[Durham INC] Durham Proposes Modest Tax Increase in FY 10-11 Budget
Amy.Blalock at durhamnc.gov
Mon May 17 19:56:39 EDT 2010
CITY OF DURHAM
Office of Public Affairs
101 City Hall Plaza
Durham, NC 27701
For Details, Contact:
Beverly B. Thompson
Public Affairs Director
(919) 560-4123 x 11229
(919) 475-2362 (cell)
Beverly.Thompson at durhamnc.gov
For Immediate Release: May 17, 2010
Modest Tax Increase Needed for Voter-Approved Bond Projects and Transit
Budget Continues Public Safety, Core Services, and Capital Improvement
DURHAM, N.C. - Continuing with voter-approved bond projects and
supplementing Durham Area Transit Authority (DATA) along with core City
services, public safety, and capital projects are next year's budget
priorities, said City Manager Thomas J. Bonfield, as he presented his
proposed Fiscal Year 2010-2011 budget to the City Council tonight.
To meet those needs, Bonfield proposed raising the tax rate by 1.19
cents, bringing the proposed total tax rate to 55.19 cents per $100 of
assessed value. Since the average home value in Durham is $161,700, an
increase of 1.19 cents raises the average annual tax bill by $19.24.
"During the budget process, we scrutinized every expenditure request,
prioritized every program and initiative, and sought every opportunity
to be more efficient to ensure that essential public services continue.
The result was a very limited tax increase to continue to meet the needs
of the community," Bonfield said. "As with last year, we continue to
face unprecedented economic times in our community, state, and nation.
Much of the budget development process focused on prioritizing programs
and services and allocating resources to the highest priorities
identified by the community and the City Council."
Bonfield said the property tax increase was to pay for the increase in
voter-approved debt service requirements resulting from the 2005 and
2007 bond referenda and other debt. Bonfield also said that the tax
increase will be used to replace some of the American Recovery and
Reinvestment Act (ARRA) funding received last year. Because departments
saved $3.9 million through program prioritization and the resources
required, core services are completely funded through the general fund,
with no affect on the tax rate.
This year's preliminary budget total is $353.4 million, compared to
$345.6 million for FY 2009-2010, which is an increase of $7.7 million,
or 2.2 percent. The amount includes a general fund budget of $206
million, which funds most core City services, and represents a $0.9
million, or a 0.4 percent budget reduction, from the FY 2009-2010 budget
of $206.9 million. Of this 1.19 cents increase, 0.49 cents per $100 of
assessed value is dedicated to debt service and 0.70 cents per $100 of
assessed value is dedicated to transit to replace ARRA funding.
The budget also maintains 12.5 percent of the City's budget in fund
balance reserves and includes increases in parking and solid waste
disposal fees as well as a water and sewer rate increase of 1.34 percent
and a stormwater rate increase of 9.3 percent to further improve
services and assist with achieving State regulatory requirements. Debt
service is at 13.7 percent, below the 15 percent threshold established
by the City Council in the budget development guidelines.
According to Bonfield, the budget allocates the City's limited resources
to the highest priorities of the citizens of Durham. "This budget will
support the community priorities of public safety, quality core
services, youth programs and activities, improved infrastructure,
deferred maintenance, neighborhood engagement and revitalization, jobs
and neighborhood economic development, and timely delivery of capital
projects," Bonfield said. "I am confident this budget allocates the
limited resources to the highest priorities of the City Council and
Durham residents, with no reduction in services."
Using the remainder of 2005 and 2007 General Obligation Bonds (GO) and
other funds, the City's Department of Public Works will continue to
resurface deteriorating streets. Bonfield advised the Council that to
continue progress on this front, other funding options will need to be
considered in Fiscal Year 2011-2012 since a dedicated Street Resurfacing
Fund could not be established this fiscal year as hoped.
Funding for neighborhood revitalization will be maintained at $750,000
and funding for deferred maintenance will be maintained at $500,000.
Funding for fleet replacement continues at $1 million, and the Street
Light Replacement Program has been reinstated at $130,000. The budget
also funds full operation of seven new facilities, including the
Walltown Park Recreation Center, the Teen Center at Old Lyon Park,
Bethesda Park, and Fire Station 15.
Bonfield also discussed the budget impact of the City's first-ever
strategic planning process since it will set direction for the future of
the city and guide decision-making beginning with the FY 2011-2012
budget. The draft plan will be presented to City Council in June 2010,
with the implementation phase to begin in September.
"By looking ahead and asking our customers what they need, we will
establish a vision for the level of service to be provided, along with
an understanding of the resources necessary to provide those services,"
Bonfield said. "This is why the development of the multi-year financial
plan is a crucial component of planning for the future. This plan will
project out the financial impact of achieving the objectives in the
strategic plan and the resources needed to fund those objectives."
The capital improvement budget includes $50 million for new projects and
to complete existing projects. Funding is provided through impact fees,
water and sewer revenues and revenue bonds, stormwater fees, and program
The City Council also received Bonfield's recommendation for non-profit
support. The budget proposes to fund 23 Non-City Agencies (NCAs) to
provide arts, public safety, youth, community development programs, and
other activities for Durham citizens at a total cost of $178,821. The
City also has a management agreement with the Carolina Theatre, Durham
Arts Council, and St. Joseph's Historic Foundation for $596,103,
$605,126, and $292,000 respectively. This budget also includes funding
for the newly negotiated agreement with Lyon Park for $181,000.
Other highlights of the FY 2010-2011 Proposed Budget include:
* Based on program prioritization, 31 positions have been
eliminated. This reduction in force will allow the City to focus its
resources on the highest priorities. Although many of these positions
were vacant, 15 are occupied. Employees slated for layoff have been
notified, which will allow them to begin engaging in job seeking
opportunities. Also, based on program prioritization and program needs,
20 previously frozen or new positions have been funded.
* Due to limited financial resources, there are no compensation
increases for general employees, or Police and Fire employees, included
in this year's proposed budget. Bonfield's plan is to review revenues
and expenditures in January 2011 to determine if excess funding is
available to provide one-time bonuses to all employees during FY
* The employee 401(k) will continue being funded at the 3
percent level for general employees. State statute requires local
governments to contribute 5 percent for sworn law enforcement officers.
In accordance with a State mandate, the retirement rate for general
employees increased from 4.8 percent to 6.35 percent and from 5.27
percent to 6.82 percent for law enforcement officers for the Local
Government Employees Retirement.
* Health insurance premiums, which were expected to rise by 29
percent, were limited to a 14.54 percent increase due to the City's
switch to a self-insured health plan in September 2010. The City also
anticipates a 10.6 percent increase in dental health costs.
Bonfield noted that the City maintains its excellent fiscal status as
evidenced by three areas: a continuing AAA bond rating by all three
rating agencies, the highest measure of financial security and one
attained by only 41 of the nation's more than 22,500 cities; unqualified
opinions by independent auditors of the City's financial statements and
compliance with major federal and state grants; and a strong Audit
Services Department, ensuring compliance with applicable laws, policies,
A public hearing on the proposed budget is scheduled for Monday, June 7,
2010, at 7 p.m. in City Council Chambers at City Hall, 101 City Hall
Plaza. Final budget approval is set for the Monday, June 21, 2010
Copies of the proposed budget are available on the City's Web site at
www.durhamnc.gov/departments/bms/, the City Clerk's Office, and the
City's Department of Budget and Management Services Office, both located
in City Hall.
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