Salisbury, North Carolina  May 23,2023  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 Mayor Alexander noted today is City Manager Jim Greene's one-year work anniversary.  Street. The meeting was called to order by Mayor Alexander at 5:00 p.m. Council thanked Mr. Greene for all hel has done for the City.  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. Mr. Greene thanked staffit for its work on the budget  and for all it does for the City.  Mr. Greene stated the recommended budget is balanced, and he pointed out Council can make any changes to the proposed budget it deems necessary. He add the proposed budget reemphasizes the City's commitment to financial stewardship, service efficiency, strategic  Salisbury City Council  May 23,2023  Page 1    investment, infrastructure maintenance, and planning for growth. He pointed out the City is growing, and it is important to plan for the growth. He noted the adopted FY2023-2024 Council Priorities developed at Council's 2023 retreat served as the guiding document for the  recommended budget. He reviewed the priorities in action:  Public Safety  $75,000 for crime reduction initiatives, $100,000 for cameras in City parks, $20,000 for a mobile camera system, and $82,700 for camera maintenance Costo ofLiving Adjustment (COLA), merit and Police Department initiatives $353,000 for street lighting and traffic safety improvements $1n million in street paving $280,000 increase from FY2023 Support ofDiversity, Equity, and Inclusion (DEI)initiatives Re-organization to prepare for and manage growth $175,000 for a comprehensive housing strategy $200,000 for neighborhood revitalization $30,000 for small business/entrepreneur development Community Partnerships and Programs Recreation Programmer  AI new Fire Station 3  Infrastructure and Human Capital (employees) Stormwater and water/sewer projects  Additional training for staff Economic Prosperity and Mobility  Funding for community groups at sustained level from current year Increase Parks and Recreation programming support by funding a full-time  Mr. Greene noted the City-wide recommended budget is $108,064,027. He reviewed key 1. The City leverages conservative revenue estimates and works across departments to manage expenses and identify budget priorities to provide quality basic services 2. The City must calculate and disclose a Revenue Neutral Tax Rate (RNTR) 3. Sales tax revenues remains strong, but monthly growth levels are slowing  factors impacting the recommendation:  Sales tax growth during FY2022-23 averaged 14.26% growth but will likely fall 4. Interest income will provide extra budgeted resources due to interest rate increases in  to the 5%1 to 7% range in FY2023-24  the past year  5. Overall Inflation was at 5.5% in April compared to last year  Decrease from last year but still high  6. The City remains committed to our most important resource: our employees Implemented al Pay Study in FY23 that is funded fora full year  Includes, Police Department salary and range increases, and increases in over Includes retirement system increases and absorbs health insurance increases  time for Fire Department personnel  Includes COLA and merit pay increase for employees  Salisbury City Council  May 23,2023  Page 2    7. Even after the Pay Study, the City must continue to compensate its employees due to an increased workload, to remain competitive with surrounding communities, and to Mr. Greene proposed a 2% COLA for employees and an average 2% merit increase for Mr. Greene reviewed the recommended General Fund Budget for FY2023-2024:  keep up with inflation.  qualifying employees.  Recommended FY2023 Budget Funds Requested by Departments Recommended Cuts Recommended FY2024 Budget  $52,296,635 $62,863,918 $ 8 8,761,512 $54,102,406  Mr. Greene stated the current tax rate is $.7196 per $100 valuation and the Revenue Neutral Tax Rate (RNTR) is $.58 per $100 valuation. He noted staffi is recommending a tax rate of$.61 per $100 valuation, and he pointed out the $.03 tax increase would help meet Council's  public safety goals:  $.0143 for Fire Station 3 $.0157 for Police:  Pay range adjustments to compete with surrounding communities and retain and Funds for new. Police Chiefto bring on needed positions $300,000 Funds for camera upgrades and maintenance-82710  attract police personnel - $250,000  Mr. Furches reviewed General Fund revenues by source for the proposed $54,102,406  budget:  Fund Balance 0.7% Property taxes 47.1%  - Property taxes increased 2.8% from FY2023 Unrestricted intergovernmental 29.2% Restricted intergovernmental 3.5% Charges for services 16.9% Miscellaneous 2.7%  Mr. Furches stated a RNTR does not increase or decrease local government revenue and must be disclosed under