The Wrightsville Beach Board of Aldermen voted June 5 to approve a fiscal year 2019-2020 budget that spared residents from increased water and sewer rates and property tax, despite greater expenditures in several departments and rainy 2018 that affected tourism-dependent revenue sources.
Wrightsville Beach Mayor Bill Blair credited town staff’s long-term money management for keeping taxes low. This year, staff members identified several future projects and purchases for which they set aside money rather than paying the full cost in one fiscal year.
A strong parking program also helped the town avoid a tax increase. Wrightsville Beach’s two main sources of revenue are its parking program and property taxes. The town uses that revenue to fund services like public safety and sanitation.
The parking program was bolstered this year by changes like a rate increase from $2.50 per hour to $3.00 per hour and longer hours of enforcement. Wrightsville Beach’s property taxes remain steady at $.1275 per $100 of value, which is one of the lowest rates of any oceanfront town in North Carolina.
Earlier this year, when town officials approved the parking rate increase, they were faced with 2018 parking revenue that was 2.9 percent off the $3.03 million they projected. Historic rainfall—nearly 80 inches, compared to 50 inches in 2017—was blamed for the revenue shortfall.
Parking revenue and room occupancy tax collections also took a hit in September 2018 when the Hurricane Florence evacuation shut down operations on the island for nine days.
In addition to setting aside money for future projects and purchases, the town added to its beach renourishment fund. These coastal storm damage reduction projects involve replenishing beach sand every four years, which officials say is critical to the beach economy. Currently, the federal government pays 65% of the project cost, but town manager Tim Owens noted that local governments might be expected to contribute more in the future.
Summary of General Fund Budget
The preparation of the FY19/20 General Fund Budget was difficult given that original budget requests by Department Heads exceeded revenue projections by more than $1,154,000. Even with many budget cuts, the FY19/20 General Fund Budget is $259,179 more than the adopted budget in FY18/19 which included a one-time $500,000 transfer to the Water and Sewer Fund.
FY19/20 Ad Valorem Tax Rate
As previously stated, the tax rate has been set at $0 .127 5 per $100 of assessed valuation for FY19/20. The total tax valuation for the Town for FY19/20 is $2,668,341,600 with an anticipated collection percentage of 99%. Each penny of Ad Valorem Tax will generate $266,000. As is typical, standard inflationary expenditures outpaced any increase in Ad Valorem revenue or increases in other large revenue sources.
The Town should continue to limit the growth of the General Fund Budget expenditures. With conservative spending and no unforeseen expenditures, it is anticipated that there may be some unexpended funds remaining in the General Fund at the end of FY19/20. This is important to acknowledge since it allows the Town to use the unexpended revenue surplus to accomplish two things: 1) Maintain a steady tax rate, and 2) Strengthen the Town’s General Fund Balance.
Summary of the Major General Fund Revenue Sources Proposed for FY18/19
As is typical, a thorough review of all revenue sources and expenditures was completed this budget year. A summary of some of the more important revenue sources are as follows;
❖ Ad Valorem Tax – Budget projections for FY19/10 are $3,304,000, which includes current taxes, back taxes and penalties. This figure is based on an estimated tax valuation of $2,668,341,600 and a tax collection rate of 99%.
❖ Parking Fees – The parking program for the Town continues to prosper. It is anticipated that the Town will collect $3,228,500 in revenue from parking operations with projected expenditures of $741,000. If this revenue source had to be replaced using ad valorem tax, it is estimated that the tax rate would go from $.1275 to $24.44. Meter revenue has increased significantly over the past several years due to a higher number of visitors and the Town adding on street parking spaces throughout Town to increase the total number of spaces available. This year marks the first full year following an increase in rates in 2019.
❖ Sales Tax – It is anticipated that the Town will collect$1,165,000 in sales tax revenue in FY19/20. Future sales tax revenue could be drastically impacted if a bill being proposed in the General Assembly is approved redistributing sales tax to more rural areas.
❖ Room Occupancy Tax – It is projected that the Town will collect $553,101 in room occupancy taxes which will help offset a variety of services the Town provides to its visitors.
❖ ABC Revenues – Revenues from the sale of alcohol and beverages is estimated at $431,000.
❖ Local Civil Violations – Estimated revenue generated from civil citations is $78,000 for FY19/20.
❖ Utility and Cable Franchise Tax – It is estimated that the Town will collect $440,000 in the coming budget year from Utility Franchise Tax receipts and the Cable TV fee.
❖ Transfer from Water and Sewer Fund – In prior years, the Water and Sewer fund made a transfer of$179,800 to the General Fund to assist in paying for services and facilities provided by the General Fund.
