Town Council to host a Public Hearing on the upcoming recommended Budget

Posted on May 28, 2021


FY 22 Budget

The Town’s operating budget represents more than the allocation of funds to the Town’s operations, it sets the tone for the goals, visions, and priorities of our community. This budget outlines the proactive ways the Town Council is working to improve our community by aligning priorities of the 2021 Action Plan to the funding resources of the annual budgeting process. Further, this budget represents our community’s commitment to create & maintain partnerships, invest in capital, improve operational efficiencies, and set clear community-based goals. The past year in dealing with the uncertainties of COVID-19 has tested the resolve of the Town and allowed the Town to look for new ways to serve the community. This budget brings forth new priorities, restores staffing, preserves programs, and allows the community to move forward. Major projects have been completed in the prior budget with huge impacts; projects like Kiwanis Park, The Purple Martin Greenway, a new Town Personnel Policy, Plan 2040 Comprehensive Plan, and new Rutherfordton Development Ordinance. Each one of these endeavors brings forth a new way for the Town to serve, grow, and establish long-term viability as the gold standard in local government for our region. This budget aims to continue looking at enterprise functions of the Town towards ensuring programs like sewer operations, trash, and recycling services are supported 100% through user fees by those using the services.

The proposed budget has been prepared under the North Carolina General Statutes, and as such is balanced. This budget follows the Town Council’s directives to provide excellent and cost-effective services while providing long-term financial stability. The Manager’s Recommended General Fund Budget totals $4,246,166  which represents an effective increase of 12.4% from the prior unamended budget. This unamended budget was down 8.32% from the prior year due to the COVID-19 pandemic, and this budget reflects an increase of 1.45% of the current amended budget. We have seen a rise in sales tax, electric sales tax, and property tax over the last year. We are also proposing to increase the curbside collection fee from its current monthly rate of $5 to $7.80 and proposing to use Fund Balance in the means of the American Recovery Act Funds to meet its mission to restore staffing to the levels prior to the layoffs that COVID-19 caused.  This proposal keeps the tax rate at $.54 of $100 of valuation.

Goals for Fiscal Year 2022

To align Town operations with Town Council directives, the Town Manager and Department Heads submitted detailed goals for the coming year. Together these goals represent critical success factors for each department, as the Town strives to deliver continued excellent, cost-effective services to the citizens of this community. These goals are driven by the 2021 Action Plan which begins with feedback from our community to drive programs and services based on the needs and desires of the community.

Specific initiatives funded in the FY 2022 Manager’s Recommended Budget while controlling costs include:

  • Establishing a Redevelopment Commission and funds for Housing programs
  • Taking on the operations of the Bechtler House
  • Supporting the growth of the Community Garden
  • Beginning the planning phase of Fire Station #2
  • Improve citizen outreach and communication
  • Increasing Sidewalk repair and replacement programs
  • Develop a Master Plan for the Norris Library
  • Develop a more comprehensive preventative maintenance program for the Sewer Utility Fund
  • Investing in Town Buildings including the Fire Station & Town Hall to look at space needs and renovations to these buildings

 

General Fund Revenue Highlights

The FY 2022 Manager’s Recommended Budget proposes a tax rate at $0.54 per $100 of assessed valuation. Ad valorem taxes remain the Towns largest revenue source, providing more than 63% of the Town’s annual operating budget.  This large percentage has provided the needed stability to ensure essential core services of the Town remain strong, as service is the core mission of our public safety and public services. As the COVID-19 crisis has caused major disruptions in all aspects of the world economy, it has also had large ripple effects on our local government operations. As we now begin the process of rebounding from the effects of COVID-19, this budget aims to bring back staff, restore programs, and begin tackling much-needed capital investments.

The economic outlook at the time of this year’s budget process is largely focused on the recovery from COVID-19 and a transition to a post-COVID era. The immediate health crisis will hopefully dissipate over the next year with widespread vaccinations, but the potential longer-term and widespread economic impacts are still unknown. There is the optimism of early signs of recovery, but the reality will be complicated as different sectors adjust to the next “new normal.” The American Rescue Plan (ARP) will provide $1.2 Million in funding for the Town, this funding can be spent through 2024 and we are hopeful that the funding will be transformational for the Town. We expect further guidance and clarification on the expenditures that these funds are eligible to be used for to be forthcoming from the U.S. Treasury and others in the coming weeks or months. This budget aims to use a small portion of the funds to augment staffing and restore jobs to pre-COVID numbers. The use of the ARP funds will show up as a use of Fund Balance in the revenue lines as the funding will be later reimbursed by ARP funds as the budget year moves forward.

We are also very optimistic about new construction and investments inside the Town. Projects like a housing subdivision on John Smith Rd, Phase 2 of Park Crossing, & smaller infill housing projects Downtown are signs of continued growth for the community. We have also benefited this year with the implementation of the new Rutherfordton Development Ordinance and associated Zoning Map that aims to drive development along with existing infrastructure and to allow the Town to maximize its potential moving forward.

General Fund Expenditure Highlights

To deliver services to the Community, the Town relies solely on the shoulders of the Town Staff. These employees have a strong commitment to customer service and professionalism they truly embody our mission “Service Forged at the Highest Standard”. This budget recommends a cost of living increase of 1.5% for all full-time staff, updating part-time salaries, increasing the allocation for volunteer members of the Fire Department, and updating the salary grades. This budget also continues to equalize the benefits for employees by setting 401K contributions at 5% for all employees to match the 5% for law enforcement personnel. We will add 0.5% of the contribution to employees’ 401k contributions, bringing the rate for general employees to 4.5%. The Town is also focused on increasing professional development through new managerial and teamwork training incorporating all staff. The chart below shows the breakdown of expenditures by the department for the coming year.

 

Budget

 

 

 

 

 

 

 

 

 

 

 

 

 

FY22 Expenditures by Dept

Over the past year, despite the challenges of COVID-19, the Town has been blessed to complete the Kiwanis Park project and complete the original vision of the Purple Martin Greenway as it now officially connects Kiwanis Park to Crestview Park. As we move into Fiscal Year 2022 we will begin to see the Highway 221 Bypass project begin as well as further development of the Rutherfordton Business Park along this new corridor. This park development will begin with the construction of a new access road funded by the Appalachian Regional Commission and begin to open up access to roughly 100 acres of sites prime for new jobs and businesses in our community.

The Town has managed debt carefully and will look to use some small debt packages to take advantage of the low cost of lending to achieve the purchase of some much-needed rolling stock in the Police & Public Works departments. Beyond these debt packages, our capital will be pay-as-you-go and limiting debt to short terms. This practice will allow the Town to invest in capital projects from the Capital Improvement Plan. This plan takes a holistic approach to evaluate the future needs of the Town and allows us to budget costs over a five-year plan, rather than on a year-to-year basis. As we move forward this plan will help drive the growth of our community and to provide the much-needed planning for larger projects.

This budget also begins the effort to create a more viable resource to cover the costs of curbside collection services like trash, recycling, and yard waste. Currently, the Town charges $5 a month per residence for the use of these services. Our break-even rate just on solid waste disposal fees is $6.74, not including the full cost recovery of $17.86. It is our proposal over the next five years to incrementally increase the curbside collection rate to gain cost recovery for this service. This year’s increase raises the rate to $7.80, and will continue the incremental growth in this rate over the next five years. In doing so, these services will become user funded and free up much-needed capital for long-term investment into the remaining Town needs.

Overall, the past year has allowed the Town to think creatively and to look for more efficiencies, and ensure we are providing excellent core services and quality of life. We are committed to working with the Town Council and citizens to ensure that our community is providing the gold standard in service.

Sewer Fund

As outlined in prior budgets the Town has worked to actively plan for future growth while ensuring that the activities of this fund are fully covered under the rate structure. Large strides have been made in the fund to replace equipment, invest in technology and grow the customer base. Over the past 4 years, we have been able to keep rates stable based on large customer usage and operational cost savings. This year the Town was targeted under the States new “Distressed Utility” list which looks at a range of variables including cost recovery and funding of deprecation. The Town has worked hard on cost recovery but will need to adjust rates with the budget and future budgets to adequately fund the deprecation of our system. This year’s rate increase begins a phased-in approach over the next 5 years to more adequately fund deprecation and investments into the system. The Town will also be developing a more comprehensive approach to capital planning for this fund in the coming year as we develop a systemwide asset management plan. This plan, coupled with a commitment to begin replacing aging collection lines and the pending upgrades at our waste treatment plant, will set the Town up for long-term viability. The proposed new rate for a customer using 5,000 gallons of wastewater moves from the current rate of $36.10 to $43.28 an increase of $7.18 a month. This is still below the statewide median of $55 for wastewater systems that operate without a water system. The rates are proposed to increase less than $87 a year for a customer generating 5,000 gallons of Wastewater a month. This rate takes into consideration all of the factors mentioned above and aligns with the 2021 Action Plan goal of ensuring that town assets are proactively maintained. Regionally, rates in the Broad River Watershed including 17 utilities have an average bill of $46.51. The increase this year reestablishes the commitment to smaller incremental rate increases over time to avoid future rate increases of this size.

Over the next year, this budget begins steps to proactively manage all assets in the development of a system-wide asset management plan. This plan will help steer investments into the system based on priority ranking. It will also allow staff to more appropriately plan for needed capital costs over time. Our team will also begin the process of removing aging or problem manholes and collection pipes. This year, we have set our target on the replacement of 5 manholes and 1500 ft of collection lines. Lastly, we will begin to fund deprecation, which will take time to phase in but will allow for a more viably utility as the year progresses.

We also aim to use savings for the needed repairs and upgrades to the Waste Water Treatment Plant. These planned repairs will address the headworks, the repairs needed in treatment Basin #1, bring Basin #2 into service, and address needed motor repairs and process improvements. At the time of this budget, this cost is not known however we are seeking bids for this work and anticipate the project to be funded by the system’s fund balance. Other notable projects for the fund in Fiscal Year 2022 include the completion of the RS Central Sewer Line Project and new units at Park Crossing.

The Fiscal Year 2022 is a pivotal year for our operations and will shift the long-term viability of the Town’s Utility system. Setting goals for more proactive maintenance, long-term financial sustainability, and environmental protection allow our utility to be a regional leader in quality service while providing cost-effective sewer service to the Town.

Conclusion

The Town of Rutherfordton remains in strong financial shape and stays committed to ensuring long-term success. This budget represents the most comprehensive annually updated financial guide for the services provided to the citizens of Rutherfordton. However, the budget process does not conclude with the approval of this document. It is not placed on a shelf and merely opened once a year during the budget season. The Budget is a constantly evolving document that is examined throughout the year and carefully managed by the Town staff. In addition, the budget serves as a gateway to keep the citizens informed. Town Management recognizes and thanks the Staff, Department Heads, Town Council, and citizens who participated in the budget process and looks forward to another successful year for the Town of Rutherfordton.

A public hearing will be held on June 2, 2021 at 5:30pm, however citizens are encouraged to review the proposed budget and submit comments to the Town Manager. The Town of Rutherfordton provides service forged at the highest standard from all departments and that quality standard is rooted in the financial stability of our budget process.

 

Full FY 22 Managers Recommended Budget Document 

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