3-cent tax hike being proposed for 2026-2027
Graham’s city council spent the better part of a nearly 4½-hour special meeting Wednesday afternoon analyzing the city manager’s $44 million proposed budget and looking at line items they might be able to nip and tuck before voting to adopt a budget for the 2026-27 fiscal year at their next meeting in two weeks.
But at the outset, the council heard presentations from representatives with three local nonprofits – Alamance Arts, LINK Transit, and United Way – seeking contributions from the city to offset costs for programs that they offer, which they said benefit Graham residents.
John Andoh, manager of LINK Transit, asked the city to contribute a “local match” of $20,000 to $25,000 for federal funds that the transit system currently receives to offset its expenses for buses that stop in five locations in Graham.
Council members agreed by consensus to continue its existing funding for the Alamance County Transit Authority (ACTA) but left open the possibility that they may revisit the request later during the 2026-27 fiscal year.
Kim Williard, interim executive director of Alamance Arts, had floated a suggestion, but didn’t specify a dollar amount, for the city to contribute toward the arts council’s 70th anniversary celebration later this year.
United Way president Shereá Burnett asked the council to consider contributing $12,000 to the agency to support the expense for a seasonal site coordinator in Graham to assist with the free income tax preparation services that IRS-certified tax preparers currently provide at United Way’s office in Burlington.
“I’m torn because our employees already give to United Way,” mayor pro tem Ricky Hall said Wednesday afternoon.
Councilman Bobby Chin proposed waiting until the new fiscal year begins to “see how the revenue stream is” and then possibly revisit the request after the end of the first or second quarter of the next fiscal year.
Council members Jim Young and Bonnie Whitaker also favored waiting until the later in the 2026-27 fiscal year.
Mayor Chelsea Dickey said, “I don’t want to cripple the efforts because of our timing” by waiting until the end of the second quarter, in late January 2027, to revisit the request.
Burnett had told the council that the Volunteer Income Tax Assistance (VITA) tax preparation program had secured $581,677 in federal tax refunds for people who had an average gross income of $26,917 in Alamance County during the spring 2026 tax season.
Several years of tax increases may be needed to fund big-ticket capital projects
Meanwhile, city manager Megan Garner forecast later during the meeting that several subsequent tax increases will be needed – on top of the 3-cent increase in the city property tax rate that she has recommended for this year’s budget, at the council’s urging earlier this spring – to fund the city’s $22 million capital improvement plan (CIP), which will be completed over the next five years.
Those CIP consists of: construction of a $6 million fire substation; a $1 million fire truck; $4.1 million over the next two fiscal years to develop the first phase of the city’s regional park; $3.75 million for street resurfacing; and to increase annual funding for capital improvements from $1.4 million to $7.1 million.
For his part, Hall asked the city manager whether it would help to move the construction of the city’s fire substation along faster if the council were to remove $4.1 million funding for the first phase of development of Graham Regional Park from the Capital Improvement Plan (CIP), potentially redirecting it to the fire station project.
An initial estimate put the cost to build the fire substation at $6 million, based on a debt capacity analysis presented to the council in February 2026.
However, Garner indicated during Wednesday’s work session that the cost for construction could come in higher.
“I think it would help significantly,” Garner responded in reference to Hall’s suggestion to redirect CIP funding from the first phase of the regional park to the substation. “The terms used were anywhere from $6 to $8 million, depending on the time that we go out to construction, the cost per square foot, all that goes in there,” she said.
As an alternative, the city could use cash on hand to pay for the design work and construction of the substation, Garner said. “And what funds may be left, you could use for your debt service for a truck, a down payment for a truck – understanding that the tax increase that was proposed was not a one-year standalone tax increase, that it did take several years of having that to maintain where you needed to be.”
Travel and mayor’s cell phone
Over the course of the remaining 3½-hours of its meeting Wednesday afternoon, the council delved into a line-item review of the city manager’s proposed budget, looking for areas to trim spending – and boost the city’s revenues.
The council agreed by consensus to bump the proposed $9,000 budget for city council travel back down to its existing level of $7,000 for the 2026-27 fiscal year.
Asked why she’d increased the budget for travel, Garner said, “Because y’all have been traveling,” referring to an annual N.C. League of Municipalities conference in Raleigh, the annual Alamance County Chamber retreat in Wilmington, and other professional development training.
Whitaker said she wanted it noted that they were not requesting any increase in the stipend for council members, prompting the manager to point out later in the discussion that the council receives a cost-of-living adjustment (COLA) increase, such as the 3 percent COLA she has proposed for all city employees in 2026-27.
Councilman Jim Young said he’d be fine with eliminating funding for city council travel altogether.
Dickey added, “I don’t think we need to keep growing that expense.”
