Published: Mar 08, 2013 06:00 PM
Modified: Mar 13, 2013 08:28 AM
HILLSBOROUGH - Town Manager Eric Peterson has recommended no change in property tax or water rates in the town’s draft budget workbook for next year.
An 8.8 percent increase in sewer rates is included, continuing a plan of 8.8 percent annual increases started last fiscal year and continuing through at least fiscal 2018 to pay for the $19.2 million upgrade to the Wastewater Treatment Plant and the projected loss of Efland-Cheeks sewer customers in fiscal 2015.
The budget workbook and FY14-16 financial plan was presented to the Hillsborough Board of Commissioners in February to allow more time for discussion and handling of any unexpected issues.
“One of the surprises is that we may have to get into the recycling business and may have to start paying for it because it looks like the county may be getting out of it,” Peterson told the board during the retreat last weekend (See related story on page 5).
The town manager also reminded the commissioners about future needs that should be planned for, including the likely need in five years for a fire station in the Waterstone development by Interstate 40 and designing and building a Public Works facility and storage/vehicle shelter. The financial plan proposes beginning design work, estimated at $50,000, for the facility in fiscal 2016. The town also will begin work in fiscal 2014 on construction of a $1.3 million elevated water tank in Waterstone next to the new UNC hospital. Developer contributions of $500,000 will lower the town’s out-of-pocket expenses to $800,000.
“I thought we were able to squeeze quite a bit into the budget this year without having a tax increase,” Peterson said. “Ultimately from a strategic standpoint I felt good that the financial forecast showed no tax rate increase for three years, no water rate increase for three years and, of course, the sewer with having basically a $20 million plant come on and almost tripling your wastewater plant budget … there’s no escaping how expensive that is.
“The recycling may throw us a curveball on how we have to deal with that on the General Fund side, but I think that’s the best picture we’ve seen in a long time. I know it was not fun to raise taxes last year and to have to make the decision to raise water and sewer rates, but that put us in the position to be where we are today.”Proposed budget
Under the town manager’s proposed budget, the town’s operating expenses would total $16.1 million, with $7.6 million in expenses in the General Fund and $8.5 million in expenses in the Water/Sewer Fund. General Fund expenses would increase 5.2 percent from this fiscal year and Water/Sewer Fund expenses would increase by 11.2 percent.
The proposed 8.8 percent increase in sewer rates would mean an additional 83 cents per 1,000 gallons for in-town customers and an extra $1.62 for out-of-town customers.
Hillsborough currently charges for a minimum of 3,000 gallons. The draft budget workbook and financial plan proposes reducing the monthly minimum usage to 2,500 gallons using a phased-in approach over four years. The proposal would lower the minimum usage from 3,000 to 2,800 gallons next fiscal year and then further decrease the minimum by 100 gallons each fiscal year through fiscal 2017.
Peterson noted he proposed a cautious approach, building in a safeguard in case of drought or other revenue loss, as the change is projected to cut the town’s revenue by $330,000 annually. The phased-in approach helps prevent the need to increase rates to offset the revenue loss.
Mayor Tom Stevens also noted the town board could accelerate or slow the phased-in approach based on how the minimum usage changes affect water utility revenue and costs to customers.
Key items proposed for funding in the General Fund include:
• Street Paving – $594,000 in FY14 to continue the second year of a four-year $1.9 million effort to repair and repave the town’s highest priority streets. The plan was adopted last year based on an engineering analysis of the town’s streets. Streets have been grouped by geographical area and year to minimize expenses.
• Riverwalk Phase II – $78,360 for first debt payment of $1.74 million loan for greenway linking Gold Park to downtown. Construction is to begin in summer with completion in late 2014. The town has received $425,000 in grant funds from the Parks and Recreation Trust Fund for construction.
• Train Station – $34,000 for conceptual design of site area and road access for rail station on 20-acre tract off Orange Grove Street.
• Patrol Cars – $120,000 to replace four patrol cars.
• Police Body Cameras – $15,000 for eight body cameras. The current camera system is tied to the patrol vehicles and generally only shows what is happening in front of the vehicles.
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