Thursday, June 13, 2024

114 West Elm Street
Graham, NC 27253
Ph: 336.228.7851

Divided Graham council goes ‘revenue neutral’ on 3-2 vote


Tuesday night, Graham became the first, and so far only, local municipality to adopt a 2023-2024 budget with a revenue neutral tax rate.

The county has undergone a revaluation of property values, resulting in a huge, 79.43 percent, overall increase in values.  Graham had the highest increase in values, according to the tax administrator’s office, at 86.94 percent.

And while county commissioners seem to be getting close to revenue neutral (see separate story this edition), local municipalities have passed tax rate hikes of 8 percent above ‘revenue neutral’ (in Mebane), 14 percent higher (in the town of Elon on Tuesday night), and 18 percent (Burlington, last week).

City manager Megan Garner had originally recommended a tax rate of 35 cents, more than 21 percent over the ‘revenue neutral’ level of 28.99 cents per $100 valuation.

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At an earlier city council work session, council members had whittled down some of the expenditures (by about $200,000), and at the direction of the council, staff had cut down some more (about another $215,000).

But the budget presented Tuesday night still contained a recommended tax rate of 32.78 cents per $100 valuation, still 3.79 cents above the revenue neutral rate. Each penny in Graham equals $228,084. So the budget was still over the revenue neutral mark by about $864,000.

In the final haggling, mayor Jennifer Talley proposed several more cuts – such as eliminating the two new employees Garner had recommended: eliminating a new city planner ($75,000) and half of a  human resources assistant ($34,500) position, making the current part-time position into a full-time one.  But council members ultimately agreed to include the two positions, but without planning to hire either immediately.

[Story continues below chart of cutbacks made prior to adoption of budget.]

Another Talley suggestion, of trimming the cost-of-living increase, which Garner had proposed at 5 percent, to 4 percent.  Alamance News publisher Tom Boney, Jr. also noted that other local jurisdictions, other than Mebane, had lower salary increases for their municipal employees: Burlington passed a 4 percent increase in its budget last week, and county commissioners have tentatively trimmed the county manager’s proposed raise for all county workers from 5 to 4 percent.

But other council members felt that Graham is already at a disadvantage in hiring and didn’t want to trim Garner’s proposed 5 percent raises. “Let’s not mess with the COLA,” said councilman Joey Parsons.  “We’re not competitive as it is,” added council member Bonnie Whitaker.

Discussion also focused on the “fund balance,” or savings account that the city has, which is now over $13 million. The unobligated portion of that, around $10 million, represents 69 percent of the city’s budget.  State law requires cities to maintain at least 8 percent in unobligated fund balance.

Garner had proposed using $600,000 of it to balance the 2023-2024 budget.  But that figure was about $1 million lower than previous city managers have recommended in several recent fiscal years.

The council took a 10-minute recess after Talley asked the city’s finance officer to find the most recent statistics on the city’s fund balance.  Boney insisted that while the chart being shown to council members showed the amounts of fund balance appropriated, he insisted that the city has not typically actually used the full extent of fund balance in practice.

When finance officer Melanie Eveker returned, she read from an audit from the fiscal year ending June 30, 2022. She said figures there showed that while money had been appropriated from the fund balance for each of the previous 11 years, in none of those 11 years was money actually drawn down, or used, from the fund balance.

Members agreed that a $196,000 expenditure at the city’s garage could probably be funded through ARPA (American Rescue Plan Act), reducing the budgeted expenditures by that amount.

Mayor Jennifer Talley then made a motion to adopt the budget by using an additional $664,000 from the fund balance – a total of $1.264 million – and lowering the proposed tax rate to 28.99 cents, the revenue neutral estimate provided by the county tax administrator.

Talley and councilman Joey Parsons voted for the motion, and Talley paused several minutes during the vote to further cajole that the city could afford to designate the saving account funds that it would probably never use.

Finally, councilman Ricky Hall voiced the third “aye.”  Talley then called for those opposed, bringing dissents from councilmen Bobby Chin and Bonnie Whitaker, and pronouncing the budget passed, 3-2.

Afterwards, Chin explained that he felt it was “shortsighted” to use fund balance. He also didn’t feel “like quibbling over” what he considered a small differential, such as the $200 example of higher property taxes he estimated he, himself, would be paying on a $600,000 home.

For her part, Whitaker said, “I don’t like spending money I don’t know that I have.”

Hall said he had wanted to come as “close as we could” to revenue neutral, while expressing the “hope we don’t have to raise taxes next year.”

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