Town of Franklin Budget

Fiscal Year 2019-2020

» DOWNLOAD A COPY OF THE APPROVED TOWN OF FRANKLIN, NC BUDGET FOR FISCAL YEAR 2019-2020

Town Managers Budget Message
Fiscal Year 2019-2020

The Town of Franklin strives to provide quality services in a cost-effective manner to all citizens. The Town of Franklin continues to operate in sound financial condition with a stable fund balance. At the close of fiscal year 2017-2018 the available fund balance as a percentage of expenditures of general fund was at sixty-three (63) percent. This is an increase of twelve (12) percent since the close of fiscal year 2016-2017. General government revenues are expected to remain the same with the exception of current year ad-valorem taxes and rents. The Town of Franklin currently has a tax collection rate of ninety- five (95) percent. Current ad-valorem taxes are estimated to decrease by $101,449.00. The two biggest contributors to this decline includes tax exemptions and releases. Rents are also expected to decrease by $22,000. This decline is due to the sale of the Old Town Hall property located at 188 West Main Street. The Town should continue to plan for unexpected revenue loss at the state and federal level. This budget allots $30,000.00 in contingency in anticipation of unexpected revenue loss or unexpected expenditures.

Statement of Revenue Neutral Tax Rate
North Carolina G.S. 159-11 (e) requires each taxing unit to publish a revenue-neutral property tax rate as part of its budget for the fiscal year following the revaluation of its real property. The purpose of the revenue neutral tax rate is to provide citizens with comparative information. As defined in N.C.G.S. 159- ll{e) "in each year in which a general reappraisal of real property has been conducted, the budget officer shall include in the budget, for comparison purposes, a statement of the revenue-neutral property tax rate for the budget. The revenue-neutral property tax rate is the rate that is estimated to produce revenue for the next fiscal year equal to the revenue that would have been produced for the next fiscal year by the current tax rate if no reappraisal had occurred. To calculate the revenue-neutral tax rate, the budget officer shall first determine a rate that would produce revenues equal to those produced for the current fiscal year and then increase the rate by a growth factor equal to the average annual percentage increase in the tax base due to improvements since the last general reappraisal. This growth factor represents the expected percentage increase in the value of the tax base due to improvements during the next fiscal year. The budget officer shall further adjust the rate to account for any annexation, de-annexation, merger, or similar event."

The Town's current total property value is $700,508,324. The Towns current property tax rate is thirty-two ($0.3200) cents per one hundred dollars ($100) valuation. The reappraisal produced a tax base of $701,176,156. This is an increase of $667,832 in assessed value from the current fiscal year 2018-2019($700,508,324). Using the new tax base of $701,176,156 in fisca l year 2019-2020, a tax rate of ($0.3197) cents per one hundred dollars ($100) of valuation is needed to produce a revenue neutral budget for fiscal year 2019-2020.

As part of calculating a revenue neutral tax rate, G.S. 159-11 (e) provides that a growth factor be used in calculating the revenue-neutral rate based upon the average increase in the tax base "due to improvements since the last general reappraisal." In applying a revenue neutral tax rate to be included in budget ordinance adjusted for growth of -0.11% to the tax rate of ($0.3197) cents per one hundred dollars ($100) of valuation, a revenue neutral tax rate would be ($0.3193) cents per one hundred dollars ($100) of valuation. Figure 1, illustrates revenue neutral and growth factor calculations. However, it is recommended that the Town maintain the current tax rate of thirty-two (32) cents per one hundred dollars ($100) of valuation for fiscal year 2019-2020. This recommendation is due to the decrease of $123,449 in general fund pertaining to current ad-valorem taxes and rents.

Personnel:
This budget allots for a one (1) percent one-time payment based on salary for all full-time positions. The one (1) percent one-time payment is suggested for December 2019. This budget does not allocate a cost of living adjustment (COLA) for fiscal year 2019-2020. The Town's dental, life, property and workers compensation premiums are expected to remain at current budgeted rates. The Town's health insurance is expected to increase by eight (8) percent. Also, the Local Government Employee Retirement System is increasing on the employer side due to new state mandate. All employees with the exception of law enforcement will go from a contribution rate of 7.82 % to 9.03 %. Law enforcement employees will go from 8.5% to 9.7%.

