June 13, 2017
MEMO TO: Mayor Barber and Board of Commissioners
FROM: Frank A. Rush, Jr., Town Manager
SUBJECT: FY 17-18 Budget - (Summary & Suggested Motions)
(Full Copy FY 17-18 Recommended Budget & Summary Presentation)
The Board of Commissioners is scheduled to formally consider the FY 17-18 budget ordinance, fee schedule, 5-year capital replacement / improvement program, and FY 17-18 pay plan at the June 13 meeting.
FY 17-18 Budget Ordinance
The attached FY 17-18 budget ordinance is identical to the Town Manager’s Recommended Budget presented on May 9 and reviewed by the Board at its May 16 and June 6 budget workshop meetings, with two minor adjustments discussed with the Board at the June 6 meeting (that do not change the bottom line). As you know, the required public hearing was held on June 6, and the FY 17-18 budget ordinance is presented for formal consideration and adoption at the June 13 meeting.
The total FY 17-18 budget across all funds is $9,886,167. The General Fund is the largest component of the Town’s budget, with total expenditures of $9,454,176, which is a $350,976, or 3.86% increase from the adopted current year budget. The Future Beach Nourishment Fund budget is $737,991, which includes a $450,000 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; these appropriations are completely supported by registration fees and sponsorships) and the Beach Music Festival Fund ($54,000; these appropriations are completely supported by outside funding sources and event revenues).
In accordance with the Board’s top budget priority, the FY 17-18 budget includes no increase in property tax rates, and only a few minor fee adjustments. The General Fund tax rate for FY 17-18 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 $450,000 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 17-18 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 three new positions in the Fire Department, primarily funded by a Federal grant (75% of eligible expenses), to increase staffing on each shift from 4 to 5 firefighters ($162,877),
- a new position in the Parks Maintenance function to improve bicycle path maintenance and NC 58 right of way appearance ($38,799), and
- funding for a new financial, tax, and payroll software system to improve efficiency and enhance public access to information ($17,000), and
- other minor service enhancements in various Town departments.
The budget also includes funding for a few significant capital projects, including
- a total of $50,000 for the first of 5 annual installment payments from the General Fund to the Future Beach Nourishment Fund to fund the Town’s portion of the cost to purchase and clean up the abandoned go-kart track and bumper boat facility on Islander Drive,
- a total of $30,000 for the construction of a new sidewalk along Old Ferry Road between Canal Drive and the CVS store, and
- a total of $25,000 for additional landscaping improvements along the NC 58 right-of-way and a new “Welcome to Emerald Isle” sign.
In addition to the items discussed above, some of the other notable items in the FY 17-18 budget are highlighted below:
- as discussed, the FY 17-18 budget is predicated on the early retirement of an outstanding Fire engine debt prior to June 30 (using additional sales tax revenues and General Fund balance), and this strategy “frees up” approximately $96,000 of budget capacity in the FY 17-18 budget,
- a total of $1,850,000 of sales tax revenue is anticipated in the General Fund, which accounts for most of the projected negative impact of S126 (Senator Brown’s sales tax redistribution bill); the Board should note that we remain optimistic that S126 will not be enacted, however, if it is somehow enacted and effective on July 1, the Town will need to identify an additional $47,000 or more of budget adjustments sometime during FY 17-18;
- a total of $224,000 of development permit fee revenues, an increase of $32,500 over the FY 16-17 adopted budget amount, is anticipated due to increasing construction activity and modest fee increases for building permits,
- a total of $125,000 of ABC revenues is anticipated in the General Fund, which is $25,000 more than the FY 16-17 adopted budget amount and reflects continued growth in this revenue source,
- an additional $19,000 of beach vehicle permit fees, an additional $10,000 of regional access parking fees, and an additional $7,500 of golf cart registration permit fees are anticipated in the FY 17-18 budget (over the FY 16-17 adopted budget amounts), reflecting the continued popularity of these programs,
- General Fund balance is projected at nearly $2.1 million at June 30, 2017, and there is no reliance on General Fund balance for the FY 17-18 budget,
- a 2.2% cost of living adjustment (equal to the CPI change as of March 2017) is included for all Town employees, at a total additional annual cost of $79,190,
- a change in employee health insurance providers is planned, and maintains and enhances this employee benefit at a lower annual cost to the Town (net savings of approximately $7,000),
- a total of $15,000 is included for the installation of small storm water solutions to address very localized storm water flooding areas in certain locations,
- a total of $84,000 is included for the replacement of beach access walkways at Fairfax Drive, Beachview Drive, and Whitewater Drive,
- as discussed with the Board at the June 6 special meeting, a total of $10,000 is now included for a Town contribution toward a new State-local funding partnership for Bogue Inlet dredging, and
funding is included for the replacement of Police, Fire, Parks and Recreation, and Solid Waste vehicles ($191,000).
