June 7, 2004
The Honorable Norman O. Call, Mayor
Members of the Board of Commissioners
Wilkesboro, North Carolina
Dear Mayor Call and Members of the Board of Commissioners:
Pursuant to section 159-11 of the North Carolina General Statutes, I am pleased to present the recommended 2004-2005 budget for your review and consideration.
The proposed budget for 2004-2005 provides a financial plan for the ensuing fiscal year and has been developed in accordance with the Town Board Goals and Objectives as discussed during our budget work sessions. The key components of these directives from the Town Board and the budgetary principles on which this budget is based include:
Basic services are continued with financing at adequate levels
Capital needs for the Town are identified and realistically addressed
Co-worker benefits and salary adjustments are maintained at a competitive level to retain qualified personnel
Intergovernmental relations will continue with the Town providing water service to County water districts
Emphasis is placed on comprehensive and long-range planning
Revenues are estimated at realistic, conservative levels
The recommended budget for fiscal year 2004-2005 totals $7,641,995 for all City operations, capital improvements, and debt service. This represents a 4% increase over the current year budget.
This increase can be attributed to rising costs of insurance, (health, workers compensation and liability) fuel and building materials which are outpacing inflation. Also the Town will begin paying debt service on the clearwell project at the Water Plant.
In the proposed budget, I recommend continuing the current tax rate of .34 cents per $100 of valuation. A property owner who has real property of $125,000 will receive a tax bill of $425.00. The ad valorem taxes will yield $1,809,000 based on property taxes at a collection rate of 98 percent.
Water and sewer fees and charges will generate $3,790,268 or 49.6% percent of the total budget. The proposed budget includes rate increases in the utility fund that allow for the Town to pay the new debt service payments and maintain a cash balance of approximately $1,000,000 for unforeseen circumstances. Residential customers using an average of 4300 gallons will receive a combined water and sewer bill of $9.61. 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 flat this last year. With the continuing uncertainty of the economy a conservative growth estimate of 2.5% should be budgeted for fiscal year 2004-2005. 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 $630,000 in fiscal year 2004-2005. We will also receive approximately $45,000 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 2004-2005 are $14,000.
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 2004-2005. 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 2004-2005 are $115,000.
Fund Balance: The proposed budget includes a general fund balance appropriation of $286,137 in order to get a balanced budget as required by statute. This will leave the Town approximately $1,200,000 or 31% 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 $3,353,612 or 44 percent of the total budget. These expenditures include salaries and wages, FICA, retirement, group insurance, merit pay, and other miscellaneous benefits for 67 full-time employees, 8 part-time employees, and 5 elected officials.
The budget contains $630,000 for group health and dental insurance for 65 employees, 4 elected officials, and 4 retirees. I am proposing that the Town look at the self-insurance market in an attempt to reign in the rising costs of health insurance. If costs can not be controlled we will have no choice but to decrease the benefits or begin charging employees for the insurance.
The budget contains revenue for a 5 percent salary and wage increase for funding a 2% cost of living increase effective July 1 and a 3% merit increase on employees anniversary date. I have also included 40,000 for a 5% match on 401k contributions for general town employees.
A total of $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 37.4 percent or $2,848,193 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 13 percent or $1,003,534 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 items included are a lab addition for the water plant, painting of Woodfield Water Tank and various water and sewer line replacements.
The fiscal year 2004-2005 budget summary of revenues and expenditures for all funds is:
FUND REVENUES EXPENDITURES
General $3,851,727 $3,851,727
Water & Sewer 3,790,268 3,790,268
TOTAL $ 7,641,995 $ 7,641,995
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.
Kenneth D. Noland