Even in tough economic times, the Chapel Hill governance board doesn't want to remove “big ticket” expenditures from the consent agenda, displaying its powerful sense of fiscal responsibility and communication with citizens.

On 10 November 2008 Chapel Hill town council meeting, Town Manager Roger Stancil announced at a town council meeting that town sales tax revenues in FY 2008-09 will be 5% to 10% below projections, i. e., about $500,000 to $1,000,000 less than projected.

In response Mr. Stancil has asked his managers to reduced expenditures by 5% – about $2,500,000. He has also frozen new hires without his express approval. According to Mr. Stancil, ”[The General Assembly] will find ways to shift their expenditures and the only place to shift that is to us and the county.” He relayed talk of the state shifting responsibility for some road maintenance to local governments.

Recent financal restraint convert Councilor Jim Ward responded by asking for even deeper cuts. He wants a budget cut of $1 million beyond the 5% goal. ”I just think let's be real serious about the need to reduce our spending now,” Mr. Ward didn’t explain why just more than six months ago he was voting for an 11% tax increase in the face of an imploding housing bubble and a looming credit crisis.

Only a few minutes after a general headshaking about having to cut spending by several million dollars, Councilor Matt Czajkowski asked to pull an item from the consent agenda - the purchase of seven new hybrid electric buses. The consent agenda is supposed to be a mechanism to speed the business of town governance boards. Uncontroversial items that don’t require discussion are voted on, up or down, en masse. Usually, if even one member of the governance board wishes to have a discussion, the item is removed.

As Mr. Czajkowski put it, the council spent half an hour on tough economic times that “sprang from nowhere”, so wouldn’t it be “fair” in the future to ask the town manager to put “big ticket” town expenditures on the action item agenda instead of the consent agenda. The alternative proposed by Mr. Czajkowski would provide for an explanation to town citizens of the need for the expenditure now and the cost or risk of deferral.

The response of fellow councilors was pure Chapel Hill “responsibility”. According to Councilor Mark Kleinschmidt, he bends over backwards to make the budget “as tight as [he] possibly can.” There's no need to discuss items that the town ”needs”. A more typical response comes from Councilor Lauren Easthom. She ignores the general principle of fiscal responsibility. She only wants to talk about the specific need for new buses, completely missing the fiscal principle of discussing all “big ticket” town expenditures in detail. Apparently, she sees no need to explain every costly expenditure to the public while an approved budget is slashed.

See the Herald Sun Consent Agenda Story.

No word on the wisdom of the town council raising town taxes 11% as the housing bubble collapsed last summer.

No word on the fate of the recently hired arts administrator position and the sustainability coordinator position.

No word on how the $10,000,000 (25%!!) overrun on the new town public works complex affects the budget deficit.

As reported in the Pulp earlier (see Pulp Chapel Hill Tax Increase Story), Chapel Hill Councilors were presented with a FY 2008-2009 budget from Town Manager Roger Stancil that recommended an 11% increase in town taxes.

On 9 June 2008, the Councilors responded vigorously by accepting that recommended record increase, approving a 5.9 cent addition to the current 52.2 cent rate. Showing their fiscal probity, the Councilors will use 11 cents of the total 58.1 cents toward debt service, instead of the originally proposed 9.8 cents. Chapel Hill has doubled its debt since FY 2005-2006. The final town budget totals about $83.6 million ($50.2 million for the General Fund, $16.3 million for the Chapel Hill Transit Fund, and the remainder for other funds).

The FY 2008-2009 budget includes the following:
1) $611,000 for a 3 percent pay raise for employees:
2) $363,000 for cover a 10 percent increase in medical insurance costs
3) $400,000 for retiree medical liability (Other Post-Employment Benefits Fund); and
4) $546,000 for retiree medical insurance.

After two years of raising debt and raiding a “rainy day surplus” fund (asw well as enjoying rising property values) to avoid raising ad valorem property taxes, Chapel Hill Town Manager Roger Stancil has nowhere else to turn and now proposes raising the town ad valorem rate by 11% for FY 2008-2009 (adding 5.9 cents per $100 of assessed value, for a town total of 58.1 cents) to keep existing services intact. This 11% increase includes sucking $2,800,000 out of the town “rainy day” fund balance.

Demonstrating keen foresight in municipal management practices, Mr. Stancil said ”I don't think we will stand alone this year. Tax increases of 3 to 10 cents in local jurisdictions will not be uncommon.”

