Proposed Durham city budget creates $5M COVID-19 recovery fund, holds line on taxes
.jpg "Screen shot from City Manager Tom Bonfield’s budget presentation at a virtual City Council on Monday, May 18, 2020.")
Property owners won’t face a tax increase and city employees won’t get raises in a budget the Durham city manager says prepares for revenue losses and unknown expenses from the coronavirus pandemic.
The unprecedented pandemic — Durham County passed 1,000 confirmed COVID-19 cases Monday — forced officials to overhaul the proposed budget for the coming fiscal year at the last minute. They had initially included a 5% pay increase for city employees and a property-tax increase to support affordable housing.
“Of course our world, country, state and community have almost overnight been rocked by the ravages of COVID-19,” City Manager Tom Bonfield told the City Council during a virtual meeting Monday night.
“While our values and aspirations have not wavered, our immediate attention and budget priorities have had to shift to COVID response, recovery and restoration along with routine service delivery,” he said.
Bonfield’s recommended budget also eliminates the anticipated tax-rate increase to begin paying for the $95 million affordable housing bond that voters approved in November. The delay won’t affect projects but the tax increase to pay for them could be slightly higher than planned when implemented, he’s said.
The