NCGS 159-11(e). He noted the RNTR is calculated by taking the last  four years average growth which is 1.23%:  Projected Tax Valuation from Rowan County for FY24 $4,113,144,278 (25.67% RNTR adjusted for 1.23% average growth is $0.58 per $100 valuation  increase)  RNTR decreases tax rate from $0.7196 to $0.58  Salisbury City Council  May 23, ,2023  Page 3    Mr. Furches reviewed examples of how the RNTR and the recommended tax rate would affect a $150,000 home and a $35,000 vehicle. He pointed out the vehicle tax savings will help offset higher property taxes on homes. He then reviewed the recommended tax rate comparison  for Rowan County and Spencer which have been published, but not approved:  Recommended RNTR $0.0541 $0.0694 $0.0300  Manager Recommended Differencefrom  Jurisdiction FY23 Tax Rate Revenue Neutral Tax Rate  TaxRate $0.58 $0.55 $0.61  Rowan County Spencer Salisbury  $0.6575 $0.655 $0.7196  $0.5259 $0.4806 $0.58  Mr. Furches reviewed revenue projections, and he pointed out the General Fund revenue projections for FY2024 are $24,588,376 with the proposed $.03 tax rate increase and  $23,379,112 with al RNTR. He noted the value of $.01 on the tax rate:  Salisbury $315,442 (FY2023) Salisbury $403,000 (FY 2024) Statesville $465,000 Kannapolis - $600,000 Mooresville - $1,261,000 Concord -$1,584,000  Mr. Furches referenced local sales tax revenue projections, and he added staff is projecting the City will receive approximately $12.45 million in sales tax revenue. He pointed out sales tax revenue can be difficult to predict and staffis making conservative projections. He  stated interest income in all funds for FY2024 is projected to be $2,032,594.  Mr. Furches stated Council must also adopt the Municipal Service District (MSD) tax rate, and he pointed out the RNTR is $0.1461 and includes a 20.56% increase in valuation. He added the Downtown Salisbury Inc. (DSI) board is requesting a tax rate of $0.156 to promote, encourage, and assist in the revitalization and economic health and stability of the downtown  area.  Mr. Furches indicated staff recommends appropriating $356,519 in Fund Balance to fund one-time projects. He added staff will also ask Council to consider appropriating $1,634,815 for Fire Station 3 at its June 6, 2023 meeting. He explained the proposed Fund Balance appropriations would be slightly less than the $2 million appropriated in the FY2023 budget. He commented the current Fund Balance is $22,687,527, well above the Council policy of24%. He explained the Fund Balance is calculated annually and last year the Fund Balance was at 48%  and is expected to increase.  Salisbury City Council  May 23, 2023  Page 4    Mr. Furches commented the City has experienced strong revenue growth despite conservative estimates. He added revenue growth is helpful to the City, but it is not sustainable long-term, and he added an economic downturn is possible which lead staff to take a conservative approach. He noted sales tax growth was at 12% to 14% but has decreased to 5% to7 7%. He indicated interest income is currently high, but will eventually decrease.  Mr. Furches referenced the City's 10-year Capital Improvement Plan (CIP) which forecasts and matches projected annual revenues with major capital needs over the next ten years. He pointed out capital planning is an important tool that strengthens the connection between the community's infrastructure needs and the financial capacity of the City. He commented the plan was put on hold due to COVID-19. He stated the FY2024 CIP for the General Fund and the Water and Sewer Fund was prepared in-house and staff also prepared a 15-  year Stormwater CIP toj project expenses and revenues.  Mr. Green stated General Fund expenditures are at $54,102,406 and comprised of:  Broadband 4.9% General government 23.9% Public safety 40.7% Transportation 11.3% Environmental protection 5.4% Culture and recreation 3.9% Debt service 2.5% Mass transit 1.2%  - Expenditures on public safety increased 1.9% from FY2023  Community and economic development 6.2%  Mr. Greene noted 23 positions were requested and seven new positions are included in the recommended budget. He stated a Code Services position will be funded by Stormwater and help address illegal dumping in streams, yard waste and other stormwater issues. He added Parks and Recreation eliminated two part-time positions to create a full-time Recreation Programmer position. He commented an Engineering Manager for Development Services will be funded by SRU and two nighttime operators are recommended for SRU to address safety  concerns.  