FY 2022-2023 Budget Proposal
City Manager Scott Hildebran presented the Fiscal Year 2022-2023 Recommended Budget to City Council Tuesday night, May 17, 2022, during the regular Council meeting.
The budget presentation and recommended budget are below for review.
A budget work session is planned for Thursday, May 19, at 6:00 pm. A public hearing on the recommended budget will be held Tuesday, June 7, at 6:00 pm during the regular Council meeting.
City Manager Scott Hildebran’s Budget Message
May 17, 2022
Honorable Mayor Gibbons and Members of the City Council:
Pursuant to Section 159-11 of the North Carolina General Statutes (NCGS), Local Government Budget and Fiscal Control Act, I am pleased to submit the Recommended FY 2022-2023 Budget for your review and consideration. This document provides a financial plan for the upcoming fiscal year and was developed in accordance with City Council’s 2022 Priorities established in the February Strategic Planning Retreat and the March Budget Retreat as well as during Council and Departmental meetings held over the past year. The budget was developed with the expectation of returning to a more normal year as we continue to emerge from the COVID-19 pandemic.
A work session to review the Recommended FY 2022-2023 Budget is scheduled to be held on Thursday, May 19, 2022, at 6:00 p.m. and a public hearing on the budget is scheduled on Tuesday, June 7, 2022, at 6:00 p.m.
The proposed General Fund budget totals $20,320,130 and is balanced with the current property tax rate of 57¢ per $100 of assessed property value. The budget maintains the current Rescue Readiness Tax Rate of .85¢ per $100 of assessed property value for a total tax rate of 57.85¢ per $100. The budget includes a $1.00 monthly increase in the Solid Waste fee, bringing the total to $11 per month. Although the recommended budget is 10% above the current adopted budget, the proposed budget closely reflects the actual FY 2020-2021 budget totals.
Nearly 83% of the General Fund’s revenue comes from property tax (45%), sales tax (26%) and franchise tax (12%). The remaining 17% comes from a combination of state-shared revenue, investment earnings, and sales and services.
The American Rescue Plan (ARP), adopted by Congress, provided $1.35 billion earmarked for NC cities and towns. The City of Lenoir was allocated $3,834,691. The proposed budget does not allocate any of the funds. To date, the funds have been used only for Premium Pay. Staff will present separate capital budget amendments based on our recommended ARP Plan in the new funding year, which emphasizes long-term issues such as large capital items and master planning.
The City also received $1,500,000 in NC State Capitol Infrastructure Funds (SCIF), adopted by the NC General Assembly. The recommended budget does not include this funding, as we have allocated the funds under a separate capital project ordinance, focusing on greenways and downtown improvements.
Staff continues to pursue the many grant opportunities that are available to continue work on the greenway and trails, Brownfield Assessments, The Campus at LHS, Aquatic Center renovations, master planning, water and sewer improvements, water interconnectivity, clean energy and wayfinding signage.
The Recommended Budget contains no additional borrowing and does not use any fund balance.
Downtown Municipal Service District
The proposed Downtown Municipal Service District budget is balanced with the current property tax rate of 20¢ per $100 of assessed district property value.
Water and Wastewater Fund
The proposed Water and Sewer Fund budget totals $10,232,980 and includes the recently adopted 5% increase in water and sewer rates. The City has traditionally used the annual Consumer Price Index - South Region for All Urban Consumers (CPI) as a gauge and guide when considering increases in Water and Sewer Rates. As of February 2022, the CIP was 8.4%. An average monthly water and sewer customer utilizing 5000 gallons will see an increase of $2.49 per month. Water and Sewer tap fees have been adjusted to a rate of cost plus $250.00 to account for the actual cost of meters/taps and to cover the rising cost of labor/materials.
The key components of this budget are:
- Core Services: Core Services are continued with revenue projections estimated in a realistic, conservative manner. The projections include consideration for continued uncertainties of the future economic environment.
- Employee Compensation: City and private sector employers are experiencing workforce challenges in recruitment and retention of employees. 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 the implementation of a new pay plan that makes the City of Lenoir more competitive with other municipalities our size in the region as well as our private sector competition. The pay plan includes raising minimum annual pay for all full-time positions to $30,000, raising the minimum annual pay for a police officer to $42,000, and providing Cost of Living Adjustments of either 5% or 8% depending on the position pay when compared to the state averages based on data from the North Carolina League of Municipalities. The new pay plan will be effective July 1, 2022. The budget also funds the mandated 0.75% increase for general employees and 0.94% increase for law enforcement personnel as a member of the Local Government Retirement System.
- Insurance: The City’s group health insurance premiums will increase by 3%, while maintaining the current level of benefits. The cost of the City’s property and liability insurance will increase by 10%, while the workers’ compensation insurance coverages will decrease by 7%.
- Street Resurfacing: The budget allocates $400,000 to continue implementation of our Pavement Study. State Powell Bill funding is expected to remain stable in the coming year. In addition, the budget includes $100,000 in funding for strategic paving for various Council priorities.
- Downtown: The recommended budget appropriates funds for new holiday decorations. The budget allocates funds from the CDBG Capital Project Fund to continue improvements to The Campus.
- Code Enforcement: In response to Council priorities, the budget increases funding for code enforcement by 66% to $100,000 (excluding personnel costs). This funding will be used for building demolitions, foreclosures, and nuisance enforcement.
- Clean Energy: The budget funds three hybrid law enforcement patrol vehicles in the coming year to move toward reducing gas emissions, lowering maintenance costs and improving fuel efficiency; and funds city-wide building and facilities condition assessments.
- Technology: The budget funds computer and information technology upgrades throughout the organization to enhance and improve operations and security; and completes the Advance Metering Infrastructure Project.
- Environmental: The City continues to outsource management and oversight of our Federal Phase II Stormwater Program to the Western Piedmont Council of Governments Stormwater Partnership.
- Debt Service: The budget funds all debt obligations.
The following General Fund capital projects are included: a light duty truck for Vehicle Services, fuel system upgrade, a service truck for Building Maintenance, a single-axle dump truck for Streets, a Cemetery Master Plan, a zero-turn mower, repairs for the creek bank at Fire Station II, repairs to the back apron at Fire Station I, IT upgrades for all three Fire Stations, Police Department parking lot repaving, (2) detective cars – used, (4) patrol cars, Aquatic Center HVAC replacement, and Mulberry Recreation Center improvements including roof replacement, playground improvements and adding pickles ball courts.
The following Water and Sewer Fund capital projects are included: a mini excavator, a utility line locator, a boring machine, major pressure reducing valve vaults, a divisional valve replacement, manhole improvements, three phase power upgrade, lift station upgrades, a lawnmower, recycle pump installation, a dump truck, a floor cleaning machine, building and grounds improvements, an ATV, America Water Infrastructure Act Compliance Project, and (2) vehicle replacements.
In closing, the Recommended FY 2022-2023 Budget is balanced in accordance with State Statutes and attempts to address the goals and priorities that have been established by City Council for Lenoir’s future while being mindful of the current economic conditions. The recent growth we have experienced in both commercial and residential sectors and a continuing diversification of the employer base should help the City weather current economic uncertainty.
Though the budget does not fund all the requested operating and capital needs, the Recommended FY 2022-2023 Budget represents a level of funding that will allow the City to maintain and enhance current service levels while making organizational changes to be cost effective and more efficient. Further, as noted in the information distributed for the retreat in February, 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”.
Come “Create With Us” in Lenoir!
Scott E. Hildebran