Salisbury. North Carolina May 13, 2025 SPECIAL MEETING PRESENT: Mayor Tamara Sheffield Presiding; Mayor Pro Tem Harry McLaughlin, Jr.; Council Members Carlton Jackson, Jr. and David Post: City Manager Jim Greene, Jr., City Attorney J. Graham Corriher. ABSENT: Councilmember Susan Kluttz and City Clerk Connie B. Snyder. Salisbury City Council met in Council Chambers in City Hall located at 217 South Main Street. The meeting was called to order by Mayor Sheffield at 5:00 p.m. ADOPTION OF THE AGENDA Thereupon, Councilmember Post made a motion to adopt the Agenda as presented. Mayor Sheffield, Mayor Pro Tem McLaughlin and Councilmembers Jackson and Post voted AYE. (4-0) PROPOSED FY2025-2026 BUDGET PRESENTATION City Manager Jim Greene, Assistant City Manager Kelly Baker. Finance Director Wade Furches and Budget Manager Tracey Keyes addressed Council regarding the proposed FY2025- 2026 budget. Mr. Greene stated the City's annual budget is a team effort, and he noted feedback from Council's Retreat and the Strategic Plan serve as the foundation for the budget. He commented the proposed budget will help the City address Council priorities and community needs while managing costs. preparing for growth and improving services. He added the recommended budget is conservative, but forward thinking. Salisbury City Council May 13, 2025 - Special Page 1 Mr. Greene noted the recommended budget is balanced as required by state law and will guide resource allocation for the coming year. He added the presentation will focus on the General Fund with a summary of the other funds. He explained Council can make changes, but it must approve a budget. He stated the proposed budget emphasizes Council's commitment to financial stewardship. service efficiency, strategic investment, and infrastructure maintenance, and it helps to plan for and manage growth. He pointed out the issues impacting the budget: Uncertainty regarding state and federal funding, grants and the economy Flat revenues and decreasing interest income and sales tax revenue Continued growth demands Departments need additional positions, equipment and technology ) High customer expectations for services and amenities Unfunded needs and cost increases ) Increases in health and property insurance, retirement system and equipment Mr. Greene pointed out inflation has decreased in 2025 based on the Consumer Price Index for the South Region with a small increase from 1.9 to 2.0 from March to April 2025. He expressed concern that the uptick could continue, and he indicated the uncertainty makes it difficult to budget for the coming year. He noted the City is responding to the challenges if faces by focusing on the Strategic Plan, basic services, efficiency, productivity, innovation, creativity, continuing to invest in employees, recruiting new talent, and being flexible and collaborative with public and private partnerships. He stated the City is growing. but its revenues are not keeping up with the growth which leads to challenges balancing the budget including: No recommended property tax increase - $.665 per $100 valuation Conservative but reasonable revenue estimates Reorganization for enhanced services, stronger partnerships, efficiency, and Strategic Plan progress Create Community Engagement Department Merge the Communications and Diversity, Equity and Inclusion Departments to be led by Anne Little Create Economic and Downtown Development Department Downtown Development will shift to Economic and Downtown Development to be led by Sada Troutman Elimination of three vacant Management Team positions Deputy City Manager Communications Director Transportation Director Evaluate the Capital Project delivery process Bring recycling service in-house Department budget submissions included a 10% reduction in services and supplies Recommended new positions to address growth and public safety priorities Prioritize infrastructure maintenance and employees Use Fund Balance for one-time capital needs Pursue grants and partnerships - Staffing for Adequate Fire and Emergency Response (SAFER) grant to fund six firefighters Salisbury City Council May 13, 2025 - Special Page 2 Ms. Baker noted approximately one year ago Council adopted the City's first Strategic Plan. She explained the proposed budget is the action step that turns the plan's priorities into projects the community can see and experience while keeping City tinances on solid ground. She noted every project has a purpose and is linked to at least one of the plan's six key focus areas to ensure every dollar spent advances Council's goals. She reviewed strategies included in the budget: Healthy, Safe and Engaged Neighborhoods Improve walkability