Capital Spending Program Prioritization
On December 15, 2009, the Town Council approved staff recommendations for adjusting the government’s bricks-and-mortar priorities during these tough economic times; the action is designed to keep the most critical projects moving forward while limiting debt and keeping taxes as low as possible.
Under the new prioritization, all of the Town’s 384 capital projects were placed into one of three categories:
- Continue - Project is continuing as scheduled.
- Delay - Project is not moving forward as scheduled. All appropriations remain in the project, but all project spending is on hold until further direction is received from the Town Council. Work can continue by Town staff (design, planning, etc.) but only where the work does not spend project funds or obligate the Town to additional project spending.
- Postpone – Project is not moving forward. All appropriations are being removed from the project, and the project is closed. The project may be submitted for reconsideration through the annual capital budgeting process where it will compete with other future capital needs.
As of July 2010, the Town now has 339 capital projects moving ahead and 14 are delayed. The 39 postponed projects have been officially closed.
BACKGROUND
Reviewing and reprioritizing projects came at the direction of the Town Council in summer 2009, and the effort included several work sessions. At the capital project work session on October 13, 2009, staff provided a high level summary of the status of all 384 active capital projects, which staff placed in one of five categories: [nearly] Complete, Mandate, Maintain, Efficiency, Higher [service level] or New. Staff also presented funding forecasts including tax rate implications through Fiscal Year 2020.
Immediately following and as a result of the October 13 work session, the 125 general capital projects that had been given a classification of Maintain, Efficiency, Higher, or New were put on hold to limit additional expenditures while staff began the prioritization effort; the remaining 259 Complete and Mandate projects were allowed to move ahead. Then at the December 15, 2009 work session, staff returned to the Council with recommendations on the remaining 125 capital projects, recommendations that the Council adopted unanimously.
- Public safety and preserving and protecting existing infrastructure were important goals of the staff when developing their recommendations on project priorities.
- Other considerations included reducing and/or eliminating the use of debt for existing projects and assessing the out-year funding needs of a project: larger funding needs for nonessential projects typically lowered a project’s ranking.
- In contrast, many annually funded projects such as sidewalks were recommended to continue since they are in various stages of design and close to moving forward. And projects with approved grant funding were generally favored.
ECONOMIC DOWNTURN
The national economic recession contributed to a slowdown in general fund revenue growth rates. If more typical average annual growth rates of 5% in general fund revenue sources had occurred in FY 2009 and FY 2010, the Town would have been about $13 million or 10 percent better off in FY 2010.
In addition to minimizing additional debt borrowings at this time, approximately 30 vacant positions were put on hold during FY 2010, with many of these positions having occurred through attrition over the last couple of years in development driven areas. With the adoption of the FY 2011 budget in June 2010, 31.25 positions were officially removed from the authorized staffing document.
Scott Fogleman, Budget Director
(919) 462-3911
scott.fogleman@townofcary.org