Councilman Bobby Chin pointed out that just because funding is available it doesn’t mean the council has to spend it. “With everything right now, because of gas…we’re earmarking it out, but it doesn’t mean we’ve got to spend it.”
The council ultimately agreed by consensus to direct the manager to reduce the budget for travel, while leaving intact the recommended funding amounts for other council expenses, such as $3,000 designated for phones and postage, which includes a city-issued cell phone for the mayor, though that topic prompted a brief, prickly exchange between Dickey and Whitaker.
Garner explained that the $3,000 budget for phones and postage had also covered the cost for city-issued Microsoft Surface tablets, which she indicated the council no longer uses.
Whitaker pressed Dickey, who’d asked the manager to explain what the $3,000 phone/postage line item covers, about why she needed a city-issued cell phone.
“I don’t think you need it; it’s something we don’t need to pay for,” Whitaker said.
“If the city council is telling me to cut it, that is okay,” Dickey responded. “But if you’re asking if I use it, I do,” she added, telling the council that she receives calls from many constituents, as well as frequent public records requests for her text messages.
“The reason she gave for using it is pretty much [applicable] to all of us,” Young countered, though he conceded later, “I’m good with it.”
Garner told the council Wednesday afternoon that numerous requests from department heads had been trimmed before presenting her recommended budget to the council last week. For example, the police department had asked for approximately $286,000 to purchase four vehicles; she trimmed that to about $121,000 for two new vehicles, she said.
Another potential tuck to the budget that Hall suggested Wednesday would entail pausing the city’s allocation for beautification grants; he said that the appearance commission previously had trouble coming up with enough people to apply for them, asking whether there might be a better use for the money.
“I would ask that we zero them out until we can come up with something better,” Hall said.
Garner, however, recommended freezing the city’s façade and business beautification grants until new guidelines can be developed.
Development charges and other fee schedules
Hall also proposed increasing the development fees for new homes by 20 percent, which he indicated would still be below what other municipalities in the county charge.
Whitaker agreed, saying, “My personal opinion [is] we need to adjust some of these higher to earn a little revenue for the city…We could do them one by one and see if certain ones need to go up and certain ones don’t.”
At the same time, Whitaker said she’d like for the staff to prepare a comparison of what other municipalities charge, reasoning, “I don’t want to make it where builders don’t want to come here.”
Assistant city manager Aaron Holland said the staff could develop a comparison in time for the next regularly-scheduled council meeting on June 9.
“If you could, that way we would have [an estimate] to work with,” Whitaker responded.
Hall also said he would like to see a 20 percent increase in the city’s fees for new home inspections.
Dickey said, “I would like to see where the city breaks even on its costs.”
Dumpster diving
The council also discussed the possibility of increasing sanitation fees for businesses for the upcoming fiscal year.
Garner pointed out that downtown business trash cans generally weigh twice as much as residential trash cans, which also affect landfill tipping fees. “Whatever rate increase the council lands on, it would be each can,” she said, adding that the sanitation department’s request for a rear-loader garbage truck is unfunded in the recommended budget.
Businesses receive trash pickup twice per week, while residential customers get pickup once a week, the council was told Wednesday.
“I think if we look at it, we need to look at the whole business district, not just the downtown – all B-1 and B-2,” Hall responded.
Meanwhile, the mayor has also asked Garner to provide, at a future meeting, an estimate of the potential cost for the city to provide all of its employees with the same 17.1-percent retirement contribution that police and firefighters receive, as well as more than two dozen other “actual costs” for things such as contracted services.
Garner agreed to provide an estimate of the potential cost to provide all city employees with a 17.1-percent retirement contribution, along with other figures that Dickey requested, at a future meeting.
More long-range capital projects on the horizon
The debt capacity analysis the council heard in February calls for a potential total of $61.7 million in water and sewer construction and upgrade projects that city officials say will also be needed within the next several years.
Those projects include: water and sewer line extensions, connections, and replacements ($30.1 million by 2031); sewer lift station upgrades ($6.7 million); water treatment plant design and upgrade ($21.6 million by 2031); and wastewater treatment plant projects ($3 million).
Approximately $48.6 million in water/sewer projects would be financed through debt, and $13.1 million would be in “cash funding,” based on the debt capacity analysis that Davenport Public Finance developed for the city and presented earlier this year.
The only vote the council took Wednesday afternoon was 5-0, to close West Elm Street from 10:00 a.m. until 1:00 p.m. on Monday, May 25, for the Alamance County War Memorial Event, held annually at the J.B. Allen Criminal Court House at 212 West Elm Street.
The council agreed Wednesday to hold another work session on the budget at 12:30 p.m. on Monday, June 1 inside the council’s chambers at city hall.
State law requires all local units of government to adopt a budget prior to the end of the current fiscal year on June 30.
