BUDGET MESSAGE

 

 

 

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.     

 

       

OTHER REVENUES

 

            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.

 

BALANCED BUDGET

 

            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