By James Kiefer
Initial consideration of money and who gets it made up the majority of discussion at the Chapel Hill Town Council’s work session Wednesday. Besides getting a high-level overview of Town needs and upcoming expenditures, it was a moment for the three newest council members to weigh in on the 2023 fiscal year budget.
In an initial draft, Town Manager Maurice Jones laid out the 2023 Fiscal Year Budget. Estimated at approximately $120 million, approximately 55% of the Town budget comes from property taxes and sales taxes; both revenue streams grew for Chapel Hill in the fiscal year.
Business Management Director Amy Oland noted that property tax accounts for about 47% of the budget, and setting that rate gives council members some hefty sway over cash flow.
“It is really the one revenue that the council has the power to set that can make a significant impact to the revenue we generate,” Oland said.
She further noted that the Town saw roughly a 1.8% increase in its recent assessed land tax valuation and that every 1 cent increase in the property tax rate generates roughly $958,000 in revenue. Other areas of growth included a 6% increase in sales tax revenue and a nearly 67% uptick in occupancy taxes, reflecting the hospitality sector’s ongoing recovery from the pandemic.
As for gaps, Oland explained that there is a $350,000 deficit shared between drops in parks and recreation fees and utility sales taxes. Jones added he expects the town to invest over $3 million in the next five years on staffing needs; two important hires he noted are a grants administrator to identify funding opportunities outside of taxpayer wallets and a compensation analyst.
He also said the Town is expecting to receive $10 million from the American Rescue Plan Act (ARPA) toward one-time expenditures, including items like maintenance for the Parks and Recreation Department.
“There are some big-picture items and some big-ticket items that we think we can address through ARPA instead of trying to address [everything] through our annual budget,” he said.
Councilmember Jessica Anderson asked why the Town is considering hiring a compensation analyst when it recently conducted a pay study for municipal employees. Jones responded that a full-time employee would cost less than paying large sums on studies, which often come late when addressing pay gaps. He added that the employee could also serve additional functions for human resource staff.
Councilmember Paris Miller-Foushee added increasing stipends for council members should also be a priority, saying it shouldn’t be a struggle for elected officials to afford to live among their constituents.
“Equity has to lead that conversation,” she said. “Folks have to live in the town in which they serve.”
Where dollars hit the road
Also on the subject of funds, transit director Brian Litchfield offered a snapshot of the operating costs for the state’s second-largest transit system. He explained that the bulk of the system’s $26.3 million budget comes from the local municipalities and UNC. Chapel Hill contributes around $5.5 million toward operations, while Carrboro is expected to give around $1.9 million; the university provides the largest funding slice at over $8 million.
The department owns 113 buses. Of these, 93 are large, fixed-route 40-ft. buses and the remainder are on-demand small buses that serve the handicapped and infirm, according to Litchfield. He said the last time the department bought buses was in 2020 when it acquired three electric vehicles. The department hasn’t purchased any new vehicles since 2020 due to the pandemic’s financial constraints on municipalities and the reductions in service due to health concerns.
That delay has placed quite a strain on the transit fleet. Litchfield said he anticipates the Town needs about 25 new buses to meet performance demand.
“Every year we need to replace between six and seven buses, and that number jumps up really fast,” he said, adding there are currently eight eclectic buses on order.
Litchfield explained that typically when the transit department makes vehicle purchases, which can run into the millions of dollars, it puts in place a debt repayment structure with Chapel Hill, Carrboro and UNC. As the buses are paid down by yearly contributions from local partners, the department also seeks out state and federal grants to help offset costs.
Litchfield added that since the Town still needs to acquire over a dozen buses, it should start considering funding options instead of relying on grants to fill the financial hole. In addition to fleet replacement, he further stated the transit facility needs roughly $435,000 for capital repairs.
“We’re basically at the max for what we can do at our [facility] today,” he said.
On top of that, he said while the Town increased wages for bus drivers to over $18 an hour, approximately $40,000 per year still isn’t enough for many employees to live in Chapel Hill or Orange County. He encouraged the Town to look into more pay equity and affordable housing opportunities for staff.
The council, which has several more budget discussions planned for the coming months, is expected to vote on approving the budget June 8.
Other business handled during the meeting included:
- The council heard an update on ongoing transit-oriented development planning and the Town’s Unified Development Ordinance.