Salisbury, North Carolina  June 6, 2023  SPECIAL MEETING  PRESENT: Mayor Karen Alexander, Presiding; Mayor Pro Tem Tamara Sheffield, Council  Members Harry McLaughlin, David Post, and Anthony Smith; City Manager Jim Greene, Jr., City Clerk Connie B. Snyder, and City Attorney Graham Corriher.  ABSENT: None  Salisbury City Council met in a Special session at City Hall located at 217 South Main  Street. The meeting was called to order by Mayor Alexander at 5:00 p.m.  ADOPTION OF THE AGENDA  Thereupon, Mayor Pro Tem Sheffield made a motion to adopt the Agenda as presented. Mayor Alexander, Mayor Pro Tem Sheffield, Councilmembers McLaughlin, Post, and Smith  voted. AYE. (5-0)  BUDGET PRESENTATION  City Manager Jim Greene and Finance Director Wade Furches presented the FY2023- 2024 recommended annual operating budget to Council for its budget work session. Mr. Greene stated staff presented the budget to Council during a Special Meeting on May 23, 2023, and Council requested additional information regarding the possible use of Fund Balance. He noted Council requested staff recommended projects not included in the proposed budget that could be  completed with $1 million of additional Fund Balance.  Mr. Greene stated the recommended budget is balanced, and he pointed out Council can make any changes it deems necessary. He explained the FY2023-2024 Council Priorities served  ast the guiding document for the recommended budget of $108,064,027:  Salisbury City Council  June 6, 2023  Page 1    Fund  Revenue $ (54,102,406) $ (6,485,224) $ (2,337,601) $ (517,972) $ (37,246,454) $ (621,176) $ (3,100,600) $ (3,652,594) $ (108,064,027)  Expenses 54,102,406 6,485,224 2,337,601 517,972 37,246,454 621,176 3,100,600 3,652,594 $ 108,064,027  10 General Fund 11 Cap Res General Fund 20 Stormwater 21 Cap Res Stormwater 30 Water & Sewer 31 Cap Res Water & Sewer 35 Transit 36 Fibrant Total:  $ $ $ $ $ $ $ $  Mr. Greene noted Council has prioritized investment in the City's most important asset,  itse employees:  Implemented the Pay Study in FY23 and funded it for a full year  Police Department salary and range increases, and increases in over time for the Fire Retirement system increases as required by the state and the proposed budget absorbs Includes first merit pay for employees in several years along with a cost of living City Manager recommends a 2% Cost of Living Adjustment (COLA). for all City employees and an average 2% merit increase for qualifying employees Mr. Greene stated the current tax rate is $.7196 per $100 valuation and the Revenue Neutral Tax Rate (RNTR) is $.58 per $100 valuation. He noted staff recommends a tax rate of $.61 per $100 valuation, and he pointed out the $.03 tax increase would help meet Council  Department  health insurance increases  increase  priorities and its public safety goals:  $.0143 for the construction of Fire Station 3 attract police personnel - $250,000  $.0157 for Police:  Pay range adjustments to compete with surrounding communities and retain and Funds for the new Police Chiefto bring on needed positions $300,000 Funds for camera upgrades and maintenance-S82,710  Mr. Furches indicated the projected tax valuation from Rowan County for FY2024 is $4,113,144,278 which is a 25.67% increase, and he noted the average growth factor is 1.23%. He reviewed General Fund Balance, and he pointed out the state requires 8% minimum Fund Balance and City has a policy of maintaining 24% Fund Balance. He explained the City has a 48% Fund Balance as of June 30, 2022 which is $10,263,704 over the 24% requirement, and  staff believes the City will end FY2023 with a surplus.  Salisbury City Council  June 6, 2023  Page 2    Mr. Furches pointed out staff recommends using $1.6 million of Fund Balance to reduce the debt on Fire Station 3 and using $1 million of Fund Balance toj pay for the rescue engine. He reviewed a list of projects that are not included in the recommend budget that could be  completed with an additional $1 million of Fund Balance:  Items to be Recommended  Project  Department Waste Management - 561 Grounds Maintenance - 590 COB-501 City-Wide City-Wide Fire Cemetery Fleet 561 Fire-531 Fire-531 Recommended:  Costs 164,806 e 55,000 65,000 325,000 55,000 186,000 $ 60,000 $ 64,000 $ 15,000 $ 4,000 $ 3,000 $ 4,000 $1,000,806  Non-CDL Garbage Truck