through the construction of Brenner Avenue and Old Concord Road sidewalk projects Continued funding for Neighborhood Revitalization Program - $150,000 J Continued funding for the Homeless Advocacy Program Increased Parks and Recreation programming at all centers Prioritize community engagement with a new department Economic and Workforce Development o Increased funding in Human Resources for internship opportunities - $29,203 Implement Microtransit (grant is not included in the proposed budget) Downtown Façade Grants and marketing - $110,000 Continue Small Business Grants - $30,000 New department ofEconomic and Downtown Development Parking study for downtown'Empie/Wels Fargo - $45.000 Sustainable Infrastructure Continue General Fund, Salisbury-Rowan Utilities (SRU) Capital Projects Investment and Stormwater Master Plan progress Funding for roof and HVAC repairs - $286,644 Increased funding for technology - Fuses, LUCID, Asset Management Increase street paving - $1,1 million Open Fire Station 3 Public Safety Recommend two additional Police Officers and a Fire Inspector Pursue a three-year Staffing For Adequate Fire and Emergency Response (SAFER) Grant for six new firefighters to reduce over time and call backs Design and construction of a decontamination area at Fire Station 2 Fund Police and Fire Department equipment, including vehicles, and turnout gear $835,554 for vehicles and $335,626 for equipment Cultural Amenities Complete design/begin renovations of Wells Fargo Downtown Event Space Continue to improve and grow the greenway system Fund necessary improvements to Fred Evans Pool - $43,000 Organizational Excellence 0 Compensation increases for employees including merit adjustments Expand benefit programs for employees with increases to dental allowance and Health Savings Account (HAS) contributions Address Fire Department pay compression Continue to fund City-wide leadership training opportunities with policy changes to assist with management of training costs Salisbury City Council May 13, 2025 - Special Page 3 Ms. Baker stated it is the goal of Council to stay competitive, reward excellence, and keep salaries and proper balance: Fair and competitive for all employees Help with recruitment and retention Move employees "up in the range" through merit pay increases Provide merit pay to reward high-quality work, customer service, increased workload and creativity Address salary compression Livable wages Ms. Baker noted the City remains committed to its most important resource, employees: City to cover retirement system increases from 13.64% to 14.39% for most employees, and from 15.04% to 16.08% for law enforcement officers - $260,932 City to cover higher healthcare increase - 10% for City and 5% for employees which is the second increase in eight years -$426,900 Recommended pay increases for FY2026 - $2,001,060 2% cost of living adjustment (COLA) in July 1% lump sum bonus in December Average 3% merit in January Ms. Baker noted since 2022 Council approved COLA and merit increases and higher 401K contributions, tangible investments in the people who power the City. She thanked Council for prioritizing employee wellbeing and professional growth. Mr. Furches noted the total City Budget is $117,947,113, which is a 1.8% reduction from last year's budget due to the conservative approach to the coming year: Manager Recommends FY25-26 Fund Revenue Expenses 10 General Fund $ (66,948,669) $ 66,948,669 11 Cap Res General Fund $ (3,181,199) $ 3,181,199 20 Stormwater $ (2,889,875) $ 2,889,875 21 Cap Res Stormwater $ (807,872) $ 807,872 30 Water & Sewer $ (37,928,710) $ 37,928,710 31 Cap Res Water & Sewer - (923,490) $ 923,490 35 Transit (1,647,298) $ 1,647,298 36 Fibrant $ (3,620,000) $ 3,620,000 Total: $ (117,947,113) $ 117,947,113 Salisbury City Council May 13, 2025 - Special Page 4 Mr. Furches explained the approved General Fund Budget for FY2025 is $68,053,759 and the proposed budget for FY2026 is $66,948,669, which does not include the Capital Reserve Fund. He reviewed key revenue assumptions: Assumption #1 - City leverages conservative revenue estimates and works across departments to manage expenses and identify budget priorities to provide quality services and implement Council's strategic priorities Assumption 2 - As mentioned at Council's Retreat, sales tax growth has slowed and staff anticipate $13.200.000. which represents an increase of $300,000 over the FY2025 budget and no increase over current projections for FY2025 Assumption #3 -Interest income has slowed, as federal rate cuts started in 2024. Projected additional rate cuts are factored into rates the City used to budget for interest income. General Fund