City Council Minutes Tuesday, May 20, 2025, at 2:00 p.m. Morehead City, North Carolina Budget Workshop Meeting #3 The Honorable Council of Morehead City met in Special Session on Tuesday, May 20, 2025, in the City Hall Council Chambers, 1100 Bridges Street, Morehead City, North Carolina to conduct Budget Workshop Meeting #3. The purpose of this meeting was to continue the discussion of the proposed FY 2025-2026 Budget. Those in attendance were: COUNCIL PRESENT: Mayor Gerald A. Jones, Jr.; Councilmembers Richard Abell, George Ballou, Lee Stiles, Bill Taylor, and Harvey Walker. STAFF PRESENT: City Manager Chris Turner, City Attorney Derek Taylor, Finance Director/Assistant City Manager Jewel Lasater, Public Services Director/Assistant City Manager Daniel Williams, Planning Director Sandi Watkins, Police Chief Bryan Dixon, Deputy Police Chief September Tuttle, Fire-EMS Chief Courtney Wade, Human Resources Director Kristen Flexer, Information Technology Director Matthew Goodwin, Parks and Recreation Director Jessica Mayo, Assistant Finance Director Leeann Vinson, Public Information Officer Anna Smith, Revenue Officer Tiffany Riggs, Purchasing Officer Sarah Currie, Special Events Officer Victoria Veith, Grants Manager Kelli Jones, Parks and Recreation Administrative Support Manager Morgan Gilbert, Library Manager Danijela Mitchell, Deputy City Clerk Shawne Southard, and City Clerk Cathy Campbell. OTHERS PRESENT: Todd Wetherington of the Carteret County News-Times, Parks and Recreation Advisory Board Member Travis Adams, Claudia Bell, Karen Bridges, Mike Campbell, Ophelia Chambers, Gloria McCarther, Chris Monteleon, William & Barbara Smith, Garland Terry, Thelma Thomas, June Vann, James H. Walker, Jr., and Sarah West. CALLTO ORDER Mayor Jones opened Budget Workshop #3 at 2:00 p.m. with a quorum present. He shared that at the end of Budget Session #2; each council member advised the manager of the changes they wanted to be made to the budget and today City Manager Chris Turner was presenting the revised budget as requested. REVIEW OF REVISED BUDGET City Manager Chris Turner presented a revised budget with a tax rate of $0.3675. The Council was provided with a list of all the changes made to lower the originally proposed tax rate. The revised tax rate included the requested positions, COLA, Longevity, debt service reserve for potential W.S. King Recreation Center Renovation at $8.0 million, and the potential City Hall Annex Building. The items that provided the greatest amount of savings were the removal of the reclassification of a Police part-time position to full-time ($52,843), a portion of May 20, 2025, Morehead City Council Budget Meeting #3 1 Fire-EMS overtime and part-time funding ($111,008), and the reduction of transfers out for capital projects by suing savings from other capital projects and interest in the capital project fund ($780,177). Mr. Turner then presented the following chart reflecting the value of each of the previously discussed items and how the tax rate would be impacted with the addition or deletion of each. MOREHEAD CITY PROPOSED TAX RATE SCENARIOS A B D E F MGR REC #2 PROPOSED TAX 0.3675 0.3675 0.3675 0.3675 0.3675 0.3675 RATE 3Police Officers 262,479.00 0.0069 (0.0069) (0.0069) (0.0069) (0.0069) (0.0069) (0.0069) 3F Frelighter-Paromediecs 329,802.00 0.0087 Fire & EMS OT & Part Time Add (100,000.00) (0.0026) (0.0061) (0.0061) (0.0061) (0.0061) (0.0061) Back (if3Positions Removed) Building Inspectorl II 93,484.00 0.0025 (0.0025) (0.0025) (0.0025) (0.0025) 2ITF Positions (removal $271,000 198,746.00 0.0052 IT costs 3f funds in: 2027) VC3F Partial Contract Add Back (ifl IT Positions Removed) 69,100.00) [0.0018) (0.0034) (0.0034) (0.0034) Reservei for Debt Payments 674,000.00 0.0178 (0.0178) (0.0178) (W.S. King Building) Reserve for Debt Payments 118,000.00 0.0031 (0.0031) (Cityl Hall Annexi Building) 0.3606 0.3545 0.3520 0.3486 0.3308 0.3277 Finance Director/Assistant City Manager Jewel Lasater explained that removing all requested positions (full-time and part-time), the W. S. King Renovation, and the City Hall Annex Building could reduce the tax rate down to $0.3277. Councilmember Taylor stated that key positions are needed. He reminded the Council that 540 additional residential units are about to come online, and an additional Building Inspector is essential in addressing the growth. He noted that the Water Plant Operator position is offset by enterprise funds and the IT position will be offset by reducing the VC3 contract. At times, the Fire Department has been responding with only two (2) people on a truck, which raises safety concerns as two (2) people cannot effectively fight a fire. He was less concerned about the three (3) police positions saying that without them less tickets would be issued, and calls would be answered a bit slower, but the job would get done. Councilmember Walker was in favor of funding the COLA and longevity since the employees are citizens too and are deserving of support. He agreed with funding the Building Inspector only. He was agreeable to the Water Plant Operator because it is funded by enterprise funds, but he was not in favor of hiring the other