RALEIGH — The City Council adopted a $697 million budget on Tuesday and afterward decided that City Manager Russell Allen can keep his $10,000 raise.
The budget, which will take effect when the new fiscal year starts July 1, keeps Raleigh's tax rate at 37.35 cents per $100 of property value. The total budget is up 8.4 percent, making Raleigh one of the few municipalities in the Triangle not to see its budget shrink in the midst of the recession.
As for Allen's raise, Mayor Charles Meeker emerged from a closed session to declare that the council would stick by its much-criticized decision last month to increase Allen's salary from $210,000 to $220,000.
"The council feels that it should honor the contract that has been signed," Meeker said.
The major budget decision before the council on Tuesday was how to pay for $1.85 million in spending that council members added to Allen's proposed budget.
The money will be used to spare employees from some increased health care costs and to keep funding levels flat for the arts and a handful of programs that serve the homeless, the disabled and others in need.
To pay for this, the council voted 7-1 to adopt Meeker's plan, which calls for a $1.85 million reduction in the $29 million the city was scheduled to put toward debt repayment next fiscal year.
A competing proposal put forward by Councilman Russ Stephenson would have eliminated all merit raises for city employees for six months, with the council to revisit the decision again in January.
Stephenson's plan drew opposition from fellow council members and city employees.
"We were somewhat baffled by Russ Stephenson's proposal and didn't think it really made much sense at all," said Rick Armstrong, president of the Raleigh Police Protective Association, which represents 500 officers.
Stephenson voted for Meeker's proposal Tuesday, though he said he remains concerned about the council's decision to borrow against the city's capital reserves.
Allen said the $1.85 million reduction in reserves would not undermine the city's ability to manage existing and future debt, as long as it was a one-time event and the council replaced the money within the next several years.
Armstrong said his members were largely satisfied with the final budget, which allows some employees to receive merit raises of as much as 4 percent.
Although Raleigh has increased the size of its budget, spending in the city's general operating fund will drop by $1.97 million. The budget eliminates 85 vacant positions and reduces operating hours and maintenance at parks, pools and other facilities.
Funding for the arts will remain at $4.50 per resident, or at about $1.71 million. Allen had proposed reducing it to $4 per resident, a move that would have saved the city $190,000.
Councilman Philip Isley, the only member to vote against the budget, said he would have supported Meeker's proposal had the arts funding gone down to $4 per resident.
Isley said he is a supporter of the arts but felt that in the current economic crisis the money could be better spent elsewhere.
Isley, the only Republican on the council, has voted against the last eight adopted budgets.
"I kept my streak alive, I guess," he said.
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