Overall, I believe the FY 17-18 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 17-18 is presented in conjunction with the budget ordinance. As noted above, the fee schedule includes only a few minor fee adjustments, and these adjustments are in bold in the attached fee schedule. Recommended fee increases include:
- an increase in building permit fees for new construction and significant renovations, from 55 cents per square ft. to 60 cents per square ft, and an increase in other base permit fees from $50 to $60; these fees have not been adjusted since 2009,
- an increase in the storm water permit fee for major commercial projects and new subdivisions, from $750 to $1,500, to more adequately cover the Town’s engineering review costs, and
- increases in the monthly fee for the Town’s preschool program (from $100 per month to $125 per month) and the Town’s after school program (from $203 per month to $225 per month), and the weekly fee for the Town’s summer day camp (from $75 per week to $85 per week); these fees have not been adjusted since 2007 and 2008.
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 similar to the plan included in the Recommended Budget and discussed at the Board’s budget workshop meetings (with two significant schedule adjustments noted below), and includes all capital expenditures included in the FY 17-18 budget ordinance (replacement vehicles and equipment, beach walkway replacements, the Old Ferry Road sidewalk, and others).
The total investment included in the attached 5-Year Capital Replacement / Improvement Program is approximately $37.77 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 $30 million of this amount is allocated for two significant beach nourishment / inlet management projects in FY 18-19 and FY 20-21. As discussed with the Board at the June 6 special meeting, a planned beach nourishment project for eastern Emerald Isle has been moved up to FY 18-19, with a total estimated cost of $15 million to be funded by a combination of State funds ($7.5 million), County room occupancy tax funds ($5.625 million), and Town reserve funds in the Future Beach Nourishment Fund ($1.875 million). Additionally, the next planned relocation of the main Bogue Inlet ebb channel and associated beach nourishment in western Emerald Isle has been pushed back to FY 20-21, also with a total estimated cost of $15 million to be funded by a combination of State funds ($10 million; Shallow Draft Channel Dredging and Lake Maintenance Fund), County room occupancy tax funds ($3.75 million), and Town reserve funds in the Future Beach Nourishment Fund ($1.25 million). As discussed with the Board, both of these projects are expected to be necessary in the next 5 years, however, the exact project schedules may be adjusted due to changing beach and inlet conditions that will continue to be closely monitored.
The other most significant project included in the 5-year capital plan is the purchase of the 29.7-acre Surfside Realty Tract in FY 17-18. The total purchase price is $3 million, and would be funded by a combination of Federal grant funds ($1.5 million), State grant funds ($1.045 million), and Town funds ($455,000, to be financed with a new installment financing agreement). Other significant projects included in the 5-year capital plan include a comprehensive renovation / expansion of Fire Station 1 ($1.25 million, planned for FY 18-19) and the replacement of the Town’s aging Fire ladder truck ($900,000, 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 remaining $2.624 million over the 5-year period is primarily allocated for scheduled vehicle and equipment replacements, annual street resurfacing, and other relatively smaller projects.
FY 17-18 Pay Plan
The Board is also asked to approve the attached FY 17-18 Pay Plan at the June 13 meeting.
The attached Pay Plan includes a 2.2% across-the-board adjustment to the pay grades established for all Town positions, in accordance with the Board’s decision to provide a 2.2% cost-of-living adjustment for all Town employees as part of the FY 17-18 budget. The hiring rate, minimum salary, mid-point, and maximum salary for each position is increased by 2.2%, and will insure that the Town’s overall pay plan remains competitive in retaining existing employees and recruiting new employees in the future.
Additional FY 17-18 Budget Information
I have again included summary information about the FY 17-18 Budget in your agenda packets. This summary information is consistent with the budget totals included in the attached FY 17-18 budget ordinance and the attached 5-Year Capital Replacement / Improvement Plan.
The following information is attached:
- “Quick Summary” of the FY 17-18 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 16-17 Actual)
- Graph – General Fund Revenues
- Graph – General Fund Expenditures by Function
- Graph – General Fund Expenditures by Category.
As you know, the detailed FY 17-18 Recommended Budget was distributed under separate cover on May 9, and copies have been made available for public review since that time. The FY 17-18 Recommended Budget has also been posted on the Town’s website since early May. A full copy of the FY 17-18 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 13 meeting.