❖ Capital Reserve Fund – The budget allocates$485,000 from capital fund reserves for a variety of projects and purchases.
❖ Refuse Collection – The Town will collect $1,000,000 in FY19/20 to offset the cost of waste disposal within the Town.
❖ Building Permits – It is projected that the Town will collect $200,000 in building permit fees in FY19/20 from building activities.
❖ Recreation Fees – Fees from participants in our recreation programs are estimated at $200,000
❖ Fund Balance – The FY19/20 budget contains a$181,735 Fund Balance appropriation. Powell Bill funds in the amount of $120,000 are included in this amount for a large resurfacing project.
General Fund Expenditures at a Glance
The Capital Improvements Program – The current and prior Boards should be commended for their support and approach to funding capital improvements through the capital improvement program (CIP). The CIP provides for long-term capital planning for expenditures with a cost of at least $5,000 and a useful life of greater than one year. Expenditures for CIP related items in the FY19/20 General Fund budget total $747,600 with $485,000 of the expenditure having been set aside in prior budget years. The Town will put aside $972,250 from the FY19/20 budget for future capital expenditures in the General Fund. Overall and following this Fiscal Year, the Town will have $5,007,527 in reserves for Future General Fund GIP items.
Employee Compensation – The proposed budget has a recommendation that all full-time employees be eligible for a 1 % Cost-of-Living Adjustment that will become effective after July 1st. Funding for a merit has been included in the proposed budget and equals 1 % of the total salaries per department. The Board has suspended the implementation of the merit program and has agreed to revisit the issue later in the calendar year.
Medical Insurance, Dental Insurance, Life Insurance, and Other Insurances and Employee benefits – The Town received a renewal quote from Blue Cross Blue Shield that was 30% greater than current rates. The Town’s broker, One Digital, sought other quotes with only United Health Care agreeing to quote. Staff is recommending tha the Town only provide a HSA product through BCBS. Staff is also recommending that the Town increase the HSA amount from $600 to $1000 per year. This amount will help offset the reduced benefit and increased cost to the employee for spouse or dependent coverage. The overall increase to the Town over the prior year is around $13,000.
The Town will no longer offer a PPO plan this year and only an HSA plan for employees to select. Employees continue to receive Dental insurance and Life insurance at no charge to the employee. The Town continues to match up to 4% of an employee’s contribution to a 401 K program.
The Town will remain with the North Carolina League of Municipalities for Property and Liability Coverage, Workers Compensation Insurance and a variety of bonds required for employees. The North Carolina League of Municipalities continues to be competitive in their rates and have provided good service over the prior years.
Departmental Expenditures Summary
Governing Body ($711,170) -The primary expenditures in the Governing Body budget include; attendance fees ($48,860), professional services ($91,475), miscellaneous expenses and programs ($9,000), and flotilla expenditures and holiday lights ($36,000). GIP transfer items include funding for future Coastal Storm Damage Reduction Projects ($500,000). This Department is $497,957 lower than last Fiscal Year which included a $500,000 transfer to the Water/Sewer Fund.
General Administration Department ($632,088) – Expenses for the Department are $9,555 more than expenditures in FY18/19. Expenditures for all personnel costs totaled $504,574. The department consists of 6 full time employees.
Information Technology Department ($325,751) – Expenditures for the Department are projected to be $21,850 more than in FY19/20. Personnel cost for the department are $75,147 with 1 employee assigned to the department. Operating costs for the department will be $207, 125 with these expenditures consisting of phones for all departments, travel and training, maintenance and repair of equipment supplies, professional services and a variety of other categories of expenditures. Capital projects anticipated this fiscal year include a 48 Port Replacement Switch, Replacement Video Server, and 100TB Network Storage for Video ($33,400).
Public Works Administration ($283,540) – The department consists of 3 employees that are the administrative arm of public works and the water/sewer department. Personnel costs for the department are $245,457 and operational costs are $38,083.
Public Works Department Fleet Maintenance ($329,247) – This department consists of 3 full-time employees and maintains the majority of vehicles and equipment that the Town uses on a daily basis. Personnel costs for the department are $211,939 with operational costs being$54,208.
Public Works Building Maintenance ($687,600) – The department saw an increase in expenditures of $38,765 from FY18/19. No personnel expenses make up any part of the department’s budget with all employees budgeted in the Streets Department. Utilities for Buildings and water and sewer charges make up the bulk of expenditures for the department at $130,000 and $80,000 respectively. The Town will place funds in the CIP in the amount of $180,000 for future projects. A new position was added to this department.
