Burlington’s city manager has rolled out a proposed budget for the next fiscal year that calls for $90.5 million in outlays from the city’s general fund; fee increases for water, sewer, and sanitation; $1.6 million in payments on bond-induced debt – and, crucially, no increase in the city’s property tax rate.
City manager Craig Honeycutt presented this tax-neutral spending plan to Burlington’s city council during a special work session on Wednesday afternoon.
During his pitch, Honeycutt acknowledged that the city is facing a number of financial challenges – not the least of which are the debt payments on $68.5 million in bonds that the city’s voters approved in November, and which are expected to cost the equivalent of 5.7 cents on the tax rate to repay. Honeycutt added, however, that he sees no reason right now to adjust the current property tax rate of 48.36 cents for every $100 of property value.
“At this point, we’re not recommending a tax increase,” he went on to assure the council during Wednesday’s work session. “Next year, with the bonds being sold for the Paramount Theater and also the MAC, there will definitely be a tax increase, so I’m giving you a year to get ready for that.”
Honeycutt conceded that his current recommendation includes $1.6 million to cover the debt payments on the first batch of bonds from November’s election. These bonds, which went to market in April, have raised $16.5 million for street and sidewalk repairs.
The city council had originally intended to issue these bonds with another $17 million that have been earmarked for an expansion of the Paramount Theater and a new superstructure for the Maynard Aquatic Center. The council nevertheless shelved this $17 million shortly before the sale date due to unexpected increases in the construction costs of these projects. [See separate story this edition.]
Since then, city staff have managed to pare back the theater expansion to within its original budget and have received the council’s permission to return to the drawing board with the aquatic center’s housing. Neither of these projects will have any impact on the budget for the next fiscal year, which begins on July 1.
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Honeycutt conceded that, aside from his efforts to accommodate the bond payments, he has compiled a fairly “basic” budget for the city’s general fund, which uses revenue from various taxes and fees to bankroll most of the city’s operations.
The city manager said that he expects property tax revenue to contribute $41.9 million to the general fund’s outlays of $90.5 million. This figure assumes a 3 percent bump in the property tax base due to “natural growth.” The manager is also predicting a 3 percent rise in sales tax receipts, which are expected to add another $22.3 million to Burlington’s coffers.
Honeycutt said that he’s proposing a 5 percent hike in water and sewer fees, which go into a standalone account that bankrolls the city’s public utilities. In the meantime, he called for an increase of $10 a month in sanitation fees in order to offset higher costs for recycling and the disposal of garbage in Alamance County’s landfill.
Honeycutt added that, unlike the city’s water and sewer fees, these sanitation charges currently go into the general fund. He acknowledged, however, that the plan is to spin these services out into their own self-sustaining enterprise fund over the coming years.
On the expense side of the ledger, Honeycutt said that he and his colleagues have gone to great lengths to minimize the money that flows out of the city’s general fund.
“We’ve eliminated a lot of operational increases,” he said. “We’ve gone through the budget with a really fine tooth comb and gotten our expenses where they need to be without any cushions.”
The city manager added that his proposed budget expects payroll expenses to account for about 70 percent of general fund’s outlays. He added that these allocations include a proposed increase of $430,000 for employee health insurance, $740,000 to fill now vacant positions, $830,000 to continue a multiyear pattern of pay increases for police officers and firefighters, and $450,000 to fund a merit-based raise for other staff members that averages out to 2 percent across the city’s workforce. Honeycutt hasn’t proposed a so-called cost-of-living adjustment in his spending plan.
Honeycutt said that he’s recommending just one new, full-time position in his proposed budget for a parking collections specialist. He is also calling for a new part-time post for a crash investigator at the city’s police department.
Another large chunk of Honeycutt’s spending plan has been set aside for capital projects. The city manager said he’s recommending $23.4 million for these endeavors, while another $17.9 million in proposed projects has been set aside or abandoned.
Honeycutt said that his proposed budget includes the first 40 percent of a new computer aided dispatch system – the remainder of which will be allocated in the following year. He added that the city had expected to receive $1 million in federal funds to offset the cost of this project – only to have this money abruptly pulled back.
Honeycutt went on to highlight a number of other proposed outlays for the city’s general fund. These include $400,000 for transit, $200,000 for handicapped accommodations, and a $250,000 line item for affordable housing – the particulars of which have yet to be nailed down. Yet, at the end of the day, he told the council that he tried to keep new expenditures to a minimum to reduce the strain on the city’s resources.
Honeycutt’s recommendations – and in particular, his maintenance of the city’s current property tax rate – were warmly received by Burlington’s mayor Jim Butler.
“Thank you for holding it in line,” Butler said at the end of Wednesday’s presentation. “It’s a moving ball…and the truth is things change every day.”
