City Manager Tom Bonfield’s proposed budget could give Durham residents new lights at two parks’ baseball fields, air-conditioning fixes at two indoor pools, $500,000 worth of sidewalk repairs and a number of other upgrades and project starts around town.
Those are on a to-do list for capital improvements, totaling $11.7 million from the $170.2-million general fund that pays for day-to-day city operations.
Aside from $760,000 worth of new sidewalks, next year’s list does not include any of the 10 big-ticket projects City Council members gave priority rankings to earlier this year.
With the current property-tax rate and financing formula for capital improvements, the council’s top three projects – high-priority new sidewalks ($15 million), infrastructure for light-rail stations ($24.8 million) and a multi-field athletic complex ($15 million) – could get done within the next 10 years.
Besides those three, capital improvements through fiscal 2024-25 could see a new fire station, bridge repairs, dirt streets paved, more sidewalks repaired and assorted other projects.
But they don’t include such talked-about projects as:
▪ A new aquatics center (estimated $25 million);
▪ A new downtown parking garage ($4.6 million);
▪ Converting the Downtown Loop to two-way traffic ($12 million).
Those, among other capital projects, could be accomplished within the next 10 years by adding a dedicated penny to the property-tax rate, according to projections the council saw during this week’s city budget meetings.
Assistant Budget Director John Allore cautioned that those projections are highly speculative at this point, and the more ambitious list still leaves out an estimated $78 million worth of new greenways, recreation centers, fire stations and other projects one city department or another, and/or citizens, have asked for.
Debt and taxes
The city’s ability to pay for capital projects depends on its capacity to borrow money. Finance Director David Boyd has suggested, and the City Council has supported, dedicating a set amount of the property-tax rate to be used for capital projects, debt service or direct spending.
The city’s current property-tax rate, which remains the same in the proposed 2015-16 budget, is 59.12 cents per $100 of property valuation. The proposed budget dedicates 13.02 cents of that rate to debt service, enough to finance about $9 million a year for new capital improvements not covered by other dedicated city revenue, such as parking fees and bonds, or money from state and federal sources, such as road-improvement grants.
Another cent on the tax rate, or 14.02 cents for debt, would allow for about $20 million a year, according to finance and budget department projections. The penny might have been available, except that the proposed budget takes one cent away from debt service to cover revenue lost by the state legislature’s abolition of municipal business-license fees.
So, the city leadership is left with decisions to make on which projects it – and the taxpaying public – most want to get done, and how to pay for them.
“I do think there is a lot of demand in the city and a lot of interest in greenway trails. ... We ought to be thinking about that and trying to get them on this list,” Councilman Steve Schewel said.
“I’m hearing a lot about changing the Downtown Loop,” said Councilman Eugene Brown.
“I’m hearing a lot about garages,” said Mayor Bill Bell.
Not this budget
Ultimately, as Bonfield pointed out, the city’s capacity to pay for capital improvements depends on the taxes the council is willing to raise.
Currently, the city has a fund balance, or cash reserve, well above its target level, which could be tapped for some projects. Boyd, though, raised a point:
“I wouldn’t be doing my job if I didn’t caution you about going to that well,” he said. “It is something our (credit) ratings agency friends look at very closely – are you building it or are you using it?” The better the city’s credit, the less it costs to borrow money.
Also, Boyd said, figures projected out in the 10-year capital project plans are just estimates, subject to inflation, construction-cost changes and other contingencies between now and the times money is actually to be spent.
“In longer term capital planning ... we have had to make some placeholder decisions. Once past 2016 and ’17, some numbers are just that, placeholders,” Boyd said.
“We need to find time as a council to talk about what we want to see funded,” said Bell, who said he favors a bond referendum for particular capital projects over raising the tax rate.
“Everybody doesn’t want swimming pools,” he said.
Bonfield pointed out that, looking ahead, there are more costs and revenue factors to take into account, such as the county-wide property revaluation next year and requests for money to hire more firefighters and police officers.
“These are things we need to keep working on,” Bonfield said, “but we won’t get there with this year’s budget.”
“E-Town Hall” Monday
A public hearing on the budget proposal, including an online “E-Town Hall” session, is scheduled at 7 p.m. Monday during the regular City Council meeting.
WRAL television reporter Ken Smith is moderator for the event, which the city is going to televise on Time Warner Cable channel 8 or 97-5 and AT&T U-verse channel 99, and live-stream at nando.com/1as.
During the town hall, council will respond to residents’ questions previously submitted.
Copies of the proposed budget are available at nando.com/1ao. Residents may also review hard copies in the City Clerk and budget offices at City Hall.
A council vote to approve a final version of next year’s budget is scheduled June 15, its last regular meeting in the current fiscal year. State law requires local governments to adopt balanced budgets before July 1.