Police Department ($2,821,703) – The Police Department budget has increased by $154,432 over the FY18/19 Budget. Personnel costs for the department are proposed at $12,014,841 with operating costs estimated at $432, 176. The department consists of 24 sworn police officers and 2.5 civilian staff and supplemented by paid auxiliary officers and contracted Deputies as needed. Of the $2.8M departmental budget, there is debt service being paid on a portion of the Wrightsville Beach Public Safety Center in the amount of $238,686. The Town will set aside $25,000 from the Town’s budget to purchase additional vehicles and portable radios in the future as part of the Capital Improvement Program.
Fire Department Emergency Preparedness ($11,025) -This small department consists of equipment and other items associated with emergency preparedness.
Fire Department ($1,797,259) – The fire department is a combination department that includes 13 career firefighters, volunteers, interns and a variety of part-time positions. The departmental budget increased by $213,598 over the prior year. Personnel costs for the department are $986,359 with operating costs of $237,214. Debt service in the amount of $238,686 for the Public Safety Building is included in the budget. The Town will put away $105,000 for future CIP projects to include Fire Rescue Boat ($5,000), and Aerial apparatus ($100,000).
Fire Department Ocean Rescue Lifeguards ($371,750) – The Town hires seasonal lifeguards each summer to help protect residents and visitors. The budget is $15,824 more than the FY18/19 Budget. Personnel costs for the department are $292,000 with operational expenditures being $59,950. The Town will purchase one ATV this year ($5,800).
Public Works Streets Department ($986,157) – The Public Works Streets Department includes 5 employees that perform street related work and also building maintenance. Personnel costs for the department are $313,960 and operational costs are $632,197. The department expenditures decreased by $152,194 over FY18/19. Of the operational costs, contracted services is the largest line items and includes the repaving of Keel and Short Street for $375,000 and the replacement of a bulkhead at the end of Keel Street ($120,000).
Parking Management ($741,000) – The Town contracts with Lanier Parking to manage all aspects of the Town’s parking meter collection and enforcement efforts. The budget proposed for FY19/20 reflects a $202,450 increase over the prior year due to placing items that are charged to this department into the FY19/20 budget. The Town will place $520,000 in the GIP program for future pay station replacement.
Public Works Sanitation Services Department ($1,074,169) – This department consists of 7 employees that have primary responsibility over emptying all trash cans in public areas, residential trash collection and commercial trash collection. Personnel costs for the department are $390,535. Operating ·costs for the department are $453,634. Most of the operating costs are as a direct result of tipping fees and other costs associated with our solid waste program. The Town will also put $50,000 in the GIP for the purchase of a new Load Packer. The Town will purchase one new Load Packer this Fiscal Year.
Planning and Parks Department/Planning and Inspections ($461,552) – The Planning Department consists of 4 full-time staff with one being a Park Ranger. The FY19/20 budget is projected to be $77,550 more than the prior year. Personnel costs for the department are projected at $323,124. Operating costs for the department will be $101,428. The department has a part-time Ranger position in the budget.
Planning and Parks Department/Recreation Programs ($360,988) – Parks Program budget has decreased a total $28,373 over FY18/19. The department consists of 2 fulltime employees and many part-time employees used for the variety of programs we offer. The reduction in the budget was due to the termination of the after school program given that the Elementary School is closed. Operating costs are estimated at $149,045.
Planning and Parks Department/Parks Maintenance ($389,987) – The FY19/20 Budget is $22,400 more than the FY18/19 budget. The department consists of 3 full-time employees and seasonal temps. Personnel costs for the department are set at $187,852 with operational expenditures set at $111,585. As part of the GIP process, the Town will set aside $35,250 for future capital purchases or replacement.
General Fund – Fund Balance
Local Governments in the State of North Carolina .are encouraged to maintain a Fund Balance (savings account) equal to, but preferably higher, of 8% of the prior year’s expenditures. This recommendation comes from the Local Government Commission which is a commission that is tasked with the oversight of the financial well-being of North Carolina local governments. A Fund Balance is a used in times of crisis or when an unanticipated expenditure arises. A healthy Fund Balance becomes even more important in a coastal community that could lose a significant amount of revenue and face a heavy financial burden following a major hurricane.
This year’s Budget includes a Fund Balance appropriation of $61,735 (plus $120,000 from Powell Bill) to help balance the budget. As of June 30, 2018, the Town will have an estimated Undesignated Fund Balance of approximately $10,625,000 or 90%.
The Board of Aldermen has adopted a policy that recommends a minimum Fund Balance percentage of 34.5%. The Town Council should continue to bolster the General Fund Balance when possible given the Town’s susceptibility to catastrophic events.