June
6, 2005
To
the Town of Wilkesboro Mayor, Commissioners and Citizens:
I am pleased to present the
recommended budget for the fiscal year 2005-2006 with the same ad valorem tax
rate and no increase for water and sewer charges. The budget was prepared in accordance with NCGS 159.7, The North
Carolina Local Government Budget and Fiscal Control Act. All funds within the proposed budget for
the General and Utility Funds are balanced and all revenues and expenditures are
identified for fiscal year 2005-2006.
The budget preparation process for
this year has proven to be a difficult effort given the following local
factors:
·
Uncertain State of
Local Economy
·
Loss of Ad Valoram Tax
Base
·
Rising Fuel and
Material Costs
·
Additional Debt Service
Costs
These factors coupled with the Boards
desire to continue providing service to citizens at current levels and to not
raise taxes requires every department to make sure that each and every
expenditure is used in the most efficient manner possible.
The recommended budget for
fiscal year 2005-2006 totals $7,782,849 for all Town operations, capital
improvements and debt service. This
represents a 2% increase over the current year budget.
That increase can be attributed to rising
inflation estimated at 3.3% for 2004 by the CPI. Also, we have experienced an even higher inflation among items
such as fuel, chemicals, concrete and utility pipe which account for the
majority of our purchasing costs.
In the
proposed budget, I recommend with great reservation a tax rate of thirty-four
(.34) cents per $100 of valuation. A
property owner who has real property of $125,000 will receive a tax bill of
$425. The ad valorem taxes will yield
$1,714,250 based on property tax collection rate of 96.86%.
In the budget worksessions with the Town
Board I stressed the importance of a tax rate increase to maintain existing
service levels. As an outcome of the
worksessions a tax increase was not chosen.
Instead we have chosen to dip into fund balance quite significantly to
balance the General Fund. Fund balance
is a tool to be used for unforeseen circumstances or for a one time fix during
low revenue cycles. However, it needs
to be said that to maintain current service levels in the future revenue must
be increased. In the General Fund tax
revenue is the only significant locally controlled revenue source. Based on current funding levels an eight (8)
cent tax increase would be needed to fully balance the proposed budget.
In
the Utility fund I have proposed to dip into fund balance in order to have a
balanced budget. This fund balance
appropriation is an expected outcome based on a revenue study completed in June
of 2004. A rate increase has been
projected for the fund in 3 more years based on proposed capital projects with
the most significant of those being a Waste Treatment Plant upgrade to handle
increased loading from Tyson Foods.
Water and sewer fees and charges will
generate $3,470,000 or 44.6% of the total budget. The proposed budget will allow the Town to maintain a cash
balance of approximately $800,000 for any unforeseen circumstances. Residential customers using an average of
4300 gallons a month will receive a combined water and sewer bill of $10.11 for
one months usage. Water rates, sewer
rates and charges for all out of Town customers excluding the Water
Associations will have a multiplier of 2.0 added to the bill.
Local
Option Sales Tax: Retail sales in
North Carolina have been rebounded this last year. However, with the continuing uncertainty of the economy a
conservative growth estimate of 2.5% should be budgeted for fiscal year
2005-2006. The Town receives four (4)
sales tax allocations:
(1) Article 39 one-cent tax, which is
the original local government sales and use tax dating from 1971, (2) Article
40 (1983 one-half cent) tax, and (3) Article 42 (1986 one-half cent) tax. A 4th one-cent tax was put in
place to replace local reimbursements.
The Town’s sales tax revenues are distributed on a per capita
basis. It is estimated that the Town
will receive $760,000 in fiscal year 2005-2006. We will also receive approximately $36,000 in hold harmless
revenue.
Other
Taxes and Licenses: A business is liable for a privilege license tax as a
revenue measure, not as an attempt to regulate activity. Under N.C.G.S. 160A-211, a town is free to
levy privilege license taxes, except as specifically restricted or prohibited by
law. Estimated receipts for issuance of
these licenses in fiscal year 2005-2006 are $15,000.