Contract Services:
The Town Council approved a Comprehensive Plan for the Town of Franklin in fiscal year 2018-2019 in the amount of $95,000. This was divided between two budget years. The first payment was in the amount of $45,000 and was paid in fiscal year 2018-2019. The final payment is budgeted for fiscal year 2019-2020 in the amount of $50,000.

Capital Projects:
The Town completed phase one (1) of the Water Treatment Plant Upgrade and Expansion in fiscal year 2018-2019. The Town will be working on securing funding for phase two of the Water Treatment Plant Upgrade and Expansion in fiscal year 2019-2020.

Capital Outlay Equipment:
The Streets Department is requesting a zero turn lawn mower. This budget allots $10,000 for this purchase. An additional mower will allow staff to cover more areas in Town in a timely and cost effective manner.

Capital Outlay Improvements:
Funds have been budgeted to complete phase two (2) of the Town of Franklin Banner Project. The estimated cost for phase two (2) is $10,000. Phase one was completed in fiscal year 2018-2019. Funds have also been budgeted for sidewalk repair and replacement. For fiscal year 2019-2020 the Town plans to address several areas in Town that are in dire need repair and replacement. These areas include the following:
• East Main Street in front of Seay's Farm Supply. Current sidewalk is 162 feet.
• East Main Street by Budget Inn. Current sidewalk is 313 feet.
• East Palmer Street from PNC Bank to Motor Company Grill driveway. Current sidewalk is 110 feet.
• Porter Street between Lazy Hiker and Palmer Street. Current sidewalk is 300 feet.
• West Palmer Street from Tastinger's Floor Covering to Sprinkles Surveying. Current sidewalk is 560 feet.
• Phillips Street by the FHS Band practice area. Current sidewalk is 615 feet.

Capital Outlay Vehicles:
The Police Department will be replacing one (1) patrol vehicle with over 100,000 miles. The Police Department requested two (2) vehicles for fiscal year 2019-2020. However, due to budget constraints only one replacement patrol vehicle is included in fiscal year 2019-2020 for $36,000.

Public Works Department will be replacing one (1) ½ ton pick-up truck with over 100,000 miles. This budget allots $25,000 for this purchase.

Franklin Fire and Rescue has budgeted $38,000 for a replacement Pumper Truck that was sold in 2013.

Contributions:
Non-Profit funding for community organizations are left at the current budget total of $40,000. Economic Development funds are left at the current budget total of $5,000.

Debt Service:
All debt payments are budgeted as required by law. General debt service principal is budgeted at $173,819.00 and interest at $17,248.00 Fire's debt service principal is budgeted at $73,418.00 and interest at $1,150.00. Water and Sewer's debt service principal is budgeted at $844,928.00 and interest at $181,975.00.

SunTrust loan for General, Water, and Sewer projects was entered into in 2012 and will be paid in 2024. The current total loan amount for SunTrust is $1,969,764.90.

Bank of America for Water and Sewer projects was entered into in 2010 and will be paid in 2025. The current total loan amount for Bank of America is $1,528,169.27.

State Revolving Loan for Waste Water Treatment Plant was entered into in 2013 and will be paid in 2033. The current total loan amount for this project is $4,299,602.30.

State Revolving Loan for Water Treatment Plant was entered into in 2019 and will be paid in 2038. The current total loan amount for this project is $3,132,271.60.

Diversified Lenders Loan for new software was entered into in 2017 and will be paid in 2020. The current total loan amount for Diversified Lenders is $45,383.14.

Entegra Bank fire trucks loan was entered into in 2011 and will be paid in 2020. The current total loan amount for the fire trucks will be $74,566.53.