Mr. Greene pointed out the Empire Hotel, the Depot, City Branding, Microtransit, and Mr. Greene referençed FY2024 payroll projections, and he recommended 4% increase consisting of a 2% average merit and 2% COLA increase. He added based on a study by the North Carolina League of Municipalities similar organizations are providing a combined 5.1% merit and/or COLA increase statewide and organizations in the Piedmont region are averaging a combined 5.7% merit and/or COLA increases. He reviewed COLA and merits for Rowan  sale oft the Plaza were not included in the recommended budget.  County and surrounding municipalities:  Salisbury City Council  May 23, 2023  Page 5    Kannapolis - 3% (COLA, + merit) Lexington - $.75 (increase per hour per FTE or avg. 3%) Salisbury 4% (2%1 merit + 29 % COLA) Rowan County - 4% (4% COLA + merit) Concord - 4% to 7% (3% COLA + 1% to 4%1 merit) Mooresville - 5.5% (2% COLA +3 3.5% merit) Statesville - 8% (COLA, no merit)  Mr. Greene pointed out the cost ofhealth insurance premiums has increased, but the City absorbed the cost and did not pass it along to employees. He indicated the City has a strong  benefits package, and he reviewed expenditures City-wide:  Expenditure  Costs $596,866 $496,221 $206,822 $100,000 $62,300 $58,000 $28,000 $1,548,209  Health Insurance Projected Costs Increase  FY2024 Retirement Impact (with COLA & merit all positions)  Continuation of 1% Longevity Property & Liability Insurance Increase Recycling increases (absorbed by City) County Tax Collection Fee Increase County Landfill Costs Increase  Total:  Budget Manager Tracey Keyes presented Department highlights:  Administration  Deputy City Manager for FY2024 (begin search: in June of2 2023) Organizational and executive development initiatives planned for FY2024 Ongoing development and implementation ofDEI strategic goals, and work plan Signed Memorandums of Understanding for internships with local colleges including Livingstone, Catawba, Rowan-Cabarrus Community College, the University of North Carolina (UNC) at Charlotte, and Pfeiffer University Continued challenges in recruitment but countering with retainment strategies Delay City-wide Office365 implementation savings of $241,300 Actively recruiting positions tol keep up with City initiatives Continuation ofIT hardware replacements - $140,000 City-wide for FY2024  Human Resources  Information Technology  Salisbury City Council  May 23,2 2023  Page 6    Finance and Customer Service Getting back to fully staffed Hired al budget manager Service Center  Hired three customer service representatives - fully staffed at the Customer Participating in the UNC School of Government benchmarking program in Community Planning, Code Enforcement and Development Services Creation ofLand and Development Services Department to manage growth New planner and code enforcement positions recommended to keep up with  Actively Interviewing for an Accountant FY2024 at no cost to City for the first year  growth  Continuation of Council Priorities:  $150,000 in Downtown Development grants $30,000 in small business investmentsyentrepeneur development $175,000 for 10-Year Comprehensive Housing Strategy $353,000 for street lighting and traffic safety improvements  Transportation  $305,000 for sidewalk improvements  Creation of Transportation Department from Traffic Operations as part of City-  reorganization Police  $75,000 for crime reduction initiatives $100,000 for cameras inj parks $20,000 for mobile camera system Actively recruiting for vacant positions initiatives for FY2024 Police minimum salary comparisons: Concord: $42,609 Statesville: $44,464 Salisbury: $45,190 China Grove: $48,845 Kannapolis: $48,935 Davidson: $50,300 Mooresville: $50,880 Burlington: $55,411  $632,710 for range and salary adjustments, positions, technology and City  Charlotte: $62,911 *With four-year degree*  Fire  Over $3.8 million ini new: fire truck purchases set to arrive in FY2025/FY2026 Fire trucks are included in this budget and offset by debt proceeds Planning for Fire Station 3 to replace the existing over 40-year old building The City anticipates funding the balance of the project, approximately $6.5 million, with debt proceeds, ARPA funding, and Fund Balance  Fire trucks will be financed with al bank loan Debt Service payments to begin next fiscal year The project will cost approximately $10 million  Salisbury City Council  May 23,2023  Page 7    Public Works  Continued partnerships to complete building and ground maintenance and repairs $513,510 in building and grounds investments managed by Public Works for  inl house to: reduce costs FY2024  Public Works - Waste Management No increase in recycling fees $2,000 in office and safety supplies $500 in uniform reductions $5,000 for educational advertising $1,600 in employee training  Toa achieve this, Public Works absorbed $62,300b by cutting:  $1,200 ini miscellaneous expenses to continue