Council hears grim news about finances

When a tree fell in City Lake Park on April 14, it knocked out the power for part of Jamestown, including downtown. But it did not knock out power at Town Hall for the Town Council’s third fiscal year 2023-24 budget meeting.

Town Manager Matthew Johnson’s opening remarks, however, may have dampened the spirits of councilmembers.

“Within the last week or so, [Finance Director Judy Gallman] brought it to our attention that proposed expenses would exceed expected revenues by nearly $1.5 million,” Johnson said, pointing out the cost of goods and services are increasing rapidly. He noted the Finance Department has worked diligently to prepare a balanced budget, despite challenges.

“Expected revenues from sales tax, franchise tax, and other revenue sources are expected to be diminished,” he added. “[Staff members] went back to the table and went through the budget line by line and worked to remove, or better yet – to defer – costs/projects to reduce the disparity between revenues and expenditures.”

The result is a reduced list of Capital Improvement Program (CIP) projects for fiscal year 2023-24. Gone are Golf Maintenance Department’s request for a tractor and implement for this fiscal year. Recreation Department’s requests for a lane marker for ball fields and restrooms at Wrenn Miller Park have also been deferred. This saves $450,000.

The Planning Department deferred a new sidewalk along Penny Road as well as removing architect fees for Fire Station renovation. 

All of the projects were deferred at least one year.

Two positions will be eliminated at the golf course and the grill will close. This reduction will save salary, benefits, grill expenses and revenues, vacation pay, etc.

In the end, these deferments and position loses total nearly $1 million in expenses for 2023-24. The budget deficit is approximately $550,000.

“To balance the budget, staff are recommending a 10 cent tax increase, as one penny of tax equates to approximately $60,000,” Johnson said. “It will become necessary for us to increase the Fund Balance within a three-year window per our adopted policies.

“This means that next year’s budget may be equally challenging. Staff will be making every effort to reduce spending in every way possible without impacting services to citizens.”

A fund balance is often considered a measure of available expendable financial resources. It is the balance remaining after the assets have been used to satisfy outstanding liabilities. If a fund balance is low, other revenue sources must be used to replenish the fund.

The state requires a healthy fund balance, Gallman said.

How did the Town get into this situation? There are several reasons: 

• One of the main issues is deferment of projects for six-or-more years between 2016-2021. During that time, costs have risen across the board;

• Covid-19 supply chain issues, inability to maintain finance rates on equipment, inflation, lack of periodic tax and fee increases to keep pace with costs and inflation’s sharp increases on recent months;

• Lack of maintenance of assets, including personnel, streets, stormwater and water/sewer;

• Legal fees, including the D.R. Horton project, ordinance enforcement and public records request issues;

• Unfunded mandates for stormwater and accounting;

• Growth, hiring new employees due to growth and retirements, change in trash collection, recruitment and retention; and

• Use of Fund Balance to complete capital projects like the golf maintenance building golf bathrooms, Town Hall renovations and two solid waste trucks.

“The news is not all grim,” Johnson said. “The Town staff has also secured over $3.5 million in grant funding this past year alone.  That represents nearly half of the General Fund budget.  This will fund new sidewalk projects, stormwater repairs at the golf course, and a complete overhaul of the Jamestown Park.

“The Town’s mission is to “Create an exceptional quality of life for all citizens by providing superior services. Those services have become more expensive to provide. Staff have worked extremely hard to provide and to continue to provide the very best services to our citizens. And we will pull through this challenging time.  

“Our tax base is poised for growth,” he concluded. “We have implemented strategies to deal with this growth and we will be a stronger community for our investments now in the hard decisions to move forward.” 

Summary of proposed 2023-24 budget

The Town is proposing a property tax increase of $0.10, which would increase the overall rate to $0.585. The rate has remained the same for several years and is still below the high of approximately $0.75 experienced in the early 1960s.

The water rate inside town limits would increase approximately 4 percent to match the purchase increase from the Piedmont Triad Regional Water Authority and City of High Point. The Town of Jamestown partners with these agencies to purchase water. The rate will rise from $3.25 per unit of water to $3.40.

The sewer rate inside town limits would increase approximately 30 percent to match the City of High Point increase. The rate will rise from $6.50 per unit to $6.80.

Finally, the monthly garbage and recycling fee would increase by $2.50.

Staff members would receive a cost-of-living raise of 4 percent and a merit raise of 0-3 percent. Health insurance would increase approximately 2.5 percent. The Town would increase its rate of contribution to the retirement plan to 12.89 percent, up from 12.5 percent in 2022-23.

The Town has suggested implementing a motor vehicle tax. Surrounding municipalities already have this. Several councilmembers voiced opposition to this tax. See related story “Motor vehicle tax added to preliminary budget” in this issue.

With new projects and developments in the Town’s future, the staff is expanding. An assistant public services director took office April 10 and a grant administrator will start in late April. A part-time assistant to the town clerk will be hired as needed. $40,000 has been designated in the budget for this person.

No overall budgetary figures were available.

Gallman again stressed that this was only a preliminary budget and that she would be getting more information on some of the items.

The preliminary budget was presented at the April 18 Town Council meeting with a public hearing and vote to be at the May 16 meeting.