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To provide the City with sufficient office space for the next several decades, the Five-year CIP funds

a new consolidated civic campus. At present, staff who work downtown are spread across three

City-owned buildings and several leased spaces. The consolidated civic campus will bring over

1,100 staff onto the existing municipal block adjacent to Nash Square. The parking deck and former

Police headquarters building at 110 S. McDowell St. will be demolished and replaced with an office

tower and expanded parking deck. The Raleigh Municipal Building will remain in place. Besides

providing over 300,000 square feet of office space, the new campus will enable us to improve

customer service and civic engagement, improve staff efficiency, and create new economic

development opportunities. Master planning for the civic campus begins this Summer.

Our employees continue to be the most important resource in the City of Raleigh. The Proposed

Budget funds our competitive employee compensation package with an average merit-based

increase of 3.25%. This amount is slightly above market trends in North Carolina and the private

sector. We also propose increasing the number of official City holidays from 11 to 12. By adding an

additional holiday at Christmas, the City’s holiday schedule will be consistent with the State, Wake

County, and other government employers in the region.

Within our employee health plan, the City has experienced a significant increase in medical claims

expenses. For our 2016 plan year, we estimate a 14% increase in expenses over 2015. Looking to

2017, we expect another 5% increase. One major cost driver behind these increases is the higher

costs of covering spouses. Both the number of covered spouses and cost per spouse have risen the

past two years. Another major cost driver is the increasing volume and magnitude of high-cost

claims.

The Proposed Budget will have the City absorb over 80% of the health plan increase in FY2017.

The remaining costs allocated to employees will come in the form of premium increases and

increases to the out-of-pocket maximums. We propose increasing premiums for plan types with

spouse coverage, which links the premium increases to this major cost driver. We also propose

applying a spouse surcharge to employees in situations when the spouse has access to health

coverage from another employer. Plan types covering children will also increase, but by a lower

amount. Employee-only plans will see no premium increase.

Our covered services, health plan premiums, and out-of-pocket maximums will remain very

competitive with other governmental and private sector organizations. During FY2017, staff will

carefully monitor our health plan trends. We will develop a policy for allocating future health plan

expenses between the City and employees. After staff research and develop a proposal, we will

bring the policy to City Council for review prior to the next budget process. The new policy will

provide employees and City Council with a consistent and predictable approach to these annual

budget decisions.

New Resources for the Future

With our strong local economy and tax base, we are able to produce a balanced budget that funds

many strategic plan initiatives and high priority services. However, additional resources are required

to achieve two initiatives. Looking again at our property tax base, Wake County conducted a

revaluation process in 2015, consistent with the historic eight year schedule. The revaluation

resulted in an 8% increase to the property tax base and a revenue neutral tax rate of 39.83 cents.

Overall, residential property remained flat, while commercial property values increased 23%.

Rather than lower the property tax rate to the revenue neutral rate, we propose lowering the rate by

0.27 cents from the current 42.10 cents down to 41.83 cents. By lowering the tax rate 0.27 cents,

we can allocate one cent of tax revenue, or $5.7 million, to expand our affordable rental housing

program. Affordable rental housing is our highest priority. The City of Raleigh has 32,000 low to

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