Raleigh Approves Budget That Addresses Deferred Spending, Mounting Needs

Prepared by: Public Affairs Department, 919-996-3100

For more information: Joyce Munro, Director, Budget and Management Services, 919-996-4273

June 18, 2012

 

Raleigh Approves Budget That Addresses Deferred Spending, Mounting Needs

 
The Raleigh City Council today unanimously adopted a budget that continues to promote fiscal sustainability and cost competitiveness, with budget reductions targeted to minimize customer service impacts.

Approved was a net operating and capital budget for Fiscal Year 2013 (FY13) of $681,057,702, which includes a General Fund total operating budget of $383,571,703. The operating budget is $3,212,092 less than the FY12 operating budget.

The budget includes the increase in the property tax rate of 0.91 cents that was agreed upon as part of the successful 2011 bond referendum. Those revenues will go to the City’s debt model to pay debt service for transportation and affordable housing projects.

The $40 million transportation bond received 67 percent approval, while the housing bond garnered 62 percent of the vote. This brings Raleigh’s property tax rate $0.3826 per $100 valuation. This rate is among the lowest in Wake County and is by far the lowest among North Carolina's largest cities.

The Council approved a $1 increase in the monthly solid waste service fee. The increased revenue would be used to fund improvements for the following projects:

• Fire Department, replacement of three fire engines at a projected cost of $313,356;
• Fire station building systems, change out HVAC systems at various station locations at a projected cost of $125,000;
• Roberts Park Community Center, HVAC and controls at a projected cost of $255,000;
• Optimist Park, test ball field transformer for PCB and replaced at a projected cost of $125,000; and,
• Eastgate Park, lighting replacement project near pond at a cost of $150,000.

The total bill for these improvements is $968,356. The $1 monthly increase in the solid waste services fee is projected to yield about $1.4 million in revenue. The council is to prioritize these five projects. The elevator replacement project for 310 W. Martin St. and replacement of the greenway bridge at the spillway at Lake Johnson Park were removed from the deferred maintenance list.

The remaining funding will be used to:

• create a senior transit planner request at a cost of $100,000;
• increase funding to Lineberry Park by $125,000;
• increase by $50,000 funding for the summer youth employment program;
• restore the staff tuition assistance; and,
• dedicate $50,000 to the City’s small business entrepreneurial position. The City Manager is to inform the council how this funding will be used within 30 days.

The Council Members also agree to defer personal raises to $1,000 annually over five years. The City Manager’s proposed budget had the Council Members receiving a $5,000 increase this year.

The City Council also removed the Carolina Ballet from the arts grants process for the next year; voting instead to have its $150,000 annual funding taken from the general fund than the arts’ $4.50 per capita fund.

The City Council followed the Water Utility Transition Advisory Task Force’s recommendation to increase sewer rates 15 percent from $2.91 per ccf to $3.35 per ccf. Also approved was a sewer and water administrative fee and an increase in the reclaimed water rate. The additional revenue from the increases will be used to improve the financial condition of the water and sewer enterprise and to maintain the utility’s infrastructure.

The budget does not include increases to solid waste, stormwater or privilege license fees. It does eliminate the cat and dog registration and the mental transport fee. The administrative costs for each of these fees exceeds revenues collected.

The FY13 budget includes equipment purchases of $10.4 million to provide essential City services. Throughout the economic downturn, the City delayed replacement of its vehicle fleet, particularly within Solid Waste Services.

The adopted budget begins to address this depletion.

The budget includes a merit-based increase equivalent to about 2 percent of full-time salary costs that totals $2.9 million. No merit-based increases were available to City staff in FY12. Staff reductions included in the budget that total a dozen positions amount to a budget savings of approximately $440,000.

The positions eliminated by the budget include: six service specialists and one custodian in the Solid Waste Services Department; an analyst in the City Manager’s Office; a staff support specialist in the Planning and Development Department; and a staff assistant, staff support specialist and a crime analyst in the Police Department.

The newly adopted budget for the fiscal year that starts July 1 and ends June 30, 2013 adds 32 positions. They are:

• A paralegal and an attorney;
• Seven emergency call takers to answer the 911 calls that have increased 18 percent over FY09 levels;
• Ten positions to maintain Raleigh greenways, which will have extended to almost 110 miles by the close of FY13. That is a 39 percent increase in mileage over FY12;
• Five highway maintenance positions for landscaping maintenance of highway shoulders. Over the past decade, maintained miles of roads in Raleigh have increased by 75 percent to 161 miles, while staffing increased just 9 percent;
• One service specialist for the Hill Street Neighborhood Facility, which will open this summer;
• Three staff positions to operate the new Historical Resources and Museum program; and,
• Three recreation facility and program supervisors and one administrative support position for the Parks and Recreation Department’s Facilities and Operations Division.

The budget reflects a 28 percent increase in fuel appropriations, requiring an additional $1.3 million in funding. The new budget provides full funding of the police and fire training academies. In FY12, these academies were delayed six months.

The budget holds human service and arts agency appropriations steady. The arts per capita rate also is continued at $4.50.

The budget reflects the very guarded optimism for Fiscal Year FY13 that positive revenue growth, particularly in sales tax receipts has prompted in City officials. However, the officials are keenly aware that the past four years of austerity has created a backlog of capital maintenance and equipment replacement created by cuts and deferrals during the downturn that will take years to adequately address.

In presenting his proposed budget to the City Council on May 14, City Manager J. Russell Allen pointed to Raleigh’s continued growth and its attendant pressures on the City. “Over the past 20 years, the land area of the City has nearly doubled with corporate limits increasing from 94.36 square miles in 1992 to 183 square miles today. We are collecting more trash from more houses, responding to more public safety emergencies, delivering clean drinking water to more households and businesses, while still maintaining a highly competitive citizen/customer costs relative to other North Carolina communities,” he said.

The City Manager said that he was guided by the following priorities for FY13:

• Ensure the long-term financial sustainability of the City’s general governmental operations and enterprises at standards consistent with a AAA-quality credit entity;
• Balance increasing service delivery demands with cost competitiveness;
• Minimize service impacts to Raleigh citizens; and,
• Invest in the City’s employee workforce by maintaining competitive compensation and benefit levels.

Capital Improvement Program

Deferring capital needs and the city’s significant, sustained growth over the past three decades have created an extreme need for capital improvements. The Capital Improvement Program (CIP) element of FY13 budget begins to address these dire needs.

"Our steady growth has outpaced our ability to build and replace critical infrastructure at the same rate as population increases and the City expands its service area," Mr. Allen said when he presented the CIP element of the budget to the City Council. “The five year CIP budget for FY13 includes strategies that begin addressing deferred maintenance and development of new facilities to serve our growing city.”

The CIP budget for FY13 totals $167,768,481. The eight areas of the program include:

General Public Improvements	$10,997,000
Public Utilities	$101,000,000
Stormwater	$4,915,000
Transportation	$30,246,520
Parks and Recreation	$2,070,000
Housing	$5,000,000
Technology	$6,867,200
Convention Center and Performing Arts Facilities	$6,672,761

The City’s newly adopted budget will be posted on the City of Raleigh's website at www.raleighnc.gov.  When they are printed, bound copies of the budget may be reviewed in the City Clerk’s Office. For more information, contact the City’s Budget Office at 919-996-3840.