key initiatives $21,000 in additional recycling can rollouts (from 624 to 312 cans) And more cuts across the department to absorb recycling costs Managing $2.1 million in fleet eplacementyacditions in FY2024 Fleetio software implementation scheduled for FY2024 City-wide  $7,000 (no addition to litter collection) $7,000 (no recycling education stickers)  Fleet Maintenance  Substantial upgrade from Fleet Dynamics  Parksand Recreation Recreation Programmer Wells Fargo, and much more  Increase Parks and Recreation programming support by hiring a full time Continued progress on appropriated $1.2 million in ARPA funds to support projects including the Miller Center, Hall Gym, City Park, Fred M. Evans Pool,  Nor recreation fee increases recommended for FY2024  Mr. Furches noted SRU has a $37 million budget, and he pointed out 64% of the funds are for operation and maintenance, 14% of the funds are for debt service, and 22% are for  capital. He noted the operation and maintenance includes:  Personnel 33% Utilities 7% Chemicals 5% Contracted services 13% Parts supplies 4% Maintenance of equipment 7% General Fund transfer 16% Other 15%  Salisbury City Council  May 23, 2023  Page 8    Mr. Furches reviewed SRU key initiatives:  Continue with project design activities to meet the proposed 2021BRIC grant project  timeline for the River Pump Station Relocation Project $9 million local contribution from Cube Yadkin  $22.5 million grant utility capital reserves Asset Lifecycle Modeling Continued master planning Wastewater Treatment Master Plan Scoping Phase Facilities and staffing  Increase investment in infrastructure by funding capital projects in the CIP using  ARPA Pre-Construction Planning $400,000 Grant Collection System Master Plan (lift stations and interceptors) Issuance ofNPDES permit at the Water Treatment Plant Pursue appropriate expansion of the SRU system  Mr. Furches noted a rate increase is not recommended for FY2024, and he pointed out: The Consumer Price Index for urban consumers for the South Region has increased 6.4% in the last 12 months; however, projected growth to the customer base will help Utility rate increases may be needed in future years to fund capital projects and offset increases in operational costs ifa anticipated growth does not meet projections An average monthly residential water and sewer utility bill for a customer using 4,000 SRU rates remain competitive compared to other utilities within our region  absorb these cost increases  gallons will remain $63.08  Mr. Furches referenced the Stormwater Fund, and he noted:  Implementation of15-Year CIP  Jackson Street watershed drainage improvement construction project- $916,000 North Long Street watershed drainage improvement construction  $2,281,000 $4.81 rate per ERU, an increase of $.40 per month to support the implementation New Code Enforcement Officer to support Stormwater's initiatives funded by the Mr. Furches stated $2.7 million from the General Fund will be transferred to the Fibrant Fund and will be used to cover the $2,694,013 principal and interest payment for FY2024. He pointed out the funding from Hotwire Communications has been consistent and the recommendation is to increase the inter-fund debt principal payment to SRU to $500,000 which  Both projects address areas with significant flooding issues  of15-year master plan Stormwater. Fund  isas $200,000 increase from FY2023.  Salisbury City Council  May 23,2023  Page 9    Mr. Furches noted the Mass Transit Fund does not include funds for microtransit, and he pointed out staffi is working with consultants and state representatives to look for grant funding. He noted there will be a $630,000 transfer from the General Fund for Mass Transit which could increase. He reviewed grant funding to be used for the FY2024. Mass Transit budget:  $220,000 in ARPA funds  $299,759 one-time allocation received via NCDOT-Integrated Mobility Division Electric buses and E-charging infrastructure supplemented by Volkswagen Grant Mr. Greene explained the RNTR is $0.58 and the recommended tax rate is $0.61 which will be used to fund public safety initiatives and Council goals. He noted staff recommends an increase in Stormwater fees of $.40 per month to address master plan implementation. He added ar rate increase is not recommend for water and sewer, recycling and solid waste, or for park and  recreation fees.  Councilmember Post noted approximately $.06 oft the tax rate is used to cover the Fibrant debt service, and he pointed out the rate has decreased from $.12 due to increases in revenues and property values. He expressed concern about the recycling adjustment, and he cautioned recycling rates will continue to increase and will eventually require a rate increase for  consumers.  