May 7, 2007
To the Town of Wilkesboro Mayor,
Council and Citizens:
I am pleased to present the recommended budget for the fiscal year
2007-2008. 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 2007-2008.
The recommended budget for fiscal year 2007-2008 totals $8,973,231 for all Town operations, capital improvements and debt service. This represents a 9% increase over the current year budget.
That increase can be attributed to rising inflation particularly in fuel and utility pipe costs. The proposed budget also includes significant capital spending in the utility fund.
In the proposed General Fund budget, I
recommend a tax rate of forty cents (.40) per $100 of valuation, which is the
same rate as in the current years budget.
With this being a revaluation year the 40-cent tax rate will yield an
additional $148,000 of revenue. A
property owner who has real property of $150,000 will receive a tax bill of
$600. The ad valorem taxes will yield
$2,361,158 based on property tax collection rate of 97.5%. I would caution Council to not lower the tax
rate because of the need to increase fund balance as a percentage of the
overall General Fund budget. Our
current unreserved fund balance represents 24.9% of total General Fund
expenditures.
In the Utility Fund I have proposed a 7.5% rate increase to all rate classes as well as a $176,470 fund balance appropriation to balance the proposed budget. This rate increase is based on a detailed rate study commissioned by Council to help determine revenue requirements based on anticipated capital spending projects.
Water and
sewer fees and charges will generate $4,175,000 or 46.5% of the total
budget. The proposed budget and rate
increase will help the Town grow its Utility Fund cash balance. In the
previously mentioned rate study we set a goal of reaching and then maintaining
a cash balance $1,000,000. These excess
funds would be available for emergency situations or unforeseen projects. Residential customers using an average of
6000 gallons a month will receive a combined water and sewer bill of $17.13 for
one months usage which is a $1.20 increase.
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 2.0% should be budgeted for fiscal year
2007-2008. 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 $780,000 in fiscal
year 2007-2008. We will also receive
approximately $20,000 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
2007-2008 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 2007-2008. The utility franchise tax is estimated to
yield $410,000.
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 2007-2008 are $120,000.
Fund Balance:
The
proposed budget includes a general fund balance appropriation of $176,470 in
order to get a balanced budget as required by statute. If spent this will leave the Town
approximately $950,000 or 21% 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 $3,915,924 or 43.6% of
the total budget. These expenditures
include salaries and wages, FICA, retirement, group insurance, merit pay, and
other miscellaneous benefits for 70 full-time employees, 8 part-time employees,
and 5 elected officials. This includes
one new position in the sanitation department and one new position in utility
administration.
The
budget contains $750,000 for group health and dental insurance for 70
employees, 3 elected officials, and 3 retirees. As Health Insurance costs continues to rise faster than general
inflation the Town will have to look at charging for dependent coverage as well
as reducing benefit levels
The
budget contains provisions to allow for a cost of living raise of 2.5% in
July. There is also a provision of up
to a 2.5% merit increase based on performance evaluations throughout the year.
Approximately
$21,500 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 45.6 percent or $4,092,527 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 10.8 percent or $964,780 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 included: two (2) utility storage buildings, four (4)
leased police cruisers and a utility RTV for the Park Department.
The fiscal year 2007-2008 budget
summary of revenues and expenditures for all funds is:
FUND REVENUES EXPENDITURES
General $4,550,328 $4,550,328
Water
& Sewer 4,422,903 4,422,903
TOTAL $
8,973,231 $ 8,973,231
CONCLUSION
As the economy recovers and we continue planning for
our future 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 Council.
The Town Council 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