Graham city manager Frankie Maness is recommending a $28 million budget for the upcoming fiscal year that would keep the city’s property tax rate at its current level, 45.5 cents per $100 of valuation, for the fiscal year that begins July 1.
However, Graham’s sewer rate would increase, while its water rate would decrease during the upcoming fiscal year.
Maness is proposing to increase the city’s sewer rate by $1.79 per 1,000 gallons, from its current level of $5.97 to $7.76 per 1,000 gallons and a minimum monthly bill of $3.30.
He is proposing to reduce the city’s water rate by $1.34 per 1,000 gallons, from $4.81 to $3.47 per 1,000 gallons and a minimum monthly bill of $3.30.
Maness unveiled his $28 million budget recommendation last week to Graham city council members – marking the first time they had convened in two months, after a statewide stay-at-home order took effect March 30 – although they came together most recently via the Zoom online meeting platform.
“While many are sounding alarms, the sky doesn’t appear to be completely falling, at least not in Graham,” Maness noted in his summary to provide context for the budget recommendation. The city’s property tax base is continuing to increase, “as hundreds of new residents are now calling Graham home, economic development interest is high, and despite the pandemic, new housing starts in April remain steady,” he said, pointing to the real estate website Zillow, which recently ranked Graham as having the fastest-growing home values among the county’s three largest municipalities.
The manager’s budget recommendation for 2020-21 represents a reduction of about $20,000 (or about 1 percent less than the current budget) in general fund spending that falls $2.1 million short of what the city’s department heads had asked for during the council’s budget retreat in March.
Maness is proposing two separate cost of living adjustments (COLAs), of 1 percent each, effective July 1 and January 1, 2021 for more than 250 city employees.
However, the manager is proposing to eliminate three full-time positions, from 160 to 157 full-time positions. (Maness has not said whether those three positions are currently filled.) No additional positions would be added during the 2020-21 fiscal year, based on the budget recommendation that he has presented to the council.
No new programs would be added, and some, such as recreation programs, could continue to be suspended to maintain social distancing requirements. Maness is also proposing to reduce spending for travel by 25 percent.
During the council’s budget retreat in mid-March, most of the city’s department heads asked for more personnel, more equipment, and funding for repairs.
Spending within the general fund would increase by $508,500, from $13.5 million for the current fiscal year to about $14.1 million for the upcoming fiscal year. Maness attributes the need for additional spending within the general fund to rising costs for employee health insurance and employer matching retirement contributions. The city is facing a $12 million long-term pension liability, which is 264 percent of total payroll, he said, adding that Graham’s costs for benefits are exceeding normal rates of inflation.
Spending with the city’s water and sewer fund also would increase by $505,800, from about $7.6 million this year to $8.2 million next year.
Of the three funds that the city’s annual budget supports, the garage fund would receive the smallest increase. Maness is proposing to increase spending for the city garage by $16,100, from $935,600 for the current fiscal year to $951,700 in 2020-21.
The fire department would receive the largest budget increase, $368,500, with most of the additional funding designated for planning and designing a second fire station.
The police department would receive an additional $236,000 to replace vehicles and repair heating, ventilation, and air-conditioning (HVAC) units that were installed when the department’s headquarters were built in 1995, Graham police chief Jeff Prichard has said.
Within general fund departmental expenses, the largest increase would be for “non-departmental” spending, which Maness is proposing to increase by $57,900, from $995,600 this year to just over $1 million next year. Approximately $312,500 in non-departmental funding would be set aside to cover preliminary costs for engineering, bidding, permitting, and financing for upgrading and expanding the city’s wastewater treatment plant.
Maness is also proposing to increase the budgets for several other departments:
- Sanitation, $39,800 (from $832,600 to $872,400);
- Information technology, $35,300 (from $348,700 to $384,000);
- Administration, $23,300 (from $593,200 to $616,500);
- Inspections, $23,100 (from $527,500 to $550,600);
- Public buildings, $7,100 (from $125,500 to $132,600);
- Garage and warehouse, $3,800 (from $91,500 to $95,300).
The budgets for all other city departments would be reduced; the streets and highways department would receive the largest budget cut, $216,300, from just over $1.7 million this year to $1.5 million next year, based on the manager’s recommended budget for 2020-21.
Future capital recommendations include $31.1 million to upgrade wastewater treatment plant
On the capital side of the ledger, Maness is proposing to boost funding for construction of an “inclusive playground” at the city’s regional park by $53,100, from $850,000 this year to just over $903,000 for the upcoming fiscal year.
Maness is also recommending that the city keep its budget for the Boyd Creek pump station at its existing level, just under $4 million. The proposed increase in the sewer rate would be used to pay $130,000 in debt service for that pump station.
The manager is also urging council members not to lose sight of the $1.25 million in debt service for the wastewater treatment plant expansion, which he says will come due a few years from now.
Maness has previously said the city will likely need to borrow $31.1 to finance the wastewater treatment plant upgrade, which is reflected in a capital spending schedule for 2021-22 that the manager included as an appendix to his budget recommendation for the upcoming fiscal year.
A portion of the nearly $4 million that Maness has budgeted for the Boyd Creek pump station in 2020-21 would be set aside to cover about a quarter of the estimated $1.25 million in future debt service for the wastewater treatment plant expansion, based on the recommended spending priorities he outlined for the council last week.
“To account for this debt service in a single year would require a 46 percent increase in sewer revenue, all at once,” Maness warned in his budget summary. “This type of increase would be considered ‘rate shock,’ as it would provide little time for individuals and businesses to adjust their finances.
“Therefore, a graduated approach, over the next four fiscal years, to adjust rates to accommodate the current and future demands, as well as align expenses for the respective services with their rates is recommended,” he explained.
There would be no allocation for city cemetery or another park on Jim Minor Road, under the manager’s recommended budget for 2020-21.
However, on the bright side, the city began the current fiscal year with approximately $8.9 million in unrestricted fund balance (or rainy-day savings) on hand, which represents about 65 percent of the total $13.6 million budget for 2019-20 and well above the 8 percent of expenses that local governments are recommended to keep in fund balance.
Maness is recommending that the council appropriate about $1.5 million in fund balance, though he is projecting that the city’s rainy-day savings account will increase by the end of the 2020-21 fiscal year but hasn’t said by how much. The council is scheduled to hold a public hearing on the proposed budget for 2020-21 at 6:00 p.m. on June 9. The council typically considers and votes to adopt a city budget at its June meeting.