By Adam Powell
CHAPEL HILL — The best route to regain ground on funding town programs was the hot topic at Chapel Hill Town Council’s first budget workshop of the season.
The elected officials heard about a series of current and long-range budget matters from town staff during the March 15 meeting.
Interim Town Manager Chris Blue indicated to the Town Council that 2023-24 is seen internally by town staff as “the year of the general fund.”
“The year of the general fund is our way of thinking about supporting the many, many employees who provide our basic fundamental operational services,” Blue explained.
The theme among the majority of the department heads was that Chapel Hill was going to have to figure out a way to raise revenue in the upcoming fiscal year not only to keep up with existing departmental costs, but also to attract and retain staff.
Transportation Director Brian Litchfield explained that while many of Chapel Hill’s peer communities in the region such as Durham, Raleigh, and Greensboro start around $19 dollars per hour, similar to Chapel Hill, those communities tend to move their pay scale more quickly, up to approximately $25 to $27 dollars per hour. Litchfield said some town employees have to work up to 20 years before starting to reach that pay level.
“We have a critical need to recruit and retain staff,” Litchfield said. “We’ve made significant progress with the pay plan that you all approved and adopted for the current year. It’s fantastic, but we still have a lot of work to do, especially with our frontline team members. We’re generally competitive with starting wage, although the school district announced they are going to around $20 dollars an hour to start.”
“We’ve got a lot of work to do to be able to retain our staff,” he continued. “We’re in a very competitive market, so folks that have skills are being recruited and sometimes leaving for other places. Not for promotions, or not for other sorts of opportunities, but simply because they have a skill, and someone is going to pay them more than we are to do that.”
Finance Officer Amy Oland went through two potential funding scenarios staff created after consulting with council members at the previous budget retreat.
In the first, described as a “catch up” scenario, Oland indicated that Chapel Hill would have to raise an additional $4.1 million in revenue in fiscal year 2023-24. Taking in that amount of money would require a 4-cent property tax increase and would allow the town to catch up on staffing, operations, facilities, fleet, fire and affordable housing expenses. This option would call for four more phased-in property tax increases of 1.5 percent each year from fiscal years 2024-25 to 2027-28, which would raise an additional $6.5 million in revenue over that period.
“The approach when putting this scenario together was to provide some level of funding for each of the priority areas that we had addressed and shared with Council,” Oland said. “The key takeaway for this scenario is that four cents doesn’t get us ahead. But it does allow the town to begin catching up.”
Oland also presented an “entire backlog” scenario, which would fully address and fund all areas of need addressed in the town’s long-term budget planning. This scenario would call for a 7.5 cent property tax increase in fiscal year 2023-24 and result in a $7.2 million spike in revenue. From there it would phase in more increases: 4 cents in fiscal year 2024-25, 2.75 cents in 2025-26 and 2026-27, and a final 2.25 percent increase in 2027-28.
“Council asked us to present what it would take to address the entire backlog that we have identified in the five-year budget strategy, and to actually begin getting ahead,” Oland explained. “This is one way we could address that entire $30.4 million operational backlog. We know this is a lot. But our needs are big. That being said, we know this cannot all be tackled at one time. So the focus for now needs to be on fiscal year 2024,”
The council and staff spent well over an hour debating the merits of department requests, with most council members seeming to lean towards the “catch up” scenario, with several noting the significant increase in the backlog scenario could be too much for the community to handle.
“We’re talking fairly significant tax increases. And I think that’s just really hard for many people to swallow in a single year,” council member Michael Parker said. “I think the ‘catch up’ scenario, generally speaking, is where we probably need to wind up. It took us a lot of years to get here, and I think we have to recognize that it is going to take some years to un-get here. So I think we’re going to have to look at it from that perspective.”
One theme was constant in the back-and-forth: There is no way for Chapel Hill to get around raising revenues in future budgets in order to maintain the town’s current and future needs.
“We’re obviously talking about a tax increase coming up,” Mayor Pro Tem Karen Stegman said. “First, I want to thank you. Sometimes the so-called hard truths are kind of kept from council, and you certainly have not done that, which is good for us to understand the situation we’re in. We’re going to need to be able to explain why we’re in this situation to the public when we explain that we are likely to increase their taxes. What do we say? How did we get here?”
Blue said prices have gone up while the budget has remained largely the same year after year.
“There were a series of years where we just stayed as lean as we possibly could, and didn’t talk about the hard truths. And now they’ve caught up to us,” Blue said.
This story has been updated to properly introduce Brian Litchfield and Amy Oland.
Adam Powell is a reporter on local news and sports. A 2001 graduate of UNC-Chapel Hill, Powell has served as managing editor of multiple local publications, including the Mebane Enterprise, News of Orange County and TarHeelIllustrated.com. An education communications professional and political researcher, Powell is the author of four books and lives in Mebane with his wife and two children.