,546,450.00	1,550,677.22	1,685,100.00	134,422.78	8.67%	
STORMWATER FUND	22,500.00	
22,500.00	
22,700.00	
200.00	
0.89%	

TOT AL  REVENUES	4,063,401.00	4, 171,307.08	4,073,396.00	(97,911.08)	-2.35%	

EXPENDITURES

This budget holds the line on operational costs and has capital purchases for equipment and technology upgrades that are needed. The expenditure budget does include developmental pay but does not include a cost of living increase for our employees.

The following tables outline projected expenditures by fund and department.  Also shown is a comparison with the previous year's budget.

EXPENDITURES

GENERAL FUND

Approved	Approved	Recommended
2015-2016	YTD 2015-2016	2017-2018	%
Budget	Budget	Budget	$ Difference	Difference

Governing Body	16,652.00	16,652.00	21,352.00	4,700.00	28.22%
Administration	223,931.00	239, 192.58	227,079.00	(12,113.58)	-5.06%
Public Buildings	46,500.00	46,500.00	41,500.00	(5,000.00)	-10.75%
Police Department	631,262.00	638,839.86	724,302.00	85,462.14	13.38%
Fire Department	325,290.00	328, 168.13	387,552.00	59,383.87	18.10%
Streets and Highways (PW)	476,276.00	553,899.89	210,047.00	(343,852.89)	-62.08%
Sanitation	118,989.00	118,989.00	113,000.00	(5,989.00)	-5.03%
Parks & Recreation	220,578.00	220,915.40	186,344.00	(34,571.40)	-15.65%
Non-Departmental	187,073.00	187,073.00	209,420.00	22,347.00	11.95%
GENERAL FUND TOTALS	2,246,551 .00	2,350,229.86	2,120,596.00	(229,633.86)	-9.77%

POWELL BILL FUND	247,900.00	247,900.00	245,000.00	(2,900.00)	-1.17%

WATER & SEWER FUND
Administration Water Department Sewer Department
WATER	SEWER FUND
TOTALS 
STORMWATER FUND TOTAL   EXPENDITURES

200,900.00	201,671.12	230,989.00	29,317.88	14.54%
714,221.00	714,221.00	781,882.00	67,661.00	9.47%
631,329.00	634,785.10	672,229.00	37,443.90	5.90%

1,546,450.00	1,550,677.22	1,685,100.00	134,422.78	8.67%

22,500.00	22,500.00	22,700.00	200.00	0.89%

4,063,401 .00	4, 171,307.08	4,073,396.00	(97,911.08)	-2.35%

The recommended budget presents a reasonable plan for meeting the stated objectives.

The Department Heads and staff have worked hard to develop this recommendation. It has not been without loss or regrets at times, as some requests had to be cut in order to make room for others. It is fair to say that we can work within the recommended budget. I look forward to working with the Town of Haw River Council as you consider my recommendation.

Manager Earp then answered Council questions regarding various points of the budget such as revenue neutral calculations, fund balance use in Fire Department budget and staffing pattern concerning new part time funds. The proposed 2017-2018 Budget is available for review in Town Hall and the Public Hearing for the 2017-2018 is scheduled for Monday, June 5, 2017 at 7:00pm in Town Hall. Public comment is welcome and encouraged. 
 
7:34 pm
There being no other business, Councilmember Allen made a motion to adjourn. 
Motion carried 4-0. 

 

____________________	________________________________________________ 
Buddy E. Boggs, Mayor 	Melanie R. Eveker, Clerk