By Department:

Franklin Fire Department: Franklin Fire Department's current total property value is $1,538,197,288. The Fire Department's current property tax rate is ($0.0545) cents per one hundred dollars ($100) of valuation. The reappraisal produced a tax base of $1,582,921,543. This is an increase of $44,724,255 in assessed value from the current fiscal year 2018-2019 ($1,538,197,288).

Using the new tax base of $1,582,921,543 in fiscal year 2019-2020, a tax rate of ($0.0530) cents per one hundred dollars ($100) of valuation is needed to produce a revenue neutral budget for fiscal year 2019-2020.

As part of calculating a revenue neutral tax rate, G.S. 159-11 (e) provides that a growth factor be used in calculating the revenue-neutral rate based upon the average increase in the tax base "due to improvements since the last general reappraisal." In applying a revenue neutral tax rate to be included in budget ordinance adjusted for growth of 4.32% to the tax rate of ($0.0530) cents per one hundred dollars ($100) of valuation, a revenue neutral tax rate would be ($0.0553) cents per one hundred dollars ($100) of valuation. Figure 1, illustrates revenue neutral and growth factor calculations. However, it is recommended that Franklin Fire maintain the current tax rate of (0.0545) cents per one hundred dollars ($100) of valuation for fiscal year 2019-2020. This rate will allow Franklin Fire to continue to prepare for the replacement of existing fleet that is approaching service life. Based on the proposed fire tax rate no appropriation from fund balance will be needed for fiscal year 2019-2020. Funds have been budgeted in the amount of $38,000 to replace a pumper truck that was sold in 2013. Funds have also been budgeted in the amount of $20,000 in Capital Outlay Reserve to prepare for future apparatus purchases. Also, fire call pay for volunteers is expected to remain at current rates. Current rates are $5.00 for medical calls and $12.00 for fire calls. A onetime bonus of $100.00 for each volunteer member of Franklin Fire and Rescue is budgeted and suggested for December 2019.

Water and Sewer Department: Funds are budgeted in the amount of $125,000 for Capital Outlay Distribution Sewer Line improvements. Maple Street sewer line is budgeted at $46,000 for replacement. East Franklin Pump Station Generator is budgeted at $64,000 and US 441 South Generator Transfer Switch for three (3) stations is budgeted at $15,000. Funds are also budgeted in the amount of $50,000 for Capital Outlay Distribution Water Line improvements. Town Bridge Pump Station rehabilitation is budgeted at $50,000. All of the above referenced projects are part of the Town's Capital Improvements Plan (CIP). The basin at the water plant only needs to be cleaned every five (5) years. However, this budget allots funding of $30,000 this fiscal year. The reason for this is to continue a reserve account for this project in preparation for cleaning the drainage basin in the future. The total estimated cost to clean the drainage basin is $150,000.

Water and Sewer Rates:
The Town continues to experience slow growth in water and sewer revenues. It is paramount that the Town of Franklin ensures water and sewer revenues can sustain expenditures and debt service payments in order to maintain existing infrastructure along with future water and sewer infrastructure. Based on current estimates water and sewer revenue combined are projected at $3,860,188.00 for fiscal year 2019-2020. This is a decrease in expenditures of $257,750 from fiscal year 2018-2019. A modest appropriation from water and sewer retained earnings of $273,631 is recommended. Martin and McGill completed a detailed water and sewer study in January 2015. In order to maintain the existing infrastructure, to upgrade/expand the water plant, and to continue funding the Town’s Comprehensive Improvements Plan, a modest water and sewer rate increase is recommended. A four (4) percent rate increase is recommended for water and sewer. The proposed rate increases only affects base and volume charges but not tap, connection, or other miscellaneous charges.

Conclusion:
This budget for Local Fiscal Year 2019-2020 is balanced as required by law and continues to provide existing services while meeting the governing board's priorities and policies. This budget includes an appropriation in general fund of $450,000 for Powell Bill. This budget also recommends a one (1) time modest appropriation from general fund balance of $189,539. This budget addresses long term infrastructure planning and capital necessities for the Town of Franklin while maintaining a healthy fund balance and providing quality services in a cost-effective manner.

Sincerely,
Summer Woodard
Town Manager