The proposed 2013-14 budget for the City of Clinton is trimmed down significantly from the current year’s amended plan, and includes no tax hike, slight rises to water and sewer rates and a small increase to solid waste fees.

Presented this week, the 2013-14 plan proposes $500,000 to expand and renovate the Public Works facilities, as well as a financial software upgrade and the implementation of a new performance appraisal system that will allow high performing employees to receive up to a 3.5 percent salary bump.

The recommended 2013-14 General Fund totals $8,879,400, or 12 percent less than the amended 2012-13 budget of $10,094,050. The 2013-14 recommended Water and Sewer Fund totals $5,178,600, or 4 percent more than the amended 2012-13 budget of $5,002,935, both as of May 13.

The property tax rate of $0.40 per $100 valuation is proposed to stay the same. The rate will provide approximately $2,767,500 in property tax revenues based on an expected collection rate of 97.5 percent.

Sales tax revenues are estimated to be $1,614,000 in 2013-14, a 2 percent hike over the current year. However, where sales tax revenues are expectd to go up, revenue will be lost in the area of privilege licenses fees, which will be reduced by $60,000 due to the closing of the video sweepstakes establishments.

An increase in solid waste fees, from $14.50 to $15 per month, is proposed in 2013-14 due to the rising cost of disposal of these items and implementation of the new curbside recycling program.

“We are proposing a 50 cent increase in garbage rates to help offset fuel and maintenance costs,” said finance officer Shawn Purvis. “This is $6 a year for each household.”

Additionally, water and sewer rates are proposed to increase by 1.6 percent to keep up with inflation and ensure adequate funding for future capital improvement projects. For 2013-14, water base rates would rise from $12 to $12.19 and sewer base rates from $12.50 to $12.70. The water consumption rates would increase from $1.60 to $1.63 per $100 cubic feet and the sewer consumption rate would increase from $1.75 to $1.78 per $100 cubic feet.

The rates were not discussed in-depth by Council, but are expected to receive attention during the Council’s next budget work session, scheduled for this Tuesday, May 21. The 1/6 percent rise is consistent with the Consumer Price Index for 2012.

“The primary reason (for the proposed increase) is to begin preparing for upcoming projects,” Purvis said.

For the coming year, the city is expected to charge $600 per grave plot for residents and $1,200 for non-residents at both city cemeteries. The city is currently charging $300 per grave plot for city residents and $600 for non-city residents at the cemeteries. During last year’s budget discussions, the City Council agreed to raise the per grave plot costs to $600 over a two-year period.

Major initiatives

Among the major expenses proposed for 2013-14, staff is recommending $500,000 be allocated for the expansion and renovation of the Public Works facility, built 40 years ago.

There is not adequate space for the gathering of all employees for training or meals and they have to use their restroom sink for food preparation and hand washing, city officials have said. Additional storage space is needed to ensure a safe and clean environment for employees, and a more customer-friendly reception area is expected to be provided as a result of the project.

The 2013-14 proposed budget also allocates $142,000 for a financial software upgrade. The city’s current financial software “is very limited and quickly becoming obsolete,” city staff said. The Finance Department staff has received quotes from several software vendors and is recommending the city upgrade its financial software.

“Staff feels this will improve our ability to keep adequate financial records and meet current financial reporting standards,” city manager John Connet stated in his budget message.

In the current budget, the city also began implementation of a new Performance Appraisal System. The new system will be fully implemented on Jan. 1, 2014 and will allow high performing employees to receive up to a 3.5 percent performance increase. The total cost of implementing the program would be $30,000 in the General Fund and $7,000 in the Water and Sewer Fund.

Among other notable expenses proposed in the budget, the city has included $200,000 for street resurfacing and $50,000 for engineering services associated with the proposed Chemtex facility.

Vehicle expenses would include three police patrol cars with cameras; one sedan for recreation; a one-ton truck for streets; one small SUV for the Public Works and Utilities director; one backhoe tractor for utility line maintenance; and one lawnmower for grounds.

Another major endeavor will be the development of a Comprehensive Plan, a process by which city officials will review strengths, weaknesses, opportunities and threats, which Connet called “critical” as the community rebounds from the recession and prepares for the N.C. 24 widening project. This project is expected to take 18 months and will be funded utilizing money from refinancing Phase I and II of the downtown revitalization.

As part of that process, a new City of Clinton brand will be developed and a marketing plan prepared to guide staff on how to use the new logo to promote the community. The 2013-14 budget allocates $64,000 — $44,000 from the General Fund, $10,000 from Water and Sewer and $10,000 from the Downtown Fund — for the branding project.

Talked about for some time now, the expansion of the Parsons-Anders Water Treatment Facility is expected to begin construction in 2013-14. The project will double the capacity of the water plant and allow reliable alternative water source to be provided to Smithfield Packing. A $4.84 million project, it will be bid out and constructed over an 18-month period.

It will be funded with a 40-year USDA loan, however the city will obtain interim financing to construct the project during the next two fiscal years.

Public safety facility planning was listed in the budget proposal as another large initiative, with much discussion concerning the current fire and police headquarters and the need for new construction, expansion or renovation. Although no funding is proposed in the 2013-14 budget, staff said planning for the service facilities should be a major focus of the next 12 months.

‘We must be vigilant’

In his message to the mayor and City Council, Connet said the budget is fiscally sound, with the city working hard to examine all services amid a continually tight economic situation that has seen diminishing revenues.

“However, no matter how hard we work to improve our local revenue situation,” Connet stated, “there is one factor that is completely out of our control and that factor is the North Carolina General Assembly.”

Specifically, changes to the N.C. Tax Code could have an adverse effect in Clinton. Diversifying sales tax may be warranted, but legislators should carefully consider any tax reform that could put local revenue sources in jeopardy.

“For example, if they eliminate our ability to collect a local privilege and eliminate the beer and wine and utility franchise taxes, we will see a reduction of $850,000 in revenue,” said Connet. ” This $850,000 equates to almost 14 cents on our tax rate or 94 percent of the Recreation Department’s budget. The revenue will be replaced in some manner with the diversified sales tax, but at this time we do not know if we would receive the entire $850,000.”

With revenue sources drying up in recent years, the city has had to dip into its reserves.

The city’s estimated undesignated fund balance on June 30, 2013 is $3.6 million or roughly 42 percent of expenditures, above the city-adopted goal of 38 percent. The city has proposed to budget $225,000 in fund balance to be used to fund one-time capital expenditures. The city’s retained earnings stand at $3.3 million, or 70.5 percent of expenditures, above the city-adopted goal of 50 percent. The city has proposed to budget $350,000 in retained earnings to balance the Water and Sewer Fund.

Even as Clinton continues to rise out of the Great Recession, the long-term revenue picture is improving, but still somewhat uncertain, Connet said.

“Most of our vacant industrial buildings have been purchased and are close to being fully occupied and our largest employer continues to expand its operations,” he said. “We are seeing an increase in commercial growth and I expect this activity to continue for the next 60 months as N.C. 24 is improved between Clinton and the Fayetteville Metropolitan Area.”

As he has the last several years, Connet warned that the status quo has gone out the window. Things cannot be done the way they have been in the past.

“In planning for the future, we must be vigilant in understanding how existing service and program costs directly affect the long-term health of the City of Clinton,” he stated. “It is important that in these economic times we evaluate every service and program to determine if they are needed. Under current economic constraints, we must focus on the critical service areas and look for opportunities to improve the efficiency of our services or look for consolidation opportunities.”

Chris Berendt can be reached at 910-592-8137 ext. 121 or via email at cberendt@civitasmedia.com.