positions at this time because of the increased property values and because the Police and Fire-EMS Chiefs have not reported that the job is not May 20, 2025, Morehead City Council Budget Meeting #3 2 getting done. At this time, Mr. Turner reminded him of the following calls for service information presented during Budget Meeting #2: Fire-EMS Department 427 Calls in April 2025 VS. 403 Calls in April 2024 Engine 1 Responded with less than 3 Firefighters 10 days in March 2025 Engine 1 Responded with less than 3 Firefighters 13 days in April 2025; The National Fire Protection Association (NFPA) requires that no less than 3 firefighters respond per engine. Fire-EMS Overtime Budget is Exhausted Police Department 43,343 Calls for Service in 2024 50,844 Calls are Projected for 2025 2025 Calls to Date: January (4,051), February (3,914), March (4,847), & April (4,135) Police Overtime Budget is Exhausted Councilmember Stiles voiced support for funding the Fire-EMS and Police positions to ensure adequate safety for the citizens, but he wanted all other positions to be cut from the budget. He also wanted the W.S. King Renovation Project added to the budget. Councilmember Ballou explained that the problem with the budget is that the City is having to start at six (6) cents above revenue neutral to fund the Pay & Class Adjustment made last year. Keeping in mind that this substantial increase was approved for all employees last year, and that Police and Fire-EMS positions are now filled with quality recruits, he was opposed to funding anything other than the pay adjustment committed to last year, keeping the tax rate at $0.3277. He stated that citizens are saying that they cannot bear anything more based on the revaluation. Councilmember Abell stated that the Council should have expected an increased based on last year's commitment. He was in favor of funding the Fire-EMS positions but delaying the Police positions for another year. It was confirmed that the City currently has 261 employees including part-time and seasonal employees. At this time, the Chiefs were asked to come forward to defend their requests for more personnel. Fire-EMS Chief Courtney Wade stated that he requested 10 positions, which were reduced to three (3); Police Chief Bryan Dixon asked for six (6), which was also reduced to three (3). Chief Wade stated that he looks at the National Fire Protection Association (NFPA) Standards to determine adequate staffing numbers. Under these standards, the Department is expected to respond to a structure fire involving a single-family dwelling with 17 members. The City, on average, has 8.81 on duty per shift. For structure fires involving commercial buildings 28 members are recommended for an effective response; for garden style apartments (one-story) 28 members are recommended; for high-rise apartment buildings 32 members are recommended. He advised that he is trying to achieve 75% of the recommended staffing level for a single- family dwelling. May 20, 2025, Morehead City Council Budget Meeting #3 3 Chief Dixon stated that his position has been discussed extensively during the Public Safety Committee meetings, and he considered it a compliment that the perception was that all the police do is write a few parking tickets and conduct a few investigations as this is not the reality of the situation. He then reviewed the crime measurement index. He reported that the statewide average for capital crimes (murders, rapes, armed robberies, burglaries, home invasions, etc.) is 2,526 per 100,000 population. For Carteret County the number is between 1,827 and 1,906; Onslow County is 1,500; Craven County is between 1,900 and 2,100; Greenville is 2,957 (2022); and Morehead City 2,844 (2022). He explained that the only insurance reduction that the Department can offer is through the City's insurance based on risk assessments and reduced by the Department's accreditation. Therefore, he looks for other benefits such as minimizing crime through adequate staffing. He uses the Workload Assessment tool, which uses federal guidelines to analyze the operational tempo and calls for service in determining adequate staffing. Based on the Department's activities and crime statistics, this tool indicates that the Department is 11 officers short. He asked for four (4) officers last year and received none, subsequently, he asked for six (6) this year. Councilmember Abell noted that these statistics are based on calls for service, and Morehead City is the commercial hub of the County, and the City's calls for service remain constant year-round. For this reason, he thought that some ofthese positions need to be funded. Councilmember Taylor explained that the salary review was conducted and adopted because of the difficulty in recruiting and retaining qualified applicants. Every lost employee costs the city additional expense for training and equipment. Therefore, he has asked for an evaluation of all City staff to determine appropriate staffing levels and to prioritize the staffing needs. He felt this needs to be made a priority for the upcoming fiscal year. Mayor Jones stated that it is a balancing act to uphold the oath of office, to protect the life, health, and safety of citizens, while maintaining a healthy fiscal position. He reviewed the cost of each item on the tax rate as shown on the chart. 