Holly Springs Town Council

Special Meeting

Budget Workshop

May 10, 2005

MINUTES

The Holly Springs Town Council met in a duly-called special session on Tuesday, May 10, 2005, in the Holleman Room of Holly Springs Town Hall, 128 S. Main Street. Mayor Dick Sears presided, calling the meeting to order at 6:00 p.m. A quorum was established as the mayor and all five council members were present as the meeting opened.

Council Members Present: Councilmen Ernie Pearson, Parrish Womble, Chet VanFossen, Peter Atwell and Hank Dickson, and Mayor Sears.

Council Members Absent: None.

Staff Members Present: Carl Dean, town manager; Chuck Simmons, assistant town manager; John Schifano, town attorney; Joni Powell, town clerk (recording the minutes); Gina Bobber, director of planning and zoning; Stephanie Sudano, director of engineering; Len Bradley, director of parks and recreation; Drew Holland, finance director; Thomas Tillage, director of water quality; Luncie McNeil, director of Public Works; Cecil Parker, chief of public safety; Ricky Blackmon, director of building code enforcement; Jenny Mizelle, director of Economic Development; Erika Phillips, director of human resources; Eric Tayler, IT technician; and Adam Lindsay.

The purpose of the special meeting was to review the Manager’s proposed FY 2005-06 budget document and to discuss the Town’s projected spending in the coming fiscal year.

The Manager opened remarks by explaining that one of the major projects the Council has expressed much interest in moving forward with is a community center. He said staff is exploring the project as one big project in comparison to a phased project; estimating costs and identifying the Town’s financing options. He said the current Capital Improvements Plan (CIP) indicates that the project could be launched in about three years without a tax increase.

Mr. Dean added that if the Council desires to move forward more quickly, then staff could determine the earliest the project could begun without having to impose a tax increase and when it could be done with a modest tax rate increase. Once those calculations have been made, the Town Council can review the information and provide further direction.

Mr. Dean then outlined his budget message, which is restated herewith below:

“The Town of Holly Springs has experienced a great deal of positive growth over the past several years, enhancing the Town’s ability to improve services provided to its citizens. As our Town continues to develop, a vision should be maintained as to how the community will grow while maintaining the quality of life expected by its citizens. This vision should include quality services, programs that address the needs of citizens, economic development in keeping with our community, and adequate infrastructure to meet the requirements of our growing Town. The proposed budget is designed to meet these needs during the next year. Highlights of FY 2005-2006 Budget are as follows:

Revenues – General Fund

A. Ad Valorem Taxes: Figures are based on a 97% collection rate with an approximate tax base of $1,190,828,416 and a tax rate of $.53 per $100 valuation.

B. State Revenues: The state-shared revenues are estimated based on previous years’ collections.

C. BFI Franchise: The budget does not reflect BFI franchise fees, which will be collected and restricted outside the operating budget.

D. Solid Waste Fees: No increase in garbage or recycling rates is included in this budget. Additional $1 per month per household for yard waste to finance leaf truck and position.

E. Fund Balance: We have appropriated $475,000 from Fund Balance, which will fund capital items and one-time project costs. This will ensure basic operating expenditures are covered with recurring revenues and, should you wish to reduce fund balance, you can eliminate capital items.

F. Powell Bill: $141,300 has been obligated from Powell Bill reserves to cover costs of additional funding for the ongoing transportation projects.

Revenue – Utility Fund

A. Water & Sewer Sales: An increase of $.50 per customer to the water and sewer monthly access fee is proposed in the FY 2005-2006 Budget. We are recommending all sewer capacity replacement fees be restricted outside of the operating budget for future capital needs. Please keep in mind that we need to prepare financially for the upcoming WWTP expansion, which this change will facilitate.

B. Fund Balance: $383,000 has been appropriated from Fund Balance to cover capital items and one-time project costs. We will utilize the same process as discussed in the General Fund.

Expenditures – General Fund

A. All capital items have been appropriated, and a list has been provided of each department’s requests for your review.

B. A total of four (4) new positions have been proposed in this budget: project analyst and IT technician (Administration), public works technician II (Sanitation), and parks & recreation technician (Parks & Recreation).

C. This budget includes contributions to nonprofit organizations of $20,000 to be designated as the Council so desires, a $15,000 contribution to the Holly Springs Chamber of Commerce, and a $4000 contribution to TRACS.

D. All debt service requirements have been appropriated in this budget to meet our debt obligations. The statement of debt is included for your review.

Expenditures – Utility Fund

A. All capital items have been appropriated and a list of each department’s requests is provided for your review.

B. One (1) new position has been proposed in this budget: equipment operator (water distribution).

C. All debt service requirements have been obligated in the FY 2005-2006 budget.

Other Highlights

Salary requirements for next year include a recommended 3% cost of living adjustment (COLA) across the board. Funding is provided in each department for merit/performance pay in the amount of 3% of salaries. The salary budget also includes a 5% 401(k) contribution and longevity benefits.

Employee health insurance has been budgeted at a 6% increase in the rates for next year.

With the current economic environment, our goal is to create a budget that will maintain and improve services to citizens while still controlling the costs for these services. I feel the Town of Holly Springs has a solid and conservative budget for next year.

As part of the budget process, the staff feels it is important to have new residential developments absorb additional expenses for infrastructure rather than passing cost on to existing citizens. To that end, we have increased water & sewer capacity fees from $3,000 to $3,500 in order to address immediate infrastructure needs. In addition, we have removed sewer capacity fees from the operating budget to go directly into reserve accounts. It is important that the Town gradually reduce its dependence on impact fees and charges for operating expenses, and we will continue to attempt to reduce these charges in future budgets to eliminate potential financial problems within the operating budget.