Greenway Repaving Window Replacement COB Microsoft 365 Startup Costs Microsoft 365 Annual Costs Gateway Park fountain - Rebecca Fire Station 5 Window Replacement Replace Wooden Cemetery Fence Install exterior door inj parts room office Rescue Rotary Saws Protable Ground Lighting  New Doors and Windows 321 W. Franklin Grounds Maintenance - 590  Grounds Maintenance  590  Other Items to Consider  Project  Department Parks & Recreation - 621 Engineering - 555 Engineering Sanitation -581 Public Works-5 561 Fleet-561 Fire-531 Fire-531 Parks & Recreation 621 City-Wide Plaza Fleet-561  Costs 150,000 $ 20,900 $ 30,000 $ 21,000 $ 215,000 $ 1,000 $ 45,000 $ 7,624 $ 15,000 $ 202,648 $ 225,000 $ 16,000  Park Shelters City Bicycle Loop Grants Creek Greenway Additional Sanitation Can Rollouts Public Works Parking Lot Repaving new curbing and striping for parking lot Firefighter Turnout Gear Ground Ladders Skate Park Study Per Sheffield 1% COLA Added Modernize Elevator Plaza Replace Set ofTools  Downtown Development Grant Reductions Community Planning Services $ 100,000  Mr. Furches reminded Council of future Fund Balance needs including the Depot, Empire Hotel, Downtown Streetscapes, the Wells Fargo Building and Event Center, Community  Center/Pool/Senior Center Project, additional equipment, and grant matches.  Salisbury City Council  June 6, 2023  Page 3    Mr. Greene noted the proposed budget includes: Revenue Neutral Tax Rate of $0.58  Recommended tax rate of $0.61 to fund public safety initiatives and Council goals Increase Stormwater fees by $0.40 per month to address master plan implementation  No rate increase for water and sewer rates Noi increase in recycling and solid waste fees Noi increase in Park and Recreation fees  Councilmember Post referenced the Microsoft Office 365 startup, and he asked if updating the software is included in the proposed budget. Mr. Furches noted the City needs to upgrade to Office 365, particularly for the Fire and Police Departments who use the software to access state-wide data. He added the Office 365 is not included in the proposed budget, and he pointed out the startup cost is $55,000 and the annual cost to the City will be $186,000. Councilmember Post commented Office 365 is critical for the Police Department. Mayor Alexander agreed. Mayor Pro Tem Sheffield asked how: much the City is currently paying for its Microsoft software. Mr. Furches noted the $186,000 will be in addition to the current Microsoft subscription which will eventually sunset, but a decision is not required at this time.  Mayor Pro Tem Sheffield requested clarification regarding possibly reducing the Fund Balance from 48%1 to 45%. Mr. Furches stated ift the Fund Balance was reduced to 45% it would equate to approximately $1.2 million. Mr. Greene pointed out $1 million of Fund Balance is being proposed for the purchase of the rescue truck. He added if Council supports the use of $1 million of Fund Balance for the rescue truck any other projects would be in addition to the initial $1 million. Mr. Furches clarified $3 million of Fund Balance is proposed to be spent including $1.6 million to buy down the debt for Fire Station 3, $1 million for the fire truck and $300,000 already included in the budget. Mayor Alexander asked if the $3 million proposed to be taken out ofFund Balance will take it to 45%. Mr. Furches stated the surplus for the current fiscal year has not been taken into consideration. He indicated after spending the proposed $3 million if Council decided to spend an addition $1 million Fund Balance would most likely remain at 45%. Mayor Pro Tem Sheffield stated it is important to invest in employees, and she recommended Council consider increasing the COLA for employees to remain competitive in the job market. She questioned what it would cost to keep the merit and increase the COLA to 3%. Mr. Furches noted ift the COLA is increased from 2% to 3% the cost to the General Fund would be $154,000 and overall cost to the City would be $202,000 which is not a full year cost. Mr. Greene explained three pay increases are scheduled in the upcoming fiscal year the COLA which will take effect in November, a 1% longevity bonus in December for employees that meet the requirements, and the 2% average merit increase would take place in January 2024. He stated the goal is to move the COLA increase to the beginning of the fiscal year. He pointed out last year employees received a 2.75% COLA increase, but did not receive ai meriti increase.  