Councilmember Post referenced open positions, and he asked if the budget is prepared as if the vacant positions were filled. Mr. Furches agreed. Mr. Post commented there is unexpended funding in vacant positions. He noted the proposed COLA and merit salary increases for staff are approximately 4%, and he pointed out surrounding municipalities are offering higher pay increases. He questioned if the City is at risk of losing employees to neighboring communities. Mr. Greene agreed the City is at risk of losing employees, and he noted the proposed increase is higher than last year's rate increase. He pointed out the City offers a competitive benefits package. He indicated there is concern regarding police officer salaries, and he pointed out neighboring communities have increased police officer's salaries. Councilmember Post noted the Fund Balance continues to increase, and he questioned if Council should consider using $1 million of its 48% Fund Balance to cover projects that haye been cut from the budget. He pointed out $1 million would reduce the Fund Balance to approximately 45%. Mr. Greene commented the City's Fund Balance is healthy. He stated staff can bring recommendations to Council regarding additional projects it could consider, and he  recommended using additional Fund Balance for one-time maintenance items.  Councilmember Smith stated the proposed budget responds to issues the City is dealing with in destabilized communities by addressing public safety, economic development,  infrastructure, and responding to Council priorities.  Councilmember McLaughlin asked about vacant positons in the Fire Department., and he asked if the Homeless Advocate position is included in the current budget. Mr. Greene noted the Homeless Advocate position is included in the proposed budget. He added the Fire Department has fewer vaçancies than the Police Department, and he noted some of the Fire Department received salary adjustments as part of the pay study. He commented the Fire Department has  Salisbury City Council  May 23,2023  Page 10    lost fire fighters to neighboring cities, and he indicated part-time firefighters go through training and are ready when a full-time positon becomes available. He pointed out other cities are  increasing salaries and itisaq question ofaffordability for the City.  Mayor Pro Tem Sheffield noted overall the City has a 50% Fund Balance and it is required to have 24% Fund Balance. She agreed with Councilmember Post and questioned why aj percentage oft the Fund Balance could not be used to complete one-time projects. She noted the City is projected to receive approximately $1.2 million in sales tax revenue over its projection, and she requested a prioritized list of projects Council could consider for the use of Fund Balance and additional sales tax revenue. She asked ifany large project will roll off the books in  the coming fiscal year that could be invested in other projects.  Mr. Greene noted staff will compile a list of projects that could be completed using Fund Balance to be brought back to Council for consideration. He explained any savings will be placed in Fund Balance, and he noted staff works throughout the year to look for savings and to create flexibility. He pointed out large projects such as the Depot and the Empire Hotel redevelopment are not included ini the budget and may require the use of Fund Balance.  Mayor Alexander stated the City has a great record of receiving grants, and she pointed out there is a portion of a grant the City is required to match. She indicated she prefers to use caution because ofl larger projects that will have a great economic impact on the City. She added the City needs to have the funds to match potential grants such as a $30 million grant for the Depot that would require a $2 million to $3 million match. She pointed out the development of  the Empire Hotel could also take place and the City needs to be ready.  Mr. Greene noted staff can update Council during the year regarding sales tax revenue and possible project recommendations. He stated Council has prioritized the old Civic Center and its master plan. He commented the cost for the master plan is included in the budget, but staff does not know the cost for this new project. He asked ifCouncil would like tol have another budget workshop before the next Council meeting where staff could bring recommendations to  Council regarding projects that could be funded.  By consensus, Council agreed to hold a budget work session special meeting on Tuesday,  June 6, 2023 at 5:00 p.m. 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 6:11 p.m.  LAba  Karen Alexander, Mayor  ImwBbgs Connie B. Snyder, City Clerk  Salisbury City Council  May 23,2023  Page 11