I have included with your budget the departmental worksheets we used in developing this budget proposal. I hope this will provide you with a better overview of the process and issues discussed during the budget-balancing procedure.

As we proceed into the next several years, we will continue to evaluate projects and personnel needs as they relate to the provision of services. We have several substantial projects (WWTP, library/cultural arts center, fire station) which will be initiated during this fiscal year; therefore, it will be important to prioritize programming needs with future budgets. We will continue to work with Council, staff, and citizens to establish our goals and objectives as the Town grows to provide the level of services expected.

As mentioned previously, we have several major projects currently underway, including the wastewater treatment plant, library/cultural arts center, fire station, Holly Springs High School Park Project, completion of ball fields at Womble Park, and the stacking lane at Holly Springs Elementary, which will limit additional projects next year. Enclosed is a breakdown and status on existing projects for your review and discussion.

Town staff has been instrumental in the development of this document, and I feel they have done a good job of controlling costs while providing service levels expected by the Town Council and our citizens. This budget is my best estimate of what we should expect next year, and I feel it represents a fair assessment of our anticipated revenues and expenditures.

This budget reflects my recommendations based on department meetings, evaluation of existing service needs, and input from Town Council. I would like to say a special thanks to our department heads—especially Finance Director Drew Holland—for their time and effort in the preparation of this document. Without their help, this budget could not have developed to address both present and future service needs.

The FY 2005-2006 Budget represents a level of funding that will allow the Town to maintain and improve current service levels while making organizational changes, which should be cost effective and more efficient. It is important to note that with any budget external forces can affect these projections, and it is for that reason that the figures proposed in the FY 2005-2006 Budget are a very conservative forecast of our revenues and expenditures for the next year.” – End of the Town Manager’s budget message, as quoted from the proposed budget document.

Following these opening remarks, discussion of the budget document followed. Discussion topics included:

Merit increases and Cost of Living Adjustments (COLA) – Councilman Dickson opened a discussion on whether or not it would be appropriate to provide across-the-board cost of living adjustments, particularly for those employees who do not perform at or above expectations. He said he felt like a 3% COLA was akin to rewarding bad behavior.

Council discussed that a COLA was provided to keep salaries in line with inflation; and that a policy could be drawn that states if an employee does not rate a “3” during his or her performance evaluation (meets expectations), then that employee would not receive a merit increase nor a COLA.

Mr. Dean said he felt that the program needed to be in place for next year in order to apply it fairly. He said COLAs are applied, effective July 1. Short of that, he added, a program would need to be in place before adoption of the budget as it is written.

Councilman Dickson said he would appreciate the Manager’s looking into a merit increase program that incorporated the COLA. In this way, he said, the one-time salary adjustment would be based on the employee’s performance evaluation and would amount to perhaps 6% or 7% increases (including COLA) instead of 3%. That would be a true incentive for employees to perform, he pointed out. At the same time, it would not provide automatic salary increases for employees who do not perform.

Historical Markers – Councilman Dickson said he would expect that the Town would implement a criteria program for the installation of historic markers. He said it was a good idea and he supported the program; however, his advice would be to have a program that clearly defines eligible properties before the markers are installed. The current budget proposal calls for the purchase of three local historic landmark markers: for the Mims house, Bass Lake and the Masonic Lodge.

Filing Fees – Council directed that the filing fee for candidates on the FY 2005-06 rate schedule should be increased from only $5 to an amount that might dissuade those who are not really serious about running. State law allows the filing fee to be up to 1% of the stipend amount that is paid for the position.

After researching the applicable laws, the filing fee was adjusted to $50.

Odor Control – Council directed that enough funds be provided in the Utility Fund to address pump station odor control measures.

General Comments – Council members expressed confidence in the proposed budget in light of all the Town’s construction projects. They also said they looked forward to a growing commercial/industrial base in Holly Springs, which would relieve some of the tax burden currently borne by residents. They commended department heads, Mr. Dean and Mr. Holland for striving to provide conservative spending plans while increasing and improving services and facilities for citizens.

At this time, Ms. Bobber explained that she had business to discuss regarding the FY 2004-05 budget. She and Mr. Holland presented the Council with an amendment to the FY 2004-05 budget in the amount of $50,000 to cover the costs of hiring a consultant to assist the Town in formulating a Small Area Plan for downtown. Ms. Bobber explained that staff was in the process of working with the consulting firm identified as providing the best response to the Town’s Request for Proposals. Staff is working to finalize the contract, and the funds need to be in place in order to proceed with finalizing the contract.

Action: The Council approved a motion to adopt an amendment to the FY 2004-05 budget in the amount of $50,000 to cover the costs of entering into a contract with a consultant to assist the Town in formulating a Small Area Plan for downtown.

Motion By: Pearson

Second By: Dickson

Vote: Unanimous

A copy of the budget amendment is incorporated into these minutes as an addendum pages.

Adjournment: There being no further business for the evening, the May 10, 2005, special meeting budget workshop of the Holly Springs Town Council was adjourned following a motion by Councilman Atwell, second by Councilman Womble and a unanimous vote.

Respectfully Submitted on Tuesday, June 17, 2005.

_________________________________

Joni Powell, CMC, Town Clerk

Addendum pages as referenced in these minutes follow and are a part of the official record