2020-2021 Budget Proposal

2020-2021 Budget Proposal Documents

City Manager Scott Hildebran’s Budget Message

May 19, 2020

Honorable Mayor Gibbons and Members of the City Council:

Pursuant to Section 159-11 of the North Carolina General Statutes (Local Government Budget and Fiscal Control Act), I am pleased to submit the Recommended FY 2020-2021 Budget for your review and consideration. This document provides a financial plan for the ensuing fiscal year and was developed in accordance with the City Council’s Priorities established in both the February Strategic Planning Retreat and the March Budget Retreat as well as during Council/Departmental meetings held over the past year. Due to the COVID-19 pandemic and the uncertainty of future revenue projections and service demands, the preparation of the recommended budget has been one of the most challenging tasks in my 31 years in local government. 

General Fund

The proposed General Fund budget totals $17,830,516 and is balanced with the current property tax rate of 58¢ per $100 of assessed property value and the current Rescue Readiness Tax of 0.85¢ per $100 of assessed property value. All other General Fund charges/fees are unchanged. 

Water and Wastewater Fund

The proposed Water/Sewer Fund budget totals $8,581,300 and maintains the current water and sewer rates. All other Water/Sewer Fund charges/fees are unchanged. 

For reference, the Consumer Price Index - South Region for All Urban Consumers over the past 12-month period is 1.9% (February 2020). 

Budget Highlights

The key components of this budget are: 

  • Core services are continued with revenue projections estimated in a realistic, conservative manner. The projections include the consideration for uncertainties due to the COVID-19 impact on the current economic environment and follows the UNC School of Government’s and N.C. League of Municipalities’ guidance for local governments. 
  • Employee Compensation: City Council and Management continue to recognize that our employees are vital to the delivery of quality municipal services and represent our most valuable asset. As our top strategic priority, the budget includes a 3.0% cost of living increase effective on January 1, 2021. The implementation of the COLA will be re-evaluated later in 2020 to determine if it is feasible based on the impact of COVID-19. Further, the budget funds the required 1.2% increase for the Local Government Retirement System.  In concert with the budget adoption and as discussed during our budget planning session, it is also recommended to provide employees with (1) personal leave day each year to be used for any use they deem appropriate, such as a birthday, holiday, school visit/trip, funeral, etc.
  • The City’s group health insurance premiums will increase by 6%, while maintaining the current plan benefit levels.  
  • The cost of the City’s property/liability and workers’ compensation insurance coverages will be relatively flat in the coming year.
  • Street Resurfacing: The budget increases funding to $390,000 to continue implementation of the recent Pavement Study, subject to State of N.C. Powell Bill allocation. Also, the budget includes an additional $100,000 for roads/bridges improvements.
  • Downtown: Allocates funds from the CDBG Capital Project Fund to continue improvements on the old Lenoir High School Auditorium, Gym and Mack Cook Stadium.
  • Fiduciary Responsibility: The budget appropriates $400,000 in fund balance proceeds but maintains a General Fund balance of approximately 48%, which is double the City Council’s 24% goal. Utilizing the appropriation of fund balance will take place only if the impact of COVID-19 requires.
  • Sidewalks/Greenways/Trails: Increases funding by $50,000 to $125,000 in FY 2020-2021 for greenways, trails, sidewalks. 
  • Code Enforcement: The budget includes a 49%, or $18,710 increase, in support of code enforcement activities, which includes $34,710 toward building demolition, $20,000 toward nuisance removal, and $2,000 in foreclosure expenses.
  • Technology: Continues to fund Computer/IT upgrades throughout the organization to enhance and improve operations and security and the ongoing implementation of the Advance Metering Infrastructure Project. 
  • Environmental: Allocates funds for the second year of the outsource of management and oversight of our NPDES Phase II Stormwater Program to the Western Piedmont Council of Governments Stormwater Partnership, as well as fully implements automated sanitation collection. Also, the budget continues to use EPA Brownfield Grant funding to conduct environmental assessments and Appalachian Regional Commission Grant funding to begin clean-up of city-owned property on College and Virginia Street. And, the budget continues funding the construction/installation of the Wastewater Biosolids Project and the upcoming Smith Crossroads Sewer Project.
  • The budget also funds all debt obligations.

The following General Fund capital items are included: Patrol Cars (4), Detective Cars – Used (2), Quick Response Vehicles (3) for Fire, SCBAs, Public Works Replacement Trucks (2), Building Repairs for the Fire Station #2, Police Department, and Aquatic Center, a mower to help with the Greenway, and an ice machine.

The proposed General Fund budget contains $365,000 for a new installment financing package for capital items.  The purchase of capital items will be made after evaluating the impact of COVID-19 on the budget. 

The following Water/Sewer Fund capital items are included: Hudson System Water Valve Installations, Major Pressure Release Valve Vault, Sewer Camera Replacement, and Replacement Vehicles (2).

Summary 

In closing, this Recommended FY 2020-2021 Budget is balanced in accordance with State Statutes and attempts to address the goals and priorities that have been established by City Council for the City’s future while being mindful of the current pandemic. Though the budget does not optimally fund all of the requested operating and capital needs, the Recommended FY 2020-2021 Budget represents a level of funding, which will allow the City to maintain and enhance current service levels while making organizational changes to be cost effective and more efficient. Further, our staff continues to display a culture that encourages cost savings to maximize resources to accomplish budget initiatives.

I would like to recognize the efforts of Finance Director Donna Bean, as she has been instrumental in the preparation of this document. Her thoroughness and guidance are appreciated.

Finally, I would also like to express my thanks to the Department Directors, Team Lenoir and City Council for their patience, understanding, and dedicated work on this important policy document. Our primary goal, each and every day, via our employee-led customer service initiative, remains to provide “Service Beyond Measure”.

A work session to review the Recommended FY 2020-2021 Budget is scheduled to be held on Thursday, May 21, 2020, at 6:00 p.m. and a public hearing on the budget is scheduled on Tuesday, June 2, 2020, at 6:00 p.m. 

Respectfully submitted,

Scott E. Hildebran
City Manager