The town fund balance stands at $18,000,000 but only $6,300,000 has not being previously committed. Upon seeking to spend $2,800,000 of the $6,300,000, Mr. Stancil says ”At this point, it is depleted as low as it can get.”.

Meanwhile, town debt payments are at an all-time high and climbing, doubling in the last three years. The town will pay more than $6 million toward principal and interest in each of the next two years, and over $7 million for FY 2010 through FY 2012. Town debt is being applied to pay for the new Town Operations Center, the planned underground parking at 140 West Franklin Street, the Aquatics Center at Homestead Community Park, the new Southern Community Park, and the public library expansion.

Additional ad valorem property tax increases will be needed to be applied to pay for the operational costs of these capital projects as some of them come on line.

Of note, Chapel Hill will spend $14,600,000 for the Chapel Hill Transit Fund to support UNC.

The proposed budget includes the following: - $611,000 for a 3 percent pay raise for employees - $363,000 for cover a 10 percent increase in medical insurance - $400,000 for retiree medical liability (Other Post-Employment Benefits Fund) - $41,000 for groundskeeper at Southern Community Park - $546,000 for retiree medical insurance - $295,000 for Police Separation allowance - $478,000 for operating costs of the new Aquatic Center - $812,500 for contributions to social agencies - $125,000 for web hosting project - $233,000 for vehicle replacement increase

The proposed capital program includes the following: - $400,000 for parks light pole replacements - $106,000 for capital maintenance to Fire Station No. 3 - $100,000 for emergency repairs - $100,000 for Fire House Mobile and GIS System for response units - $60,000 for small park improvements - $50,000 for fiber optic cable - $50,000 for greenways - $50,000 for parking lots, paths, and trails - $20,000 cemetery beautification

No word on whether or not retired town manager Cal Horton foresaw the coming tax storm.

No word on how Fayetteville has recovered from the loss of Mr. Stancil as town manager there.

No word on whether or not the town council will seek a town property transfer tax like the county commishes have.

See N&O Chapel Hill Budget Story.

On 26 March 2008, during the annual Chapelboro school spring break when the citizenry isn't paying attention, Chapel Hill Mayor Kevin Foy started a public forum by announcing that Chapel Hill town taxes would be increasing for the FY 2008-2009 budget. Keeping up the local political mantra that ”quality of life has associated costs”, Mr. Foy mentioned the new Town Operations Center and the coming Aquatics Center, monuments that have doubled the town debt to $70,000,000 and significantly increased recurring operational costs. Mr. Foy neglected to mention the $500,000 spent on art for the remote Municipal Operations Center (not to be confused with Town Hall). That remote art spending equals ten annual tax increase payments ($100) on 500 affordable $200,000 homes.

For Pulpsters with a for-profit financial bent, service (aka yearly payments) on Chapel Hill's outstanding debt has increased from $2.4 million in 2004 to more than $6 million now. Without raising the tax rate, the budget would face a deficit of $2,800,000.

New town financial director, Mr. Kenneth Pennoyer, (See Hot Orange Finance Director Story) sugarcoated the proposed tax increase, calling it a 4.9 cent increase (based on the official tax rate being calculated on a per $100 of assessed value). Neither Mr Pennoyer nor the ever-vigilant local media noted that a 4.9 cent increase is about a 10% increase in the town tax rate. A nickel sounds substantially better than 10%. (For those keeping track, a nickel tax rate increase on a $300,000 house translates into $150 more in taxes over the current $1566. Remember, that's just town taxes. You pay an additional $3460 for Chapelboro schools and county taxes, for a pre-increase Chapel Hill municipal tax total of about $5026 on a $300,000 house.)

For-profit financial readers should note that the “nickel tax increase” also includes consuming an existing town fund balance of $2,700,000. Without that fund being available, the increase would have been “another nickel”, i.e., an almost 20% increase.

The Town Council should adopt the budget on June 9.

No word on whether or not the Town Council will connect decreasing housing affordability to the difference in the increase in town taxes (about 10%) versus the last UNC wage increase (about 3%).

No word on why a financial impact statement showing the effect on town taxes wasn’t prepared and discussed when the decisions to build these monuments were being discussed

No word on whether or not cumulative town residential property values have declined during the bursting of the nationwide housing bubble, thereby necessitating a further tax rate increase.

No word yet on how the town of Carrboro will fare with its FY 2008-2009 town tax rate that’s currently 25% greater than that of Chapel Hill (65.37 cents versus 52.20 cents).

See Chapel Hill Herald Budget Story.