News
May 19, 2009
City Manager's Proposed Budget Cuts Spending; Maintains Services
Given economic realities, City Manager J. Russell Allen today submitted a proposed budget to the City Council that reduces recurring expenses, which unavoidably impacts service delivery. The proposed net operating and capital budget for Fiscal Year 2009-10 (FY 2010) of $696,184,399 contains no property tax increase and eliminates 85 positions. All of the positions proposed for elimination will be vacant. The proposal would cover the City’s expenses for July 1, 2009 through June 30, 2010.
The proposed $384,507,953 General Fund operating budget is $2,706,907 less than the current fiscal year’s operating budget of $387,214,860. Mr. Allen said the budget he is offering for the council’s consideration would not reduce public safety funding significantly or require staff lay-offs. He said it would maintain the City’s high standards of fiscal planning, management, control and reserves expected from a AAA quality credit. The proposal also maintains Raleigh’s property tax rate of 37.35 cents per $100 of value and the lowest combined municipal costs in the Triangle and among the lowest in the state.
The Parks and Recreation Department is slated for the elimination of 27 full-time vacant positions, reduced service hours and maintenance for community centers, parks, public pools, special events and roadsides and greenways.
The economic downturn has translated into a significant reduction in workload in the Inspections Department. Mr. Allen’s proposal reflects this with the reduction of 15 vacant positions and the temporary redeployment of seven inspectors to the Fire Department where they will generate additional revenue and provide required fire safety inspections.
Eleven positions are targeted for elimination in the Public Works Department. This includes erasing funding for the Accessible Raleigh Transit Tier I program, delaying implementation of the Transit Plan to January 2010 and eliminating an asphalt and pothole patching crew. This elimination will delay response time to repair utility cuts and increase the response to patch potholes from 24 hours to 36 to 48 hours.
The City Manager listed the following cost-saving measures he is proposing that will save nearly $10 million in FY 2010:
- Eliminating a 1.5 percent range adjustment for employees along with a reduction of the merit pay program that allows the maximum increase to be decreased by 1 percent. Mr. Allen also is proposing deferring the annual review of one third of the City’s job classifications;
- Containing a projected 8 percent increase in employee health insurance costs through a 7 percent increase in employee dependent premiums and an increase in deductibles for all employees coverage;
- Transitioning to a fuel consumption model for budgeting fuel;
- Deferring 47 replacement vehicles;
- Restricting travel and training; and,
- Funding only those professional and contractual services that cannot be deferred to another year.
Revenue Components
The significant revenue components affecting the FY2010 budget are:
- A 2 percent increase in property tax revenues due to growth;
- The second portion of the retail water and sewer rate increase approved in April will become effective Dec. 1. Concurrent with this rate increase, the Public Utilities Enterprise Operation will transition all customers to monthly billing and residential customers in the Raleigh and Garner service areas to a tiered rate billing structure to promote water conservation ;
- A 3 percent decrease in sales tax revenue;
- Declines in inspection fee revenues of 27 percent and a 59 percent decline in facility fees; and,
- A 10 percent increase in intergovernmental revenues. These are franchise fees from utilities and telecommunications companies that have increased in part due to updated allocations to the City as a result of audits.
Capital Improvement Program
In presenting his proposed Capital Improvement Program (CIP), Mr. Allen stressed that infrastructure development strengthens an area’s long-term health. Therefore he is proposing a CIP that represents $311,676,446 for FY 2010 and $1.2 billion for the coming five budget years. The FY 2010 proposed CIP represents an 18 percent decrease from the FY 2009 CIP.
The City Manager said that factors limiting revenues to support the proposed FY 2010 CIP include:
- A 35 percent reduction in Powell Bill funding;
- A 50 percent reduction in interest income;
- A 50 percent reduction in general fund pay-go capital;
- A 38 percent reduction in Public Utilities pay-go capital; and,
- A projected 57 percent decline in facility fee revenues.
The City Manager’s proposal includes a $136.8 million transportation bond
referendum for the fall of 2010.
Total appropriations for Phase I (FY 2010 through 2014) of the CIP are proposed at the following levels for the six major program areas:
- Transportation $192.4 million;
- Public Utilities $374.9 million;
- Parks $85.8 million;
- Stormwater Utility $36.5 million;
And Neuse Basin
Environmental Program
- Housing $15.0 million; and,
- General Public Improvements $496.7 million.
