Cary Town Council - October 13, 2009
DRAFT
Contact the town clerk at (919) 469-4011 for official minutes
Town Council Capital Projects Work Session
Present: Mayor Harold Weinbrecht, Mayor Pro Tem Julie Robison, Council Members Gale Adcock, Don Frantz, Erv Portman, and Jennifer Robinson
Absent: Council Member Jack Smith.
Mayor Weinbrecht called the meeting to order at
Town Manager Ben Shivar said council requested a fall work session to discuss capital projects moving forward. The capital projects need to be reviewed in context of the debt services as well as the operating budget. The budget has been cut and revenues on the operating budget have been reduced about $10-14 million.
This is the first year general fund money has not been contributed to the capital program, and it will be the same for next year. Staff is not expecting council to provide specific decisions about specific projects tonight. However, it would be helpful if staff had some general parameters to work with, e.g., have department directors rank important projects; therefore, staff would like general direction from the council.
Projects are categorized into a format that may be helpful to council. The first section includes projects with some flexibility; the second section includes projects that cannot be changed. Utility fund capital projects are also included in the list but the purpose tonight is to talk about the general fund.
Budget Director Scott Fogleman reviewed the Town of
1. Revenues: Assumptions figured with a flat tax rate of $ .33.
2. Operating Costs: One of the assumptions is a three percent growth starting in FY2011, which is an average of about 25 new positions each year.
3. Debt Service: Critical because it related to funding of the capital program. This information shows the debt service expected if all general capital projects are executed all capital projects that have received appropriations to date. Not included is any capital funding in FY2011 or beyond that would require additional debt. There is $7-10 million a year general capital designated revenues that are utilized to help with those types of capital projects.
a.) Operating Margin: After debt service.
b.) Fund balance available for capitals.
c.) Four-month reserve calculation
d.) General guideline: One variable is that as the expenditure budget grows, the same amount of debt service makes up a large percent of that. This only includes current appropriated debt services.
e.) Tax-based growth rate.
4. Historical and forecasted annual general fund debt service percentage scenarios and the forecasted general fund operating margin scenarios expressed in additional cents on the tax rate of 33 cents. The tax-based growth represents about sixty percent of the general fund engine and is growing at a slower rate than the operating expense assumption. One percent growth in tax base can’t keep up with a three percent growth in expenditures.
Mrs. Robison asked if the items relating to the Western Wake Wastewater Reclamation Facility are only
Mrs. Robison asked if the assumptions take into account the current tax rate. Mr. Shivar said the impacts of current and various tax rates and their impact are included.
Mr. Portman asked if the $7-10 million ongoing capital utilized for various sources is included in the revenue projection. Mr. Fogleman said no.
Mr. Portman asked about the operating cost assumptions. Mr. Shivar said the Town is still growing and 30 positions have been cut. In order to return to service levels prior to the economic downturn, those positions will be filled first. Mr. Fogleman added that 22 of those positions are not funded this year and
Mrs. Robison asked if the untapped bonding authority has been taken into account. Mr. Fogleman said yes. He explained that the debt service impacts of the $10 million bonding referendum from 2005 are included. He said it is being funded with a transfer of the utility fund so it does not become a burden in terms of the tax rate associated with the general fund. There is another $10 million associated with the land banking program that is currently on hold until 2014. All other capital project debt is reflected in the summary and the streetscape debt is scheduled to begin in the next couple of years.
Mr. Portman clarified that the schedule reflects what is projected to be spent, the portion projected to be spent coming from debt, and the appropriate debt service. Mr. Fogleman concurred. Mr. Shivar said it shows the impact with variables staying the same.
Mr. Shivar commented that the permit revenue is down due to inactivity and value. Mr. Fogleman said the next county tax base growth estimate will not be received until next year.
Mr. Fogleman said there is a four-month target reserve of fund balance in the general fund. He said one-third of the annual operating expenditures and debt service is being added to the fund balance to keep it whole. The target is to hold the reserve steady as operating and debt service grows.
Mrs. Robinson said
Mr. Portman asked about the fund balance available for capital. Mr. Fogleman said the beginning fund balance of $74.3 million (FY09 ending balance), minus the reserve of $18.6 million and four months of operating expenditures and debt service (the self-imposed reserve of $37.2 million), and $14.2 million is the FY2010 fund balance available for capital. Mr. Portman clarified it is cash as opposed to end of the year operating budget.
Mr. Portman said the summary assumes there will be no new projects in the near future. Mrs. Robinson said there are many projects already underway that will allow changes in the community for a couple of years. Mr. Fogleman said there are about 12 road projects that have remaining debt and at some point existing funds can be reallocated to relieve debt service.
Mr. Portman said the tax rate and the prioritizing of capital project need to be discussed. Mrs. Robinson said the issue is what needs to be done to keep the tax rate from escalating.
Mr. Fogleman reviewed the Page Reference Index for Capital Project Classification Detail by Category as of
Mr. Portman said the maintain, efficiency, higher and new section is the target for reductions. He wondered if it would be efficient to rank by return on investment.
Mr. Frantz suggested staff set parameters such as leaving the tax rate as is, focus on highest priorities, etc., and bring this information back to the council. The council concurred.
Mayor Weinbrecht suggested an example of a two-year lumped tax increase.
Mrs. Robison said funding for new growth needs to be considered.
Mayor Weinbrecht summarized that the council wants to know about tax rate and staff priorities with geography taken into account.
Mrs. Robinson said future expenditures need to be reviewed.
Mr. Portman wants information on a no tax increase basis and if the goal can not be met, identify the reasons.
Mayor Weinbrecht wondered what will happen if a tax increase is deferred. Mr. Portman said there is pressure on the tax rate if there is no additional capital.
Mrs. Robison wonders about the potential cost associated with project delays.
Mrs. Robinson said amounts for infrastructure need to be appropriated and the life span of it anticipated.
Mr. Portman said future debt needs to be thought of in terms of being tied to a funding mechanism.
Mr. Shivar said staff will provide the council with the requested information.
The council will e-mail Mr. Fogleman, copying Mr. Shivar, with any concerns regarding the Town of
Mr. Shivar and the council thanked staff for being pro-active.
Mrs. Robison wants to revisit the 15 percent threshold.
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