Elon’s town manager has preemptively proposed tens of thousands of dollars in spending cuts in response to pushback against a potential property tax hike that has been the centerpiece of his suggested budget for the next fiscal year.
Town manager Richard Roedner shared these prospective cuts with Elon’s town council on Monday due the resistance that some of the council’s members have shown to his recommended tax increase, which would add 1.5 cents to the current levy of 35 cents for every $100 of property.
Roedner went on to enumerate about $175,000 in potential reductions to line items ranging from contracted services to police uniforms and even the council’s own travel allowance. All told, these proposed changes add up to more than the $140,000 that Roedner predicted a 1.5 cent tax hike will raise. The town manager nevertheless acknowledged that various other adjustments to his original spending plan have still left him about $15,000 shy of a balanced budget.
In any event, Roedner said that he’ll try to scare up some additional reductions so that he can present these cuts alongside his recommended budget when it comes up for a public hearing on May 13. He added that his goal is to offer the council a viable alternative to the tax increase without having to dig into the town’s accumulated savings, or fund balance.
“I will tell you it will not include taking more money out of fund balance for operations,” he elaborated on Monday. “I will cut operations [instead].”
More balls in the air
Roedner ultimately shared these proposed cuts with the council after its members spent the better part of an hour grappling with the spending plan that the town manager presented three weeks earlier.
In its original form, the town manager’s budget calls for nearly $11.9 million in outlays from the town’s general fund – a repository for various taxes and fees that bankrolls most of the town’s operations. This figure, which amounts to a 6.3 percent spike over the current year’s budget, includes increases in fuel, utilities, and employee healthcare, as well as $250,000 for downtown streetscaping and a 2.5 percent “cost-of-living adjustment” for Elon’s municipal staff.
In order to cover the general fund’s proposed increases, Roedner relied on a combination of strategies. In addition to the proposed property tax hike, these measures included a more optimistic projection of the town’s sales tax receipts as well as the tentative allocation of nearly $1.3 million in savings.
The town manager also shifted some of the general fund’s outlays to Elon’s water and sewer fund – a free-standing account that relies on proceeds from user fees to operate the town’s public utilities. Roedner has proposed a 7 percent increase in these user fees to keep the water and sewer fund above water.
For all the complexity of Roedner’s financial juggling trick, the town’s elected leaders haven’t been hesitant to toss some figurative bowling balls into the mix. During its meeting on Monday, the council bandied around everything from additional allocations of savings to restated revenue assumptions to offset the town manager’s proposed property tax increase. Its members also hazarded some potential spending cuts of their own before Roedner saved them the trouble by offering up the litany of spending reductions he had at the ready.
Gaming the budget
Among the ideas that the council contemplated prior to Roedner’s intervention was the potential restatement of other revenue sources in order to obviate the need for a property tax hike.
This apparent act of bookkeeping legerdemain gained some legitimacy from Roedner himself, who had previously acknowledged that, in his recommended budget, he revised up his usually cautious sales tax projections to within a $100,000 of the state’s estimate.
Roedner went on to admit that, in years past, his “conservative” sales tax projections have come in well below the town’s actual sales tax receipts, allowing him to bank much of the difference in the town’s savings. This accumulation of surplus revenue was put in much plainer terms by councilman Randy Orwig as he tried to make sense of the town manager’s historic approach to the budget.
“The game that we play is the sales tax game,” Orwig inferred. “You guess what our sales tax will be, then you back that up a little bit.”
This trick of the trade also grabbed the attention of Elon resident Michael Goodwin, who had addressed the council during a designated public comment period on Monday. Goodwin recalled that an article in The Alamance News had observed that, in 2024, a sizable surplus in revenues had enabled the town to plow more than $4 million back into its savings.
“If we have surplus,” Goodwin went on to inquire, “why are we talking about a tax increase?”
Roedner attributed this particular surplus to some residual federal pandemic funds that are no longer flowing into the town’s coffers. The town manager added that he expects the margin to be much slimmer in the upcoming financial cycle.
Roedner was also reluctant to endorse any change in his current sales tax projections when Orwig asked him if such an adjustment could negate the need for a property tax hike. The town manager emphasized that pressure from the town’s budget committee has convinced him to bring his sales tax projection closer in line with the state’s estimate of $4 million.
“And at the request of the budget committee, I went up to $3.9 million,” the town manager explained.
“In other words,” Orwig said, “we’re less conservative this year.”
“And we’re going into a year that’s anything but conservative,” Roedner continued. “I’m not an economist, so I have a lot of angst about the next fiscal year.”
Saving grace
In addition to trying to rejigger the manager’s revenue assumptions, some members of the council were tempted to increase the proposed allocation from the town’s savings to avoid any increase in property taxes.
Reinforcing this inclination was the fact that Elon’s latest annual audit had reported $11.9 million in “unreserved” cash within the general fund’s savings – or more than 122 percent of the fund’s outlays for the whole fiscal year which the audit examined.
Roedner nevertheless discouraged the council from increasing the savings he had already set aside to balance his recommended budget. The town manager insisted that he has already taken advantage of the admittedly ample sums which have accrued in the fund balance.
“Ours has gotten quite large,” he added, “and over the past two years, we have made a pointed effort to spend that down.”