Unrestricted
Intergovernmental: Utility Franchise Tax - each town’s share of the
utility franchise tax is based on the actual receipts from electric, telephone,
and natural gas service within the municipal boundaries during fiscal year
2005-2006. The utility franchise tax is
estimated to yield $400,000.
Restricted
Intergovernmental: Powell Bill Allocation - These funds, unlike
other State-shared taxes, are limited in their use. N.C.G.S. 136-413 directs that the money be spent “only for the
purpose of maintaining, repairing, constructing, reconstructing, or widening of
any street or public thoroughfare including bridges, drainage, curb and gutter,
and other necessary appurtenances within the corporate limits of a municipality
or for meeting the municipality’s proportionate share of assessment levied for
such purposes.” Three-quarters of the
proceeds are distributed on a per capita basis, while the remaining quarter is
distributed on the basis of the number of miles of non-state streets in the
town. Estimated receipts from the
Powell Bill Allocation in fiscal year 2005-2006 are $120,000.
Fund Balance: The proposed budget includes a general fund balance
appropriation of $330,741 in order to get a balanced budget as required by
statute. This will leave the Town
approximately $1,100,000 or 28% of the proposed General Fund budget in
unappropriated fund balance. The Local
Government Commission recommends that municipalities maintain at least 8% in
fund balance reserves.
EXPENDITURES BY CATEGORY
Personnel: This category of expenditures accounts
for $3,481,868 or 44.7 percent of the total budget. These expenditures include salaries and wages, FICA, retirement,
group insurance, merit pay, and other miscellaneous benefits for 68 full-time
employees, 8 part-time employees, and 5 elected officials.
The budget contains $630,000 for
group health and dental insurance for 68 employees, 4 elected officials, and 4
retirees. We have entered the
self-insurance market and have realized savings of potential premiums in excess
of $100,000 for the current year. These
savings should allow the Town to continue providing full coverage health
insurance for its employees and dependents for a least 2 more years before
additional costs catch up to the realized savings.
The budget contains revenue for a 3
percent salary and wage increase for funding a 3% cost of living increase
effective July 1. There will be no
merit increases offered in this budget cycle.
I have also included 46,900 for a 5% match on 401k contributions for
general town employees.
A total of $19,830 has been budgeted
for training this year. This funding
will be used to improve job skills, gain knowledge of the latest equipment and
technology, and to remain up to date on a variety of issues that impact the
Town. Internal training will focus on
safety and the use of technology.
Operating
Expenditures: This category of expenditures accounts for 47.5 percent or
$3,690,481 of the total budget. These
expenditures include costs other than personnel and capital outlay that are
required for the operations of the Town.
Debt service requirements, inflationary trends, increased service
demands, and enforcement of government regulations directly affect operational
expenditures.
Capital
Outlay: This category of expenditures accounts for 7.8 percent or $610,500
of the total budget. These expenditures
are for the purchase of machinery, equipment, and other items that are too
permanent in nature to be considered expendable at the time of purchase and
have a value greater than $5000. Some
of the items include a dump truck, police car, mower, chipper and a utility
building.
The fiscal year 2005-2006 budget summary of revenues
and expenditures for all funds is:
FUND REVENUES EXPENDITURES
General $3,975,981 $3,975,981
Water &
Sewer 3,806,868
3,806,868
TOTAL $
7,782,849 $ 7,782,849
As the economy recovers this is
an exciting time for Wilkesboro. We
continue to be financially strong, we are an affordable community to live in,
and we provide a high quality of life to our citizenry. As we look to the future, our desire is to
provide a safe, healthy, and prosperous community in which to live.
This budget is proposed by the Town
Manager. At this time, it is neither
final nor is it necessarily a reflection of what will be approved by the Town
Board. The Town Board will undertake a
thorough study of this proposal to arrive at what it considers the proper
program of revenues and expenditures for the Town government for the coming
year.
Respectfully
submitted,
Kenneth
D. Noland
Town Manager