Mayor Pro Tem Sheffield asked what it would cost the City to have a 3% COLA. Mr. Furches noted it would cost approximately $400,000. Councilmember Post noted $400,000 is approximately $.01 on the property tax rate. Mr. Furches noted $247,000 of the pay increase is included in the proposed budget and the increased cost to go from 2% COLA to 3% COLA is $200,000 for the General and Enterprise Funds. Mr. Greene noted if the additional 1% is taken  Salisbury City Council  June 6,2 2023  Page 4    from Fund Balance for the General Fund the Enterprise Funds will have to look for the additional  funding for its salary increases.  Mr. Greene noted every employee did not receive a pay increase from the pay study. He added the City has great employees and it is important to offer competitive pay along with a balanced budget. He commented if a pay increase is taken out of Fund Balance it must. be accounted for in future budgets. He noted it is best to use Fund Balance for one-time  expenditures.  Mayor Pro Tem Sheffield asked how many employees received pay rate increases as a result of the pay study. Mr. Furches indicated less than halfo ofe employees received pay increases as a result of the pay study. Mayor Alexander asked about the total number of employees working for the City. Mr. Furches indicated a few years ago the City had approximately 425 full-time employees and last year it had less than 400 full-time employees. He explained the City budgets as ifa all approved positions are filled but the actual number of employees continues to decrease. Mr. Greene added the City experienced increases to Fund Balance due to  employment vacancies.  Councilmember Smith asked how often the parking lot at Public Works is repaved. Public Works Director Chris Tester noted the parking lot has never been repaved, but the pot holes are filled. Mr. Smith asked about the cost savings between repairing the Public Works parking lot and replacing the windows in the City Office Building. Mr. Tester stated it is important to replace the windows in the City Office Building due to leaking issues that have occurred. Mr. Greene pointed out there are mold issues at the City Office Building, and he explained Public Works helped prioritize the project list. Mayor Alexander asked ifiti is possible to put as a priority to repair the deep holes in the Public Works parking lot. Mr. Tester noted staff patches the deeper holes, and he added staff can get an estimate for repairing the parking lot intersection that contains the worst damage. He pointed out there are other parking lots in the City that are also in need of repair. Mayor Alexander asked if any parking lot repairs are included in the proposed budget. Mr. Tester indicated parking lot repairs are not included in the  proposed budget.  Councilmember McLaughlin referenced the $150,000 for park shelters, and he asked how many shelters could be constructed and the revenue generated. Parks and Recreation, Director Nick Aceves explained $150,000 would construct one large corporate shelter that could be used  by 250 to 300 people and would bring in approximately $125 per day. budget will be brought to Council at its. June 20, 2023 meeting.  Mr. Greene pointed out the items before Council are for its consideration and the final Councilmember Smith commented if there is a surplus Council can reexamine the project list. Mr. Greene stated there will be an opportunity mid-year to consider revenues, expenditures, and Fund Balance and possibly adjust the budget at that time to take on additional projects. Councilmember Post noted if Council is going to consider increasing the COLA he would like tol know the impact it would have on the property tax rate. Mr. Greene indicated staff  will provide the information. Salisbury City Council  June 6, 2023  Page 5    ADJOURN  Motion to adjourn the meeting was made by Councilmember Post. Mayor Alexander, Mayor Pro Tem Sheffield and Councilmembers McLaughlin, Post and Smith voted AYE. (5-0)  The meeting was adjourned at 6:02 p.m.  KLAl -  Karen Alexander, Mayor  Corus B5p Connie B. Snyder, City Clerk  Salisbury City Council  June 6, 2023  Page 6