TRANSPORTATION
Funding of $192.4 million is proposed for transportation infrastructure improvements, including the phased completion of projects funded by the 2005 Street Bonds and a proposed $136.8 million bond referendum to be sought in the fall of 2010 to fund the remainder of the 2005 Street Bond projects along with new projects in FY 2011 and beyond. A projected reduction in thoroughfare facility fees due to the economy has been addressed in this proposal.
The transportation categories of funding are 19 major street widening and road improvement projects; street improvements such as street resurfacing and repairs to City-owned bridges; funds for replacement buses and feeder vans for the City’s transit system, Capital Area Transit, and funding for necessary assessment of the condition of City-owned parking decks and subsequent repairs. This program is funded directly from the City’s Parking Fund.
PUBLIC UTILITIES
The utilities program continues to execute an extensive number of investment projects, as well as initiatives to improve water and wastewater operations throughout the Raleigh service area which now includes providing service and capital investment to infrastructure located within the municipalities of Garner, Knightdale, Wake Forest, Rolesville, Wendell and Zebulon.
Environmental projects represented in the program include an appropriation of $1.0 million to the Falls Lake Initiative in FY 2010. This is a water quality preservation program.
PARKS
Phase I of the CIP earmarks $1.6 million for parks property acquisition, $16.4 million for development projects and $67.7 million for phased expenditures from the 2007 Parks Bonds. The 39 percent decrease in facility fee revenue and other pay-go revenue and other pay-go capital has resulted in limited land acquisition for future parks and greenway projects, reduced greenway development and delayed repairs and improvements to parks and other infrastructure.
STORMWATER UTILITY AND NEUSE BASIN ENVIRONMENTAL PROGRAM
The FY 2009 capital budget appropriated an infusion of $20.2 million for stormwater projects funded by revenue bonds. This year’s CIP returns to a program of $36.5 million in Phase I financed through operating transfers, also known as pay-go funding.
GENERAL PUBLIC IMPROVEMENTS
All other capital facility and maintenance needs fall under the category of General Public Improvements (GPI). Included in this program is the construction of fire stations and other public safety initiatives that support police and emergency communications operations. A total of $491.9 million in GPI and $4.8 million in economic development initiatives is proposed.
Major project categories within the GPI are:
- Bonded Funded Facilities and Major Renovation Construction: The Clarence E. Lightner Public Safety Center ($205.3 million) and the continued development of the Remote Operations Facilities concept ($240.1 million) are funded through a multi-year debt model strategy that includes 1.68 cents of the property tax rate increased adopted by Council in FY 2009, along with subsequent year increases as projected in the debt service model. Three new fire stations, expansion of the fire training facility, police district stations, and a police training facility are also identified needs in Phase I of the CIP. The total construction cost of these projects is estimated at $23.9 million in Phase I, with an additional $10.9 million needed in Phase II of the CIP. As there is no identified funding source for these additional projects, Mr. Allen is recommending bond funding;
- Facilities and Major Renovations Planning: The projects in this category ($4.0 million) focus on the design, planning and land acquisition costs associated with future projects, as well as the completion of Fire Station 29;
- Facility Improvements: These projects address the major infrastructure repairs and maintenance of City-owned buildings and facilities ($6.4 million);
- Technology, Equipment, Other: This funds technology ($2.8 million) target areas of the City, with particular emphasis in the downtown core, to accommodate and promote economic growth.
Budget Deliberation Process
A public hearing on the proposed budget and CIP will be held June 2 at 7 p.m. in the council chamber of the Avery C. Upchurch Government Complex at 222 W. Hargett St.
The City Council will conduct budget deliberation sessions on dates to be determined. All of these sessions will be held in the council chamber and will be carried live on Cable Channel RTN11 and video streamed on the City website, www.raleighnc.gov.
The FY 2010 City of Raleigh budget must be adopted no later than July 1, 2009.
The complete budget proposal can be seen on the City of Raleigh website here. Bound copies of the proposal may be reviewed in the City Clerk’s Office. For more information, contact the City’s Budget Office at 996-3840.
Prepared by:
Jayne Kirkpatrick
Director
Public Affairs Department
For More Information Contact:
Joyce Munro
Acting Budget Manager
Administrative Services Department
222 West Hargett Street, Room 302
Raleigh, NC 27601
919-996-4273
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