June 14, 2016
MEMO TO: Mayor Barber and Board of Commissioners
FROM: Frank A. Rush, Jr., Town Manager
SUBJECT: FY 16-17 Budget
The Board of Commissioners is scheduled to formally consider the FY 16-17 budget ordinance, fee schedule, capital replacement / improvement program, and FY 16-17 pay plan at the June 14 meeting.
FY 16-17 Budget Ordinance
The attached FY 16-17 budget ordinance is identical to the Town Manager’s Recommended Budget presented on May 10 and reviewed by the Board at its May 12 and June 7 budget workshop meetings, with a few adjustments as directed by the Board (as outlined on the attached sheet; net increase of $27,000). As you know, the required public hearing was held on June 7, and the FY 16-17 budget ordinance is presented for formal consideration and adoption at the June 14 meeting.
The total FY 16-17 budget across all funds is $9,472,387. The General Fund is the largest component of the Town’s budget, with total expenditures of $9,103,200, which is a $200,765, or 2.26% increase from the adopted current year budget. The Future Beach Nourishment Fund budget is $679,187, which includes a $400,000 transfer from the General Fund, with the full amount reserved for future beach nourishment activities. Appropriations are also included for the Half-Marathon Fund ($90,000), and these appropriations are completely supported by registration fees and sponsorships.
In accordance with the Board’s top budget priority, the FY 16-17 budget includes no increase in property tax rates (or any fees). The General Fund tax rate for FY 16-17 is unchanged at 15.5 cents per $100 of assessed value, with 14 cents allocated for general services and 1.5 cents specifically earmarked for beach nourishment. The recommended Primary Benefit District (oceanfront and inlet-front properties only; for beach nourishment) property tax rate remains at 4 cents, and this rate, along with the $400,000 transfer from the General Fund, will enable the Town to reserve the historical annual amount for future beach nourishment activities. There is also no change in the Town’s annual solid waste fee, and this fee would remain at $228 for all developed residential properties, which equates to $19 per month for all Town solid waste services (trash, recycling, yard debris collection, beach strand collection, and more).
The FY 16-17 budget includes sufficient resources to enable Town staff to maintain the high service quality expectations of our residents and visitors, and includes funding to compensate Town employees fairly, replace necessary vehicles and capital equipment, meet inflationary and other service demand pressures, and enhance staff capabilities. The budget also includes a few notable service enhancements, including:
funding for a new Community Resources Officer in the Police Department to coordinate EIPD’s popular community programs, including the Neighborhood Watch program ($52,090),
additional coverage on the beach strand and improved supervision of the Fire Department’s lifeguard program ($13,734), and
an additional $13,000 in Town funding (along with an additional $30,000 of call fee revenues) to enable EI EMS, Inc. to transition to the use of all full-time employees for scheduled shifts (the total EMS budget is now $560,000), and
other minor service enhancements in various Town departments.
The budget also includes funding for a few significant capital projects, including
$120,000 for the construction of a new storm water pump station to serve the Osprey Ridge neighborhood (the Board’s other top priority),
$70,000 for the construction of an additional bicycle path segment along Bogue Inlet Drive to link the pier with the “downtown” area (funded by the Bicycle and Pedestrian Fund), and
as discussed by the Board at the June 7 budget workshop meeting, the budget also now incudes $32,500 for the planned replacement / expansion of an existing storm water pipe leading from Cape Emerald subdivision to Bogue Sound.
In addition to the items discussed above, some of the other notable items in the FY 16-17 budget are highlighted below:
a total of $1,749,000 of sales tax revenue is anticipated in the General Fund, representing more than 19% of General Fund revenues,
a total of $520,000 of electricity sales tax revenues, an increase of $127,300 over the FY 15-16 adopted budget amount, is anticipated in the General Fund, making this revenue source increasingly significant,
a total of $175,000 of building permit fee revenues, an increase of $40,000 over the FY 15-16 adopted budget amount, is anticipated due to increasing construction activity,
General Fund balance is projected at nearly $2.1 million at June 30, 2016; no reliance on General Fund balance for FY 16-17 budget,
a 1% cost of living adjustment is included for all Town employees, at a total additional annual cost of $34,448,
additional health insurance costs are budgeted for all full-time employees, at a total additional annual cost of $16,625,
a total of $15,000 is included for the installation of small relay storm water pumps to address very localized storm water flooding areas in 5 locations,
a total of $72,000 is included for the replacement of beach access walkways at Georgia Street, Hubert Street, and Sea Crest,
funding is included for the replacement of Police, Parks and Recreation, and Solid Waste vehicles ($118,000),
funding is included for the construction of a new pedestrian walkway at The Point vehicle ramp ($15,000), to be funded by the Bicycle and Pedestrian Fund,
a total of $9,500 is budgeted for the installation of new park gates at the Western Ocean Regional Access and Emerald Isle Woods Park to improve the aesthetics of these features,
a total of $10,580 is included for the replacement of the lights in the gymnasium in the Community Center, and
a total of $17,000 is included for the first of 3 annual installments to upgrade and modernize the Town’s financial, payroll, and tax software systems (also enabling the Town to present tax payment information online).
Overall, I believe the FY 16-17 budget represents a fiscally responsible spending plan for the next year, that it addresses the Board’s expressed priorities, and that it will continue to move the Town forward.