budget includes $1.2 million, which is the same as the FY2025 budget, but a $200.000 decrease from FY2025 projections Assumption #4 - City estimates a 98% property tax collection rate and recommended budget for property tax is approximately $27.9 million for FY2026, about $400,000 more than our current year estimate - land and tax data provided by Rowan County Mr. Fuches reviewed the value of$.01 on the property tax rate: Salisbury - $453.000 Statesville - $537,258 Kannapolis - $888.000 Mooresville - $1,358,344 Concord - $2,4 million Rowan County - $2 million Mr. Fuches noted the Municipal Service District tax rate would remain unchanged at $.156 and is expected to generate $158,000 in revenue that is turned over to Downtown Salisbury, Inc. (DSI). He added the funds are used to promote and assist in the revitalization and stability of the downtown area. Mr. Furches reviewed the proposed fee changes for FY2026: Credit card processing fee City-wide - 3% for all transactions over $1,000 Increased Parks and Recreation damage deposit and room rental fees Damage deposit increased to $75 Halls Gym multi-purpose room rent increased to $70 per hour/ $100 deposit Additional fees for Development Services o Voluntary annexation fee - $350 per petition o Review by Technical Review Committee - $300 Re-review of construction documents for any plan/permit type - $200 per hour (after five reviews) Review of Performance Guarantee - $100 Grading permit - $600 Salisbury City Council May 13, 2025 - Special Page 5 Mr. Furches noted there were 43 requests for new positions City-wide: Administration: Paralegal Community Engagement: Culture Engagement Coordinator Fire: nine Firefighters and twO Fire Inspectors Human Resources (HR): HR Business Partner Information Technology: MUNIS Administrator; Sharepoint Administrator: Support Tech Land and Development: Construction Inspector; Zoning Inspector; Senior Engineer; Senior Development Services Specialist; Ombudsman Parks and Recreation: Facility Maintenance Worker; Recreation Programmer Police: four Police Officers; Records Specialist; Crime Scene Investigator Public Works: Construction Maintenance Worker; Senior Construction Maintenance Worker Transportation: Administrative Specialist SRU: three Distribution and Collection Technicians; Education and Recruitment Coordinator; Maintenance Supervisor; Safety and Training Coordinator: Utilities Construction Inspector: Utilities Engineering Technician; Warehouse Specialist Stormwater: part-time Street Sweeper Mr. Furches reviewed the 22 positions that are recommended City-Wide: Administration: Paralegal (to be filled internally) Fire: Six Firefighters (SAFER grant funded) and one Fire Inspector Land and Development: Senior Engineer; Senior Development Services Specialist; Ombudsman Parks and Recreation: Recreation Programmer (to be filled internally. part-time position eliminated) Police: two Police Officers Public Works: Construction Maintenance Worker: Senior Construction Maintenance Worker (funded for last quarter of! FY2026 to begin in-house recycling) SRU: one Distribution and Collections Technicians: Education and Recruitment Coordinator; Maintenance Supervisor; Safety and Training Coordinator: Warehouse Specialist Stormwater: part-time Street Sweeper Salisbury City Council May 13. 2025 Special Page 6 Mr. Furches then reviewed other items included in the proposed budget: Project Department Costs Grants Creek Greenway project Transportation $1,409,187 Depot Multi-Model Center Design/Purchase Transportation $2,800,000 Street Resurfacing Public Works - Streets $1,100,000 Fisher Street Bridge Demolition Public Works - Streets $750,000 Community Effort Partners City Council $373,338 Roof/HVAC Repair and Upgrades Public Works - Facilities $286,644 Bell Tower Bell Tower Green $140,000 Neighborhood Stabilization Planning and Neighborhoods $150,000 Capital Improvement Process study Public Works - Facilities $75,000 Fusus Enterprise Solution Police $50,000 Lucid - annexation management software Land and Development Services $35,000 Façade Grant - related to Main Street project Downtown Devopment $60,000 Parking Study Downtown Devopment $45,000 Small Business Assistance Program Planning and Neighborhoods $30,000 Mr. Furches noted the community partner recommendations are the same as last year. He reviewed items that are not included in the proposed budget: Project Department Costs Tennis and Pickleball Court renovation Public Works - Facilities Mgmt $562,100 Fire Department training tower Fire $250,000 Resurface parking lot Station 1 Fire $750,000 Paving at Community Park Grounds Maintenance $175,000 Metal shelter - picnic area Public Works - Facilities