City Manager Payne proposes $257 million FY19-20 budget for Concord
Friday, May 31, 2019

CONCORD – City Manager Lloyd Payne provided his fiscal year 2019-20 (FY20) budget recommendation to the Concord Mayor and City Council on Friday, May 31. The City-wide budget totals $257,752,019 for all funds, including utilities and special revenue funds. The total represents an overall budget increase of 2.7 percent over the fiscal year 2018-19 adopted budget. The recommended General Fund budget, where the major funding sources are property taxes and sales tax receipts, is $94,483,872. The property tax rate is recommended to stay at 48 cents per 100 dollars of valuation, which has not changed since 2013. As in past years, the proposed budget restricts the equivalent of two cents on the tax rate to supplement State funding for transportation projects, as mandated by City Council.

"Per Council’s direction, the focus of this budget is maintaining essential services provided to our residents and businesses and fund the essential projects necessary to maintain and improve the quality of life in a growing community," wrote Payne. "To do this and to continue to make basic capital purchases, I am recommending the use of $3,819,644 from the City’s Capital Reserve Funds to pay for one-time expenses."

While keeping the property tax rate level, Payne recommended adjusting revenues in three key service areas. The proposed changes include the addition of a minimal monthly solid waste fee for residents, a nominal fee for water customers to support a new program to protect customers from the cost of water leaks, and an increase in the motor vehicle tax paid while registering vehicles with the NC DMV. If adopted, each would take effect July 1, 2019.

Residential Solid Waste Fee
Communities across the United States are dealing with a changing global recycling market greatly impacted by policy changes in China. Stricter contamination standards along with reduced or eliminated marketability of materials, have put pressure on local recycling waste streams and increased the processing cost for municipalities across the nation. Cost increases and dwindling market revenues are having major impacts on local budgets and have caused many municipalities to evaluate whether they should continue recycling services or eliminate it all together. Concord is not proposing to eliminate recycling at this time. However, to maintain these services the City must institute a Solid Waste Fee.

Over 32
,500 customers receive weekly solid waste (garbage, recycling, bulky waste, and yard waste) services from a combination of contracted and in-house staff. Development trends indicate that 1,800 new weekly collection points could be added between now and June of 2020, accompanied by increased operational costs. Although City's collection cost per customer has not changed significantly since 2011 due to contract safeguards, costs in fuel, vehicles, labor, and recyclable processing have risen considerably since that time. With new collection and processing agreements taking effect July 1, 2019, the upcoming budget must account for about $900,000 in increased expenses.

Because the factors are outside of the City’s control and impacts are projected to last well into the future, the City must work now to ensure that core services are funded at appropriate levels. It costs the City about $18 per collection point to provide the current menu of services each month, approaching $8 million of General Fund tax dollars each year. In an effort to maintain service levels and keep up with rising costs, the budget recommendation includes implementing a $2.24 monthly Solid Waste Fee for each residential household. This fee would cover the projected increased costs for contracted residential garbage, recycling, and bulky waste collection ($560,000) and recycling processing ($343,000) for FY20. The fee would appear on monthly City of Concord utility billing statements.

Water Loss Protection Fee
Unexpected water leaks are a challenge for customers and the City of Concord. Some of the most common ways that customers experience water loss are toilet leaks, hot water tank leaks and broken pipes. Since customers are charged for all water passing through their meters (including leaks), those who have leaks can experience high water bills. Current policy allows customers who experience leaks to receive a partial adjustment to their bill. The partial adjustment is calculated by determining the customer’s average usage. Any usage above the average is considered as the usage caused by the leak. The leak usage is still billed, but at a lower water rate. Although these partial adjustments lessen the amount customers have to pay, their remaining bill will still be higher than their typical monthly bill which can create an unexpected financial burden. The current leak adjustment program has also had a financial impact on water system revenues. Records reflect that revenue losses from write-offs for the past three years have totaled $322k (FY18), $239k(FY17) and $430k (FY16) respectively.

In order to assist customers who experience high water bills due to unexpected leaks, the City is proposing a new “optional” program that will provide a 100 percent leak adjustment. The program will allow a customer to receive this adjustment one time over a 24-month period. All revenue generated would be used to support the loss protection program.

Water Loss Protection Program participants will be charged a monthly fee based on meter size. The base rate will be 50 cents per month for each standard ¾” residential meter, with graduated fees charged for larger size meters (industrial customers will not be eligible for this program). The fee would be automatically included on the customer’s monthly billing statement, and a customer may opt-out of the program by submitting an opt-out application. Customers would be responsible for providing proof of repairs in order to receive the adjustment. However, if a customer chooses not to participate, there would be no assistance provided if a leak occurs. The opt-out application will be available online or customers can come to City Hall (35 Cabarrus Avenue West) and fill out a hard copy.

Motor Vehicle Tax
Based on the latest street evaluation, the City has approximately 124 centerline miles of streets (35% of the City streets network) that are rated fair to poor condition and need basic resurfacing or more expensive rehabilitation. (Centerline Miles = # of lanes X street distance). The City has also identified approximately 98 miles of key sidewalk network needs throughout Concord. To better align funding with maintenance demands, the FY20 budget recommendation to City Council includes increasing the Motor Vehicle Tax from $15 to $30.

Beyond street resurfacing, funds would be used for other preventative maintenance projects and the construction of new sidewalks each year. The results would extend the life of the City’s streets, decrease the frequency of more expensive rehabilitation, and better meet the needs of Concord’s pedestrians. The remaining portion of the Municipal Vehicle Tax is reserved to support transit operations as required by NC General Statutes.

As North Carolina's 11th largest City by population (92,067 in 2017 per US Census estimates), Concord's growth has increased wear and tear on the City’s infrastructure exponentially, especially streets and sidewalks. The City of Concord maintains over 354 centerline miles of streets and 254 miles of sidewalks. Currently, the City resurfaces approximately 7.5 centerline miles of streets and allocates funding for approximately 0.15 miles of new sidewalk construction per year. Of the 7.5 centerline miles of street resurfacing, approximately 3 centerline miles are funded through the Municipal Vehicle Tax. The proposal would nearly double the portion of annual street resurfacing funded by the Municipal Vehicle Tax from approximately 3 centerline miles to 6 centerline miles, bringing the total annual resurfacing to approximately 10 centerline miles. (These funds will not be used to fund maintenance on NCDOT roads. There are approximately 92 centerline miles of NCDOT roads located in the City of Concord.)
The remainder of the funding for this maintenance is provided through State Street-Aid (Powell Bill) allocations which are used to repave streets and repair/construct sidewalks.

This tax is collected by the NC Division of Motor Vehicles at the time of vehicle registration and the last increase was in 2005. This increase will appear on any vehicle registration/license plate renewal completed after the increase takes effect.

The FY20 budget recommendation allows for service and infrastructure expansions where necessary to meet the demands of growth. The recommendation also includes investments in coworker compensation and benefits to ensure the recruitment and retention of talent to deliver community services. A key recommendation in this area is implementing a living wage for all permanent full-time and part-time positions. If adopted, the City's minimum hourly rate would be $15 or an annual salary of $31,200.

The City Council held a budget workshop at a special meeting on April 16, where Payne presented an overview of his recommendation and solicited feedback from the Mayor and Council. The Council will discuss the budget at its June 11 work session, and a public hearing is scheduled for Thursday, June 13 during the regular City Council meeting.

Interested individuals can view the City Manager's recommended budget on and also in print at the City Clerk's office.