The City of Clinton budget is proposed to tighten by more than $800,000 over the current plan, with no tax hike proposed and nominal increases in monthly garbage collection and water and sewer fees included.
The recommended 2015-16 fiscal year budget totals $13,554,200 for all city operations, capital improvements and debt service requirements. That is $812,645, or 5.7 percent, less than the 2014-15 amended budget. The proposal calls for the tax rate to remain at 40 cents per $100 valuation and allocates $146,900 from General Fund reserves.
During a recent Council meeting, City manager Shawn Purvis expressed that, while the city’s financial standing was strong, officials still needed to be aware of two factors the city was facing: diminishing revenues coupled with capital costs on the horizon.
The 2015-16 recommended budget for the General Fund totals $8,691,300, which is 4.93 percent less than the 2014-15 amended budget of $9,142,450. The 2015-16 recommended Water and Sewer Fund totals $4,726,300, a 6.75 percent decrease from the 2014-15 amended budget of $5,068,595. Both amended budget figures are as of May 15, 2015.
Overall, General Fund revenues of $8,691,300 are down 4.5 percent.
“We’ve remained pretty flat (in General Fund revenues). As the economy started recovering in 2013, we had a little more, but now we’re starting to decline again,” Purvis noted.
General Fund revenues have decreased in recent years with the retraction of various revenue streams due to state legislation, Purvis noted. While there has been modest growth in sales tax and ad valorem tax revenues, the growth has not been enough to offset the loss of $210,000 from hold harmless payments and privilege license fees over the past two years — equal to about 3 cents on the city tax rate.
While there is $387,000 in debt coming off the fund’s books in 2015-16, there is the need to set money aside for ongoing and upcoming projects.
City water and sewer projects, specifically the water plant expansion, will put the city in a solid position for the future but there is still a matter of revenue generation to offset the cost of those endeavors. A water production expansion has a price tag of $4.8 million, the Southwood elevated tank costs $1.7 million and a utilities relocation for N.C. 24 tallies $2.5 million.
To that end, Purvis has recommended a hike in water and sewer fees by 1.5 percent, expected to yield an increase in estimated revenues of $60,000. The same hike was done last summer for the current budget.
The proposal, if approved, would bring water base rates from $12.37 to $12.56 and sewer base rates from $12.89 to $13.08. Similarly, water consumption rates would increase from $1.86 to $1.88 per 100 cubic feet and sewer consumption rates would rise from $1.80 to $1.83 per 100 cubic feet.
For an average household with a 800 cubic feet consumption, that would translate to a monthly hike of 72 cents from $48.96 to $49.68, an overall increase of $8.64 a year. The residential solid waste fee is proposed to increase from $15 to $15.50 per month, while the commercial rate will stay the same.
In addition to the water/sewer fee hike, Purvis has proposed a 50 cent increase in the monthly garbage fee, which would generate another $17,000.
A $35 business registration fee, floated to offset the privilege license elimination, is not included in the budget. The budget does call for an increase in the fire district tax by a half-cent to 10 cents per $100 valuation — in line with other county districts — which would generate an additional $20,000. That ultimately has to be approved by the Sampson Board of Commissioners.
Purvis said with the elimination of privilege license fees and a proposal to overhaul sales tax, there may be other fees that can be explored toward supplementing city revenues, the city manager said.
“The anticipated growth we have I do believe is coming, but you’re still two to three years out. I know I said that last year but it’s all based on when N.C. 24 is projected to be finished,” Purvis told Council. “We will see that growth, but it will just be a little while. There are some trends we need to be aware of because soon it’s going to affect what we are able to do for the future.”
The city’s restricted fund balance currently stands at nearly $4 million, close to 45 percent of expenditures
The $146,900 in fund balance set to be allocated in 2015-16 is primarily for capital expenditures, specifically for the Recreation Department where $50,000 would be set for a portion of the city’s state grant match and the remaining $96,000 will be for equipment and facility repairs at Royal Lane and Newkirk parks.
“While the city’s fund balance currently is healthy, the city cannot continue to use reserves annually for capital expenditures,” said Purvis. “We have larger capital needs on the horizon that we continue to delay, both internal in facilities such as the police and fire departments, but also other quality of life things — greenways, recreation and new roads — things that have all been spoken about but have not quite been able to put together the financing because of diminishing revenues.”
With a strong financial position, the city manager said it may be time for the city to evaluate the risk in taking that next step and making that investment.
“We’re maintaining excellent services and we’ve increased services despite the decrease in revenues,” Purvis stated. “Council has expressed so many wishes for where they want to see the city go and what they think we can do, and we’re in complete agreeance. We have a lot to offer, but there are things we have to do to get there and it’s been difficult for us to put those things in place because of the finances.”
The budget is tentatively scheduled for a June 16 adoption. To see an electronic version of the proposed budget, visit cityofclintonnc.com.