Mgmt $65,000 Mini-pitch basketball playground equipment Parks and Recreation $104,000 Roof Replacement - large tractor shed Public Works - Facilities Mgmt $130,000 Ladder Truck Fire $2,500,000 Mr. Furches stated staff recommends in-house recycling to minimize recycling fee increases, and he noted there will be no fee increase for FY2026. He added two new employees, and equipment would be needed for the fourth quarter ofFY2026. Mr. Furches reviewed the available Fund Balance as a percentage of expenditures and transfers to other funds, and he pointed out the Fund Balance was healthy last year at 62.7% of General Fund expenditures. He stated Council adopted a Working Capital Fund Balance Policy that requires the City to have a 25% minimum Fund Balance, or three months' worth of expenses on hand. He noted the City has almost $40 million in Fund Balance, some of which is restricted by State Statue and the 25% Working Capital Fund Balance Policy which leaves approximately Salisbury City Council May 13, 2025 - Special Page 7 $20 million of available Fund Balance. He added staff recommends allocating $1.9 million of Fund Balance to be used for the following one-time projects: Fisher Street Bridge demolition $ 750,000 Bell Tower Green Structural Repair 140,000 Roof andHVAC 211.644 Bell Tower Green Splash pad sand filter 12,500 replacement Police Headquarter renovations 25,000 Fleet vehicle lift 36,424 Pool restroom renovation 32,750 Fire Station 1 remodel 15.420 City Office Building duct cleaning 15,000 Comprehensive Bicycle Plan 38,500 City share of grant-funded projects Grants Creek Greenway 322,563 Old Concord Road Sidewalk 222,732 Brenner Avenue Sidewalk 111,856 Brenner Avenue Safety 17.400 $ 1.951.789 Mr. Furches noted there is: Revenue growth, but growth is slowing, and the proposed budget is conservative Revenue growth is helpful to the City, but increases are not sustainable long-term Economic downturn is a possibility Mid-year revenue review could lead to budget cuts, vacant position freezes, or other changes Grants are uncertain and could impact services Fund Balance appropriation recommendation for one-time expenditures Ms. Keyes referenced the City's Capital Improvement Plan (CIP) which is: 10-year plan that outlines the City's vision Tool that strengthens the link between community infrastructure needs and the City's financial capacity Projects are bound to the City's Strategic Plan Key Focus Areas Each fund has its own CIP: General Fund, SRU, and Stormwater Costs are incorporated into the annual operating budget Funding includes Fund Balance. grants, partnerships, and financing packages Salisbury City Council May 13, 2025 Special Page 8 Ms. Keyes reviewed CIP projects: Public Safety: firing range construction, Fire Station 2 addition and new fire stations Healthy, Safe Neighborhoods: Kesler Mill Project Sustainable Infrastructure: sidewalk projects, Mainstreet Project, fuel site Economic and Workforce Development: The Depot Organizational Excellence: Makson Building enovations/deparment relocations Cultural Amenities: Wells Fargo/Event Center, Salisbury-Spencer Greenway Ms. Keyes noted at its Retreat Council prioritized the Wells Fargo Event Center and the fueling site: Wells Fargo/Event Center estimated $7.5 million/ Fuel Site estimated $2 million Will consider Fund Balance, grant opportunities, and a financing packet Financing packet in February timeframe/no effect on FY2026 Budget Depending on the amount financed, the effect on the tax rate for FY2027 o $6 million 1.56 on the tax rate o $7 million 1.82 on the tax rate $8 million 2.08 on the tax rate Assistant Finance Director Mark Drye pointed out the City operates four Enterprise Funds. He noted the Stormwater Fund has a FY2026 recommended budget of $2.889.875. He added staff is recommending a fee increase of $.53 per Equivalent Residential Unit (ERU) per month from $5.29 to $5.82 per ERU per month to cover projects included in the budget: Purchase of a vacuum/Jetter truck Purchase of a leaf collection machine Part-time Leafs Sweeper employee Upcoming projects: Sunset Drive - moving into construction phase o Eaman Park - planning and design phase Local Assistance for Stormwater Infrastructure Investments (LASII) Grant- CIP adjustment initiation in October 2025 Mahaley Branch = planning and design phase Mr. Drye stated SRU is the biggest Enterprise Fund with a recommended budget of approximately $38 million, and he noted key initiatives: Continued investment in infrastructure upgrades Continued master planning Continue to implement the adopted CIP Evaluate staffing needs/invest in training/new positions Salisbury City Council May 13, 2025 - Special Page 9 Mr. Drye referenced the relocation of the River Pump Station, and he indicated the project has some uncertainty due to the cancellation of the $22.5 million Building Resilient Infrastructure and Communities (BRIC) grant. He added staff is continuing to seek funding alternatives. Mr. Drye explained the Consumer Price Index (CPI) of the South Region has increased 23% over the past five years and SRU rates have increased 11.53% during this same period. He added SRU's customer base growth has helped absorb some of the cost increases: however, the City Manager is recommending a 4% water and wastewater rate increase for the FY2026 budget to help cover growth and increased costs. He stated the proposed 4% rate increase equates to $2.61 per month for residential units based on 4,000-gallon monthly usage. He reviewed SRU's rates with neighboring communities, and he indicated SRU rates fall within the middle of the group. Mr. Drye referenced the Broadband Fund, and he pointed out the total recommended budget is $3.62 million. He noted the General Fund contribution to the Broadband Fund is $2.5 million which is $200,000 less than last year. He then referenced installment financing debt, and he stated there will be a $2,746,138 principal and interest payment for FY2026. He added the debt will be paid offin FY2029. He commented the inter-fund debt principal payment to SRU for FY2026 is $500.000 which is the same as FY2025. Mr. Drye stated the Mass Transit Fund has a recommended budget of$1.6 million: $874,048 in grant funds $678,000 from the General Fund - same as FY2025 $58,950 allocated for a third-party service to clean the buses and shelters Mr. Drye noted staff continues to focus on Microtransit, and he added the proposals are under review. He explained Microtransit costs and revenues are not included in the Transit Budget, but once the reviews are finalized staff will bring a budget amendment to Council for its consideration. Mr. Greene thanked staff for its work on the budget. He noted the recommended budget does not include increases to property taxes, solid waste or recycling fees. He added staff is proposing an increase of $.53 per month in stormwater fees to address master plan implementation and a 4% increase in water and sewer rates to fund infrastructure needs. He explained the proposed fee increase would impact the average monthly residential customer by $3.14. He reviewed the budget adoption process: Budget Presentation to Council - May 13, 2025 Budget Workshop - May 20, 2025 to begin at 5:00 p.m. Additional workshops if needed for May 27h, June 3rd and June 10th Budget public hearing to be held June 3, 2025 Budget adoption June 17, 2025 per Council approval Salisbury City Council May 13, 2025 - Special Page IO Mr. Greene stated the City is facing uncertain times, and he added he is confident it will meet the challenges it faces. Mayor Pro Tem McLaughlin asked about the cost of funding six firefighters if the City does not receive the SAFER grant. Mr. Greene stated staff will provide the information. Councilmember Post referenced the 10% cuts made by department heads, and he questioned what services are being lost by the reduction in spending. He added he does not want to cut critical factors, and he questioned where the decrease is coming from. He indicated in an ideal environment the growth rate would cover inflation. He expressed concerns that items have been cut that will be needed. He requested additional information on what the City is losing due to federal cuts. He commended staff for its work on the budget. Mr. Greene stated the proposed budget is for a challenging year. He added staff considered where cuts could be made and started the budget process with a little less than last year. He noted with the uncertainty regarding federal funding. staff will conduct additional reviews and look for grant funding opportunities. Councilmember Post asked about the Main Street Project and when the work will begin. Mr. Greene noted if Council is agreeable with a Budget work session on May 20, 2025 at 5:00 p.m. staff could bring information to Council regarding the Streetscape Project and the cost for additional tirefighters, By consensus, Council agreed to hold a Budget Work Session on May 20, 2025 at 5:00 p.m. Mayor Sheffield thanked everyone who has worked on the recommended budget. ADJOURNMENT Motion to adjourn the meeting was made by Mayor Pro Tem McLaughlin. Mayor Sheffield, Mayor Pro Tem McLaughlin and Councilmembers Jackson and Post voted AYE. (4-0) The meeting was adjourned at 6:19 p.m. aman Tamara Sheffield, ME vor Coiuo BSvel Connie B. Snyder, City Clerk Salisbury City Council May 13, 2025 Special Page 11