SALISBURY — Uncertainty remains the buzz word when discussing Salisbury budget for the upcoming fiscal year, and as a result, City Manager Jim Greene Jr. presented a budget with a decrease in general fund expenditures from the previous year.

The budget keeps the property tax rate steady at $0.665 per every $100 of valuation, but it does provide for fee increases and new fees in various departments.

The total budget is $117,947,113, down approximately 1.8 percent from the prior year’s $119,746,878.

The recommended budget did include fee increases in both the stormwater and Salisbury-Rowan Utilities budgets.

Stormwater would see a 10-percent increase in the stormwater fees. The current rate is $5.29 per ERU, which represents 2,500 square feet of impervious surface area. The increase to $5.82 would represent a $0.53 increase for all single-family homes, as they are billed at one ERU.

The SRU budget has a four-percent increase in all water and sewer rates, which would represent a $2.61 increase per month for the average residential customer. As part of the fee increase request, Assistant Finance Manager Mark Drye noted that the Consumer Price Index for the South region had increased approximately 23 percent over the past five years while SRU has increased rates at approximately 11 percent across the same period.

The city is also implementing new fees in the Land and Development Department and city-wide, which Finance Director Wade Furches said are primarily aimed at developers. One of the larger fees was a 3-percent fee on credit card payments over $1,000 throughout all city departments. The fee is meant to cover the convenience fees associated with credit card payments.

“What has started to happen, especially in the development services area, is that a developer will come in and pay large amounts of fees on a card, and that could cost us thousands of dollars in one transaction,” said Furches.

The $1,000 baseline was developed with the purpose of excluding residential water and sewer customers.

The budget also included fees for various development services, such as $350 for voluntary annexation petitions, $600 for grading permits and $100 for reviews of performance guarantees.

Between the steady tax rate and the lack of growth in other revenue areas, such as the sales tax which has been projected to remain the same as last year, Greene said he made the decision to ask the city departments to bring their requested budgets in with a baseline 10-percent reduction in “services and supplies.”

“This is a very tight year. It’s a challenging year, and I very much appreciate the departments’ meeting that challenge, and we worked with them during the budget process to look at issues, look at programs and see how we can add some things back. But, we are starting the budget at about a 10-percent reduction,” said Greene.

The largest total budgets cuts came in the Transportation Department, which dropped by approximately $4 million due to a decrease in grant funding; systems maintenance, which dropped by approximately $2.7 million due to the completion of projects; and the Administration Department, which dropped by approximately $620,000 due to the deletion of a vacant deputy city manager position and the moving of two positions to another department.

“One of the overriding things that hits me however, and I think you’ve done a fabulous job, is we went to all the departments and said ‘cut out 10 percent.’ That’s a heavy lift for each of those department heads,” said Council Member David Post.

When that 10-percent baseline is added to the annual cost of living increases to wages and capital projects the city has budgeted, the total expenditures in the general fund ended up approximately $1 million below last year at $66,948,669.

“I’m just concerned that our total dollars are coming down and our wages are going up, which means something is giving there in the middle, and I hope we haven’t cut too much that we’re really going to need,” said Post, who did add that he believed taking a more conservative route was correct with the uncertainty present in the upcoming fiscal year.

In responding to Post, Greene said that the city mainly took a different approach this year in asking the departments to make the “budget cuts” first. Prior years, the departments have made their requests and then the city manager’s office cut from that.

Greene also said that the city would likely need to have more budget conversations throughout the fiscal year, rather than the mid-year review they have had in recent years. Those extra conversations would be needed because of the uncertainty in grant funding and other avenues that make it hard to nail down revenue and expense projections.

“Without a doubt, this has been the most challenging budget that I’ve worked on, a difficult budget to develop and a difficult budget to monitor during the year. Why has it been such a challenging year? There is tremendous uncertainty now. State and federal funding, grants, the economy, there is just a lot of uncertainty and that’s causing budget pressure on us and creating an environment that is difficult to predict,” said Greene.

Furches stated that the uncertainty is primarily on a national level. The Federal Reserve has cut its target rates by 4.1 percent, said Furches, meaning that the city is bringing in less interest income than projected. The projected budget has the income set at $1.2 million in the general fund, which is the same budgeted amount as the prior year but approximately $200,000 less than the actual amount.

“We know that there are more cuts coming (to the target rate). We’re not exactly sure when. The latest thing I read (Tuesday) morning was expecting a 25 basis point cut in September, which has now been pushed back from June. Will they cut in June, will they cut in September? That’s part of the uncertainty that Mr. Greene has talked about,” said Furches.

Another point of uncertainty concerned the sales tax, where Furches said that the potential for an economic recession fueled by tariffs caused the city and state to budget for no expected increase to the sales tax.

“A lot of economists are starting to say the recession is coming. True or not, I don’t know,” said Furches.

As for state and federal funding and grants, the city has already felt the pressure of changing federal priorities when it lost an anticipated $22.5 million in grant funding due to the cancellation of the FEMA BRIC grant. Drye said that they are still working to identify alternative funding sources for the relocation of Salisbury-Rowan Utilities’s raw water pump station and related connected facilities on the Yadkin River due to repeated flooding and hazardous access conditions at the existing station on Hannah Ferry Road

That uncertainty and 10 percent reduction across departments left city management with some tough decisions, said Greene. A total of 43 new positions were requested by the departments along with multiple capital expenditures.

Of those 43 positions requested, 22 were included in the recommended budget including six firefighters and a fire inspector, two police officers and several new positions for the Land and Development department.

However, the budgeting of those six new firefighters plans for the reception of a Staffing for Adequate Fire and Emergency Response (SAFER) Grant. Greene said that if the city does not receive that grant there is no plan B to pay for those positions.

Mayor Pro Tem Harry McLaughlin said that he would like to see a backup plan in case Salisbury does not get the grant, adding that he understood Salisbury was a growing city with a need for additional firefighting resources.

“I know we’ve been short some firefighters so I’m curious to see what that would be,” said McLaughlin.

Several large, one-time capital expenditures were also included in the recommended budget, with the funding coming from a $1,951,789 transfer from the city’s available fund balance. Those capital expenditures include:

• $750,000 to demolish the Fisher Street bridge
• $140,000 to stabilize the Bell Tower
• $211,644 for roof and HVAC repairs on multiple city buildings

In order to update the city’s governments as well as eliminate some vacant positions, providing further budget savings, Greene said that they made the decision to restructure several departments.

The Communications and Diversity, Equity and Inclusion departments are being combined into the Community Engagement Department, which will be headed by DEI Director Anne Little. The change will allow them to remove the vacant director of communications position as well as “centralize our outreach, education, input and storytelling functions,” said Greene.

The Downtown Development Department is being changed into the Economic Development Department, which will still be led by Downtown Development Director Sada Stewart Troutman. The change is meant to signal that the city is committed to “prioritizing economic development and job creation for all areas of our community,” said Greene.

The budget also paves the way for the city to bring recycling services in-house, with the addition of two new positions for public works. Furches said the positions are only funded for the final quarter of the year, so that the employees can begin onboarding and learning routes and other issues from the current provider Republic Services. The start-up costs will also include the purchasing of equipment and recycling cans, totaling approximately $845,000.

Following the presentation of the recommended budget, the members of the city council agreed to set a special budget workshop meeting for 5 p.m. for next Tuesday, just before the regularly-scheduled meeting.