Roedner went on to allude to the town’s recent outlay of $2 million in savings to cover the cost of a new ladder truck.
In the meantime, Elon’s mayor Emily Sharpe argued that, in addition to the funds for this vehicle, the council should factor out another $4.8 million in savings, or about 40 percent of the budget, in order to ensure that the town remains solvent in the event of an emergency. Sharpe went on to observe that these deductions leave about $5.2 million in genuinely expendable funds.
“But when you look at our capital improvement plan there’s $46 million in projects,” she added, “and that doesn’t even include the one that we’re going to discuss in closed session tonight…So I’m asking you whether you want to have money to invest in your future.”
[The council, incidentally, went behind closed doors for roughly an hour on Monday to discuss the potential purchase of a building that LabCorp owns at 112 Orange Drive. The town’s administrators have previously identified this property as a possible new home for Elon’s town hall and police department. The council ultimately concluded Monday’s closed session by instructing the town manager to continue negotiating a deal for this real estate.]
In the end, the council generally seemed to concur that it wouldn’t be wise to raid the town’s savings to avert a property tax increase. At the same time, council member Stephanie Bourland suggested the public impression that Elon is rolling in savings is largely a failure on the town’s part to convey the nuance of how the fund balance is actually used.
“I think it’s about optics,” Bourland told the rest of the council. “People are asking why are doing this when you have all this money sitting around…But what we’re finding out is that the community doesn’t know what’s going on here…and I have said this until I’m blue in the face: we are not communicating what we need to with the community.”
Cut time
Rather than try to preserve the proverbial pie in its entirety, some members of the council were quite willing to scale back the town manager’s proposed outlays in order to jettison the property tax hike.
During Monday’s discussion, councilman Quinn Ray recalled that the council had recently expedited more than $50,000 in computer purchases from Roedner’s original budget in order to get ahead of newly-imposed tariffs on Chinese-made goods.
Ray suggested that the council could strike another $100,000 from the manager’s budget, and thereby eliminate the need for a property tax increase, by postponing some sidewalk and street repairs that the town manager had recommended for the next fiscal year.
Ray added that the council could eventually roll these street and sidewalk improvements into a bond package that its members have previously discussed.
“I think we can cut the streets and sidewalks because we’ve been talking about doing a bond,” he added, “and we shouldn’t tax people for something we want them to vote on.”
Ray’s suggestion seemed to strike a chord with the mayor, who said she “personally” liked the idea. It nevertheless fell flat with Roedner, who observed that the funds for the street and sidewalk repairs are slated to come out of savings earmarked for capital improvements. He added that, even if the proposed upgrades are struck from the budget, the money freed up would remain in the bank without doing anything to offset the town’s property tax revenues.
Ray’s gambit went on to inspire other council members to suggest other ways to reduce the proposed budget’s outlays. Councilman Michael Woods, for one, recommended that the council swap out the staff’s proposed cost-of-living-adjustment for a flat bonus, which he deemed more economical.
Sharpe nevertheless swatted down the proposal on the grounds that it would allow salaries in Elon to slip behind those in other cities and towns.
The mayor, meanwhile, threw out a proposed cut of her own after she determined that a $4,000 line item for employee “wellness” was “not evidence based” and presumably not worth the expense. Roedner agreed to consider this cut before he short-circuited any more proposed nips and tucks by announcing that he had already compiled a list of his own recommended excisions.
The town manager went on to acknowledge that he had appealed to Elon’s department heads to recommend some potential cuts so that he could offer the council some alternatives to the proposed property tax increase. He went on to enumerate several dozen of these prospective deletions.
Included in this budgetary hit list were the computer purchases that the council had previously fast-tracked along with $12,000 for timekeeping software, $10,000 for contracted administrative services, $10,000 for contracted sidewalk repair, $15,000 for ADA upgrades in public works, and another $15,000 for other capital improvements on the public works department’s to-do list.
Roedner also proposed to strike $8,000 from the line item for police uniforms and equipment, $2,500 from council’s travel budget, $912 for phone service on the mayor’s iPad, $500 for “staff recognition,” $5,000 for downtown marketing (which Roeder said can be funded through the town’s new tax on hotels and motels rather than the general fund’s revenues) $8,000 for the planning department’s enforcement of code violations, $5,000 that the town would’ve chipped in toward a “donation honor tree” in the downtown business district, and $5,000 from the fire department’s vehicle maintenance outlays in recognition of the fact that the department just got a pristine new fire truck.
In the final count, Roedner’s proposed cuts came in at just over $175,000. The town manager conceded, however, that he’ll need to eliminate another $15,000 due to various adjustments that he has made to other parts of his recommended budget.
The council, for its part, generally seemed grateful for Roedner’s suggestion. Sharpe nevertheless objected to the elimination of the funds for “staff recognition.” She also balked at the removal of the council’s travel allowance until Roedner informed her that the funds are currently not being used.
When all was said and done, the mayor joined the rest of the council in urging Roedner to polish up his list of proposed cuts so they can be unveiled at next month’s public hearing along with the original proposed budget with the property tax hike intact.
“I think for our public hearing, we should look at our budget as proposed and our budget with no increase, and see what people say,” she added before encouraging her colleagues to drum up attendance during the hearing. “So let’s get on the phones and ask people to show up.”