The Town’s official fee schedule for FY 16-17 is presented in conjunction with the budget ordinance. As noted above, the fee schedule includes no fee increases of any kind. The Board should note that the only change is a new daily fee for indoor walkers at the Community Center ($5, which is less than the $10 daily fee for the use of the entire Community Center that would otherwise be charged).
5-Year Capital Replacement / Improvement Program
I have also attached an updated copy of the 5-Year Capital Replacement / Improvement Program, and request that the Board formally adopt this plan in conjunction with the budget ordinance and fee schedule. The attached 5-year plan is nearly identical to the plan included in the Recommended Budget and discussed at the Board’s budget workshop meetings, and includes all capital expenditures included in the FY 16-17 budget ordinance (Osprey Ridge storm water pump station, Bogue Inlet Drive bicycle path, Cape Emerald pipe, and others).
The total investment included in the attached 5-Year Capital Replacement / Improvement Program is approximately $19.95 million, and is funded with a mixture of pay-as-you-go funding, installment financing proceeds, grant funding, and fundraising proceeds. The Board should note that $15 million of this amount is allocated for the next realignment of the main ebb channel in Bogue Inlet (and associated beach nourishment in western Emerald Isle) in FY 19-20. The Board should note that the attached capital plan schedules this project one year earlier than previously presented, and that it also now relies on $10 million in State grant funds (from the NC Shallow Draft Navigation Channel Dredging and Lake Maintenance Fund). These funds would be supplemented by $3.33 million from the Carteret County room occupancy tax and $1.67 million from the Town’s Future Beach Nourishment Fund. As discussed with the Board previously, this project is primarily intended to be a “placeholder” at this time to begin Board and community discussion about this project. It is possible that the timetable and funding plan will evolve over the next few years, and the 5-year capital plan will be adjusted accordingly as necessary.
The other most significant projects included in the 5-year capital plan are a comprehensive renovation / expansion of Fire Station 1 ($1 million, planned for FY 18-19) and the replacement of the Town’s aging Fire ladder truck ($875,000, also planned for FY 18-19). Both of these projects would be funded with a new installment financing agreement timed to coincide with the full retirement of the Town’s 2013 refinancing debt, thereby freeing up sufficient budget capacity for the new debt. The attached 5-year capital plan also includes $600,000 for the potential purchase of land and expansion of the Western Ocean Regional Access in FY 17-18, to be funded primarily by grant funding.
The remaining approximately $2.48 million over the 5-year period is primarily allocated for scheduled vehicle and equipment replacements, annual street resurfacing, and other relatively smaller projects.
FY 16-17 Pay Plan
The Board is also asked to approve the attached FY 16-17 Pay Plan at the June 14 meeting.
The attached Pay Plan includes a 1% across-the-board adjustment to the pay grades established for all Town positions, in accordance with the Board’s decision to provide a 1% cost-of-living adjustment for all Town employees as part of the FY 16-17 budget. The hiring rate, minimum salary, mid-point, and maximum salary for each position is increased by 1%, and will insure that the Town’s overall pay plan remains competitive in retaining existing employees and recruiting new employees in the future.
The Board should note that the attached FY 16-17 Pay Plan does include two specific changes, as noted:
- the creation of a new Facilities Coordinator position (in Parks and Recreation) at a grade 13 (the FY 16-17 budget converts a ~ 30 hour per week part-time position to full-time status), and
- the assignment of the Police Chief and Fire Chief positions to a grade 27, which is 5% higher than the current grade 26 (to more accurately recognize the critical importance of these two positions and provide additional capacity for salary advancement for the incumbent and future chiefs).
Additional FY 16-17 Budget Information
I have again included summary information about the FY 16-17 Budget in your agenda packets. This summary information is consistent with the budget totals included in the attached FY 16-17 budget ordinance and the attached 5-Year Capital Replacement / Improvement Plan.
The following information is attached:
- “Quick Summary” of the FY 16-17 Budget
- “All Funds” Summary
- General Fund Budget Summary
- Net Change in Annual Town of Emerald Isle Tax Bill (for selected property values)
- Graph – General Fund Property Tax Rate History
- Graph – Primary Benefit District Property Tax Rate History
- Town Organization Chart and Summary of Authorized Positions
- General Fund 5-Year Forecast
- Graph – Adjusted General Fund Balance
- Property Tax Rate Breakdown
- Itemized Property Tax Receipt
- Graphs – Annual Solid Waste Service Fee History and Annual Solid Waste Service Fee Revenues
- Graph - Annual Bill – Average Value Property Owner
- General Fund Tax Rates for NC Beach Towns (FY 15-16 Actual)
- Graph – General Fund Revenues
- Graphs – General Fund Expenditures by Function / Category.
As you know, the detailed FY 16-17 Recommended Budget was distributed under separate cover on May 10, and copies have been made available for public review since that time. The FY 16-17 Recommended Budget has also been posted on the Town’s website since early May. A full copy of the FY 16-17 Approved Budget will also be made available in Town buildings and on the Town’s website after Board approval.
I will be happy to answer any questions about the budget ordinance, fee schedule, capital replacement / improvement program, and pay plan at the June 14 meeting.