June 22, 2008

This week was a tough week with two work sessions on the budget. There were a lot of difficult situations and actions this week and last week that resulted in a loss of trust. We will need to regroup and come together if we are going to do the best job for our citizens.

On Monday of this week I attended the Wake County Mayors meeting in Raleigh. Instead of a presentation each mayor stated their municipality’s defined revenue neutral tax rate, the proposed tax rate, and what their major capital projects were. Most of the municipalities are so small that their capital projects consisted of getting a fire truck, a police car, etc.  I explained Cary’s revenue neutral tax rate was 33 cents, its tax rate should be around 37 cents, and the significant capital projects were in the downtown area with $15 million for Cary Elementary, $35 million for streetscapes, and $14 million for the Walker Street tunnel. It appeared on Monday that Cary would have the 2^nd lowest tax rate of 37 cents but could have the lowest tax rate of 33 cents if the tax rate were set at revenue neutral.

On Wednesday we held our first budget work session of the week. We agreed on removing two capital projects totaling $10 million which included the widening of Chapel Hill Road from Maynard to Maynard and the extension of South Harrison to Kildaire. Staff explained that the remaining proposed capital projects, mostly in the downtown area, would not allow the town to take on any debt for four years. In addition, the town’s operating margin was gone and the general fund reserve was down to the minimum of four months. So to allow some flexibility a tax rate of 37cents was proposed by Mayor Pro-Tem Robison. The vote was 5-2 with Smith and Portman opposing. Smith cited that he would like the tax rate below revenue neutral and would be willing to delay many projects including roads and parks to achieve that rate. Portman’s concern was that we should not use up all our debt capacity in downtown and leave no flexibility for the future. In support of the motion, Frantz stated that for many years councils have avoided tax increases by using debt and have now used up all the town’s debt capacity. He added that bonds were approved with the option to raise taxes to support them but taxes were never raised.

It was a tough decision for me. I tended to agree with Portman but believed the 37 cents for flexibility would get us through the four years. The capital projects were presented in a way to leave little choice. Here’s how they were presented to me: Cary Elementary – is at the point of crumbling and would need major infrastructure repair if renovation is delayed further. Downtown Streetscape – the previous council put in $7 million in design and some construction materials have a current inflation rate close to 30%. Walker Street Tunnel – will be needed if transit starts coming over the rails and can be viewed is a safety feature allowing quick access to both sides of the tracks. In addition, the council has asked for and received $1 million if federal funding thanks to David Price and other members of Congress. So I reluctantly went along with the 37 cents tax rate knowing that we could sustain this rate for several years. I believed given the proposed status of our debt it was the responsible thing to do.

On Thursday I met with developers who want to rezone at the corner of Piney Plains and Stephens Road to build office buildings. The concerns of the neighbors included flooding issues and site issues. The developer informed me that they are working with the neighbors on these issues. Their proposed restrictions screen the office buildings from view and provide flood control from the site. I asked that they provide additional information to the residents on the causes of the flooding originating from other properties and they agreed.

Friday’s main event was the second budget work session of the week. New information was presented by staff based on the recommended 37 cents tax rate. It allowed more road and parks projects including Cary Parkway repair and repaving. Projects listed as available with the 37 cents tax that were not available with a 33 cents tax rate included: intersection realignment at Jenks-Carpenter and High House, Fire Station #2 construction, Fire Station #9 in Green Level (and a pumper truck), a rescue truck, and Annie Jones and Black Creek Greenway projects. In addition, the 33 cents tax rate did not include an aquatics center.

It is important to understand what the 4 cents difference would mean to the average homeowner. If your home is valued at $250,000 then the additional 4 cents would mean an extra $100 a year in taxes, for a $300,000 home $120, for a $400,000 home $160, and for a $500,000 home $200.

There was discussion by Portman to reduce spending on projects downtown which did not gain support. The Operating budget was then presented with just a few questions. One item of note was that we asked staff to come back with projects that met the criteria of the hotel/motel tax of $10 million allotted for Cary. With just a few minutes left in the work session I announced that we were basically finished unless there were some small unfinished items. Ms. Robinson proposed that the council commit to a Performing Arts center in four years. Since we can’t make commitments for another council that proposal did not go anywhere. Then, Ms. Robinson proposed that we revisit the tax rate. This caught me and staff by surprise. The motion was seconded by Mr. Frantz and they both explained how they had changed their minds. I expressed concern that with a 33 cents  tax rate we would have no debt capacity, no operating margin, no fund reserve beyond four months, little flexibility to meet surprises, and that it would cut road and parks projects. Mr. Smith responded that the town had plenty of parks and didn’t see a problem with delaying new park projects. After a few other comments reiterating similar concerns, the new rate was passed 5 – 2 with Mayor Pro-Tem and myself being the dissenting votes. I then made a motion for another work session to review the capital projects once again since we had a new tax rate. This was argued by some council members saying that nothing would change. I explained that most of the information presented was with a proposed 37 cents tax rate and that I needed to revisit capital projects to be able to make an informed decision. In addition, I told them I would not support this budget as is. The council agreed for a new work session on Tuesday morning. I have since started sending requests for information to staff. In my opinion, we cannot support all the debt we are proposing downtown for this year with a 33 cents tax rate. Some of the capital projects will have to be deferred.

I am very concerned and disappointed that a new tax rate was proposed and passed at the end of the fourth work session especially after so much time was spent on the budget. It appeared that we were moving towards consensus on what should have been the final proposal for a budget. I am not sure why this change was proposed at the last minute which caught so many of us by surprise. It is also disappointing that the new tax rate would only hold for two years and leave a projected tax rate increase of 5 cents to a new council in two years. It remains my responsibility to try and get our council through this budget year in the best interest of all our citizens.

That’s about all I have to report for this week. So I’ll close for now and hopefully post again by Sunday, June 29th.