3 Police & 3 Fire-EMS positions = $0.013 or $45.00 per year based on a $350,000 home ITj positions = $0.0164, providing an essential service Two (2) capital projects = $0.0209. Water Plant Operator is paid by the enterprise fund. Building Inspector is offset by permit fees, very similar to an enterprise fund. Removing all will reduce the fee to $0.3277; adding back the requested positions without the two project brings the rate to $0.03466. Councilmember Stiles was in favor of including the W.S. King Renovation project; however, he added that ifit needed to be delayed awaiting the development of a Master Plan, the Master Plan should be a priority in the upcoming fiscal year. He stated that providing the renovation serves to give the citizens something back for the increased tax rate. Mayor Jones questioned spending the funds before confirming that the W.S. King Renovation is what the citizens want as would be discovered through the Master Plan process. It was noted that the Recreation Advisory Board, as a voice oft the public, was favorable for the project, but they were not in a position to determine ifthe return on the investment is reasonable. Parks and Recreation Director Jessica Mayo was asked to provide statistics on the facility's use. She reported that in 2022, 35% of the program participants were non-residents; in May 20, 2025, Morehead City Council Budget Meeting #3 4 2023, 60% were non-residents; and in 2024 65% were non-residents. Today, 80% of the members are residents; however, they are mostly using the gym. Recreation programs continue to serve mostly non-residential participants due to the City's quality facilities. There are 180 participants in the basketball program, but she noted that the $6.5 million renovation would not accommodate any more participants. The renovation project began out of a desire to provide observation seating. Mayor Jones suggested bumping out the gym enough to add seating and hold off on the other renovations until after a Master Plan is developed. Mr. Turner pointed out that the debt service is based on $8 million, knowing that the project costs have most likely increased since the quote was received. In response to a question, Mr. Turner said that $30,000 was spent, as approved by the Council, for an architect to develop a plan and reasonable estimate for budgeting purposes. Ms. Lasater suggested paying the remaining fiscal year VC3 contract utilizing $129,646 from the Fund Balance, and utilizing the funds budgeted for this purpose to fund the IT positions reducing the tax rate to $0.3641 and removing the City Hall Annex project until the final tax values from the County are received. This will bring the tax rate down to $0.3610. She advised that the Council had not demonstrated a consensus of three (3) or more for debt service reserve of the W.S. King project to be potentially included in the proposed budget ordinance, which is proposed to be financed on a 17-year note. COUNCIL DIRECTION Mr. Turner asked the Council for a consensus on the tax rate target or items to be includedremoved SO that the budget ordinance can be prepared without the need for last-minute adjustments on the day oft the public hearing. Councilmember Abell asked for a tax rate of $0.3432 Councilmember Taylor agreed, noting that this will provide essential services while also providing a tax break for citizens; Councilmember Stiles asked that the public safety positions be funded along with the W.S. King project Councilmember Ballou stated that he would not provide directions on what to omit until after the public hearing. Councilmember Walker asked for a tax rate of $0.33 with everything included. The Council took a briefrecess at 3:20 p.m. and reconvened at 3:29 p.m. Further discussion resulted in a Council consensus in favor of including the three (3) Fire-EMS positions, the three (3) Police positions, and the Building Inspector position, and removing the City Hall Annex and W.S. King Renovation project. The IT positions are to be funded as a result of the VC3 buyout from the Fund Balance. These changes will result in a tax rate of $0.3432. In closing, Mr. Turner expressed his appreciation for the budget discussions and debate. He then addressed Carteret County Commissioner Mark Mansfield's comment as quoted in The Carteret County News Times, Morehead has proposed a city tax rate 12 cents above revenue neutral. I don't know what kind of math there're doing over there, but somebody's spending a lot of money and I don't know what it's going for," saying that it is the market driving the current May 20, 2025, Morehead City Council Budget Meeting #3 5 situation. He encouraged the Council to urge the County to conduct revaluations every two to three years, which would make managing budgets much easier. ADJOURNMENT There being no other business to discuss, Mayor Jones adjourned the meeting at 3:40 p.m. GeraldA. Jones Ir., Mayor Attest: attun Campba Cathy Campber, City Clerk 858 * May 20, 2025, Morehead City Council Budget Meeting #3 6