Work Session Minutes of the Town of Cary, NC

June 18, 2008

5:30 p.m.

Room 10035, 316 N. Academy St., Cary, NC

Subject: Animal issues task force appointments and Fiscal Year 2009 proposed budget

Present: Mayor Harold Weinbrecht, Mayor Pro Tem Julie Robison, Council Members Gale Adcock, Don Frantz, Ervin Portman, Jennifer Robinson and Jack Smith

The meeting began at 5:33 p.m.

Animal Issues Task Force Appointments

Mr. Portman presented the following slate of suggested appointments to the animal issues task force: Curt Kennedy, Bob Slay, Lisa Battaglia, Ruth Lanni, Judy Benrud, Jennifer Talbot, Barbara Wood, Lisa Rich, Linda Veronica Taylor, Dave Forvendel, Elaine Mangum, Deborah Fox and Kim Parker.

ACTION: Mr. Frantz moved to approve the appointments proposed by Mr. Portman; Mrs. Robinson provided the second; council granted unanimous approval.

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Budget Discussion

See Exhibit A attached to and incorporated herein for handouts that were distributed.

Mr. Coleman outlined the various budget scenarios based upon different tax rates (Exhibit A). He cautioned the council that the scenarios give an overall picture of a particular reality with certain variables. He stated the variables will change. He urged council to consider this when they adopt the FY 2009 budget. He stated what council does with the FY 2009 budget will not necessarily define future budget years.

Mr. Coleman stated one major constraint with the FY 2009 budget is the 15% debt limit. He stated Cary’s operating budget has increased from $44 million to $100 million in the past 10 years. He stated this is a reflection of past decisions made on capital projects and programmatic changes (C-Tran, signal system, new facilities, etc.), and this will consume the margin between revenues and expenditures. He stated in FY 2000 the Town had a $25 million margin; since that time about $15 million has been used for debt and the other $10 million in operating costs. He stated another constraint is we’ve created new infrastructure (primarily roads, some parks and the new town hall facility). He stated the Town’s size is a factor. He stated prior to 1998-99 most of the Town’s capital projects were funded with cash. He stated Cary can no longer do this, other than some parks and general government projects. He stated for major projects, the Town will need to depend on debt. As a result, he stated the Town will be very limited in the next four years in its capital spending of any major degree.

Mrs. Robison asked Mr. Coleman to define “major” degree. Mr. Coleman stated the Town will be limited to cash funding of up to $10-$12 million, and anything over that would be debt funding.

Mrs. Robison asked what tax increase we would have realized based on past bond referenda. Mr. Coleman stated it would be 14.5 cents at the current tax rate, which equates to about 7 cents on the proposed level of assessed tax value.

Mr. Fogleman outlined the scenarios in Exhibit A.

Mr. Coleman stated there will always be capital projects we can’t fund, and it is important to establish priorities. He suggested that council look at the FY 2009 budget, prioritize capital projects and create funding for these priorities. He stated there is flexibility for council to add priorities mid-year. He stated the major drivers other than maintenance in the FY 2009 capital budget include streetscapes, smaller projects in parks (greenway projects, Bartley Park, Cary Elementary).

Mayor Weinbrecht asked if the lower tax rate scenario will provide less funding for roads and parks. Mr. Fogleman replied that this scenario provides less cash for pay-as-you-go funding. He added that it does not impact the debt level, because we are already at the 15% ceiling.

Mr. Coleman stated growth rate is factored into Exhibit A, and indicators predict that growth will be significantly less the next two years.

Mr. Coleman stated we have an $8 million revenue expenditure issue to deal with, and it could be translated into tax rate or dealt with in other ways.

Mr. Portman suggested that if council proceeds with the streetscape project, then they recognize the significant investment and weigh it at the expense of the other projects. Instead of it being streetscape plus parks and roads, he suggested the council consider cutting back on some of the other projects as a value decision to do the streetscape project. He thinks it would provide more cushion moving forward.

Mr. Portman stated the Town has a well established policy for speed humps, etc., that requires private contributions. He proposed to look for some percentage of contribution from landowners along the streetscape--either assessment or contribution--to assure that those who will most directly benefit feel they are engaged. He stated if these property owners do not want to contribute a token amount, then council should be concerned.

Mrs. Robinson thinks this would tax the current businesses with future businesses not paying but benefiting. She does not know if small businesses in the downtown can absorb this. Mr. Frantz concurred. His biggest concern is that $7 million has already been spent on the streetscape project, and he does not think it is a responsible action on the part of the council to waste this money. He thinks it benefits the entire Town and not just downtown business owners.

Mr. Smith likes Mr. Portman’s approach. He stated past intercity visits have shown more business and industry involvement on these types of investments. He wants to seek the assistance of the chamber and the Heart of Cary to ensure total buy-in. He would like to see this as a concept in Cary’s overall approach. However, in this particular instance the Town has invested $7 million, and he questioned the fairness of changing the rules at this time.

Mr. Coleman stated about 30 years ago the Town did a downtown improvement project to install the dogwood in the intersection of Chatham/Academy Streets. He does not remember if assessment was levied on adjacent property owners. Finance Director Karen Mills will get an answer. He stated general statutes allow special tax districts to assess a portion of the cost of improvements.

Mr. Portman thinks downtown businesses will enjoy economic development incentives as a result of the streetscapes project, and he thinks tax incremental financing is a way for those who will most directly benefit from the project to contribute a token amount and have a stake in the process. He stated if those most directly impacted by the project have problem with a token contribution, then he questioned why council is constraining all other projects due to the size of the streetscape investment.

Mrs. Robison stated these are good ideas but she thinks the Town is too far into the streetscape project to make a major change at this point. She suggested the council may want to consider this approach in future years with other projects. Other council members concurred.

Mr. Frantz stated the longer this projects takes, the more expensive it becomes. He is not opposed to a business improvement district for downtown and thinks it would be good to look at it for the performing arts center. He does not think tax incremental financing is possible because so much of the property is church and town owned.

Mr. Portman thinks FY 2009 is the wrong time for a 50% increase in development spending. He asked if there is a willingness to de-prioritize other projects for a year to allow the Town to move forward with the streetscape project.

Mr. Fogleman referred to information in Exhibit A. Mrs. Robinson stated everything would have to be eliminated, and there still wouldn’t be enough.

Mr. Weinbrecht summarized that either tax rate causes us to lose flexibility with debt funding new projects. Mr. Portman stated there are two issues: (1) economy and unprecedented level of funding and (2) tax rate. He suggested voting on the tax rate to constrain the remaining budget discussions. He would like to make the tax rate decision and then adopt a budget that fits that decision.

Mr. Frantz stated citizens have approved past bonds, and voters realized the bonds might result in a tax increase. Mrs. Robinson concurred.

ACTION: Mrs. Robison moved to set the tax rate at 37 cents. Mr. Weinbrecht provided the second.

Mr. Smith stated the Town must be more aggressive at time of bond referenda so the tax increase coincides with approved debt. He can’t support raising taxes now for past bond referenda. He is opposed to raising the tax rate in these tough economic times, but he does understand the logic. He would rather have less flexibility and hold the line for the next two years. He thinks the budget is big enough to allow council to make the tough decisions. He’d like to stay with 33 cents.

Mrs. Robinson would support 33 cents if council agreed to move forward with capital projects on the list. However, she disagreed with Mr. Smith’s comments about not supporting a tax increase for past bond referenda. She stated Cary citizens have had that money in their pockets for the past few years without a tax increase to coincide with the approved bonds.

Mr. Frantz stated he believes the bond referendum ballot includes a statement about a possible tax increase.

Mr. Weinbrecht stated if we maintain a 33 cent tax rate, then there may be larger tax increases in the future. Mr. Smith stated the council cannot look too far into the future due to assumptions. He would prefer a tax increase in a future year.

Mr. Coleman stated the 37 cent tax rate allows the Town to proceed with the streetscape and other budgeted projects and provides $12 million for pay-as-you-go capital funding. He is confident that with a 33 cent tax rate the Town can do the projects in the FY 2009 budget with the cuts previously approved by council and with changing Cary Elementary from debt to cash funding (switch with aquatics) without having a tax increase next year. He stated 2011 will be more difficult, and it will depend on the economy and other factors. He stated the real question is whether the $12 million pay-as-you-go funding is worth the tax increase.

Mrs. Robinson stated Cary Elementary can be paid with cash from the aquatics project. She stated if council approves the 33 cent tax rate, then this does not provide $12 million as pay-as-you-go, and the council is agreeing to not do the aquatics project until after 2011 with another potential tax increase. Mr. Coleman concurred that it would delay aquatics until after 2011, and he does not know if it will require another tax increase. Mr. Frantz stated this scenario also delays a possible community center in western Cary.

Mrs. Robison stated she has heard from disappointed citizens because council is using aquatic funds for Cary Elementary, because they don’t want to postpone aquatics. She thinks there are potential projects (such as the western Cary community center, expanding greenways and filling in gaps) that would benefit from the flexibility afforded by a 37 cent tax rate. Mr. Frantz added that he thinks a 37 cent tax rate provides stability for as much as eight years.

Mr. Portman does not want to cut aquatics or reallocate the $15 million for aquatics to Cary Elementary. He favors a 33 cent tax rate and thinks we need to pace spending to meet revenues.

Mrs. Robinson asked if the Town would see some portion of the $12 million (for pay-as-you-go funding) available if council postpones raising the tax rate in FY 2010.  Mr. Fogleman stated the cushion would be gone by 2011. He stated this cushion would be generated if it is put in place in FY 2009.

ACTION: Vote was called for on the motion to approve a 37 cent tax rate. Mr. Portman and Mr. Smith voted “no”; all others voted “aye”. The motion carried by a vote of 5-2.  

Mr. Portman suggested prioritizing the project list. He would like to see aquatics added to the list.

Mrs. Robinson wants the intersection realignment of High House/Jenks Carpenter Roads moved to the elective list so council can consider it in future budgets.

Mrs. Robison needs more time to review the list of electives in order to make recommendations.

Mrs. Robinson cautioned against thinking about how to spend the $12 million in pay-as-you-go funding. She thinks every time a mid-year appropriation request comes to the council, then staff needs to share information about its impact to the $15 million debt ceiling and implications of how it might reduce the $12 million pay-as-you-go money.  

Mrs. Robinson is in favor of the private sector rising to the challenge if Cary is to pursue some of the projects on the elective list.

Mr. Smith suggested that a future citizen committee look at how to engage the private sector.

Mrs. Robison stated when she voted to increase the tax rate she didn’t envision a next step as putting items back on the list. Rather, she wanted the extra cash cushion. She wants to close the capital budget discussion.

Mr. Portman clarified that he doesn’t want to add projects to the list. Rather, he wants to remove projects from the list so the Town can proceed with the aquatics project.

Mr. Coleman stated at a prior work session the council removed the two major road projects from the capital budget. He stated most of the other road projects are either maintenance related or related to particular programs (i.e., stormwater, culvert repair, traffic calming, signalization, etc.). He stated Walker Street and the streetscapes are the major projects.

Parks, Recreation and Cultural Resources Director Mary Henderson stated the Town currently has design money for aquatics and will not need construction money in FY 2009.

Mr. Coleman thinks one more work session will be needed. At that meeting he will provide council a final version of the capital budget and council may discuss on the operating budget.

The meeting ended 7:26 p.m.