8/9/2019 FY 2015-2016 Budget Message - Franklin

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Town of Frank!inProposed Budget 

Fisca~Year 20152016

8/9/2019 FY 2015-2016 Budget Message - Franklin

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Town Manager's Budget Message

Fiscal Year 2015-2016

The Town of Franklin remains in sound financial condition. This budget addresses the need for long term

financial, infrastructure and strategic planning for the Town of Franklin. The Town continues to

experience slow growth in revenue sources, especially water and sewer revenue. All departments in

general government were able to reduce their budgets by five (5) percent. It is crucial that expenditures

do not exceed revenues. The Town should continue to stabilize and build its fund balance. Fund balance

is key to long term financial planning. The Town should carefully prepare for unanticipated loss of

revenues, especially with the ever looming threat of the North Carolina General Assembly and their

involvement in local government affairs. The pending threat of the sales tax redistribution bill and the

elimination of privilege license fee are a couple issues facing local governments.

Stat menet of Revee Neutral Tax Rate

North Carolina 6.5. 159-11 Ce)requires each taxing unit to publish a revenue-neutral property tax rate aspart of its budget for the fiscal year following the revaluation of its real property, The purpose of the

revenue neutral tax rate is to provide citizens with comparative information. As defined in N.C.6.5. 159-

11(e) "in each year in which a general reappraisal of real property has been conducted, the budget

officer shall include in the budget, for comparison purposes, a statement of the revenue-neutral

property tax rate for the budget. The revenue-neutral property tax rate is the rate that is estimated to

produce revenue for the next fiscal year equal to the revenue that would have been produced for the

next fiscal year by the current tax rate if no reappraisal had occurred. To calculate the revenue-neutral

tax rate, the budget officer shall first determine a rate that would produce revenues equal to those

produced for the current fiscal year and then increase the rate by a growth factor equal to the average

annual percentage increase in the tax base due to improvements since the fast general reappraisal. This

growth factor represents the expected percentage increase in the value of the tax base due toimprovements during the next fiscal year, The budget officer shall further adjust the rate to account for

any annexation, de-annexation, merger, or similar event"

The Town' s current total property value is $725,317174. The Towns current property tax rate is twenty

seven {$0,2700) cents per one hundred dollars ($100) of valuation. The reappraisal produced a tax bas

of $718,035,498. This Is a decline of $7,281,676 in assessedvalue from the current fiscal year

($725,317,174). This equates to a total 1,014 % reduction, Using the new tax base of $718,035,498 in

Fiscal Year 2015-2016, a tax rate of ($0.2727) cents per one hundred dollars ($100) of valuation is

needed to produce a revenue neutral budget for Fiscal Year 2015-2016.

As part of calculating a revenue neutral tax rate, G.S. 159-11 (e) provl'des that a growth factor be used in

calculating the revenue-neutral rate based upon the average increase in the tax base "due to

improvements since the fast general reappraisaf~" Since 2007, the Town of Franklin's base has grown

2.07% on average, In applying a growth factor of 2.07% to the tax rate of ($0.2727) cents per one

hundred dollars ($100) of valuation, a revenue neutral tax rate would be ($0.2784) cents per one

hundred dollars ($100) of valuation, Figure 1, illustrates revenue neutral and growth factor

calculations,

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There is a request from the Franklin Fire Department to Macon County to increase the current fire tax

rate of $0.030 cents per one hundred dollars ($100) of valuation to $0.039 per $100 of valuation. At this

time reappraisal values are not available. Macon County is still working on these totals, Once these

totals are given to the Town of Franklin they will be made available at the May 16, 2015 budget work

session.

 Personnel

This budget calls for a two (2) percent cost of living to be added to base pay plus a one (1) percent, one

time, in December if financial conditions permit. Funds are also budgeted for salary adjustments for pay

plan implementation. This budget eliminates the part-time Main Street Coordinator position. Instead, a

Festival and Events budget is proposed with funding allotted for a contractually obligated firm or

individual for Festival and Event responsibilities, This is a cost savings to the Town of $25,200. Employee

benefits will remain unchanged, The Towns Health Insurance annual premium is expected to decrease

by $12,000.

 DebtServiceAll debt payments are budgeted as required by law. The Town Sewer Plant project of $5,190,484 is

completed and $373,741 is budgeted for new debt service. The Town secured a $3.5 million dollar loan

through the North Carolina State Revolving Loan Fund for Upgrades and Expansion to the Water Plant.

The first payment towards debt service will not be due until Fiscal Year 2017-2018. This budget also

accounts for existing debt service for $155,575 for general fund and $270,561for water and sewer. Also,

debt service on the water plant for $12,600 will be paid off this current fiscal year.

 Ca--..J;fj-taiProjects

The Town will begin the first phase of the Water Plant Upgrade and Expansion with Engineering Report

Approval October 1, 2015 and Bid and Design Packet Submittal April 1, 2016,

 Operating Cap gu

The Police Department will be replacing two (2) patrol vehicles with over 100,000 miles, Water and

Sewer Department wilt be re placing two (2) 1988 vehicles with over 100,000 miles. Street Department

wilt be replacing one (1) 1988 vehicle with over 100,000 miles. A lease payment option would be best for

all departments replacing vehicles.

 Operations

Non-Profit funds for community organizations are left at the current budget total of $40,000,00.

 Special Projects

`Funds are budgeted for the Town to begin looking at brick pavers on both sides of Downtown sidewalk

areas. Funds are also budgeted for Downtown cross walk improvements. This budget also designates

$3,700for the North Carolina Bicycle and Pedestrian Planning grant the Town received, The total amount

of the grant is $40,700.However, the Town is only responsible for a ten (10) percent required match.

 By Department

All departments were able to reduce their budgets by five CS)percent with the exception and

explanation of those listed below.

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Fire Department: The request to increase the fire tax rate stems from the increased volume of calls the

Town is receiving. One entry level staff position for the Fire Department is recommended to help with

the increased call volume. A modest transfer from fire fund balance of $208,605 is recommended for

capital purchases.

Water and Sewer Department: Funds are budgeted for Forest Avenue water and sewer line repair.

Water and Sewer line repair is needed before the street can be re-paved. The basin at the water plant

only needs to be cleaned every five (5) years~ However, this budget allots funding of $30,000 this fiscal

year. The reason for this is to start a reserve account for this project in preparation for cleaning the

drainage basin in fiscal year 2018-2019. The total estimated cost to clean the drainage basin is $150,000.

Also, the budget designates funds for a new full-time Engineering position. This position will be a cost

savings and a benefit to the Town tremendously as the Town moves forward with the Water Plant

`Upgrade and Expansion along with various other projects in the Town's Comprehensive Improvements

Plan.

 Water and Sewer Rates

Based on current estimates water sewer revenue combined are estimated at $3,263,000. A modest

transfer from water and sewer fund balance of $275,718 is recommended. Martin and McGill completed

a detailed water and sewer study in January 2015. In order to maintain the existing infrastructure, to

upgrade/expand the water plant and to start funding for the Towns Comprehensive Improvements Plan

a modest water and sewer rate increase tS~recommended. A five (5) percent rate increase is

recommended for water and sewer. The proposed rate increases only affect base and volume charges

but not tap, connection, or other miscellaneous charges~

 CQnc[uSjon.

This budget for Local Fiscal Year 2015-2016 is balanced as required by law and continues to provide

existing services while meeting the governing board's priorities and polices. A revenue neutral tax rateadjusted for growth is recommended for Fiscal Year 2015-2016. This budget includes an appropriation in

general fund of $450,000 for Powell Bill. However, this budget does not include an appropriation of

general fund balance, Instead a contribution to fund balance is recommended~ This budget address long

term financial, infrastructure and strategic planning for the Town. All three are crucial for the future

growth of the Town of Franklin.

Sincerely,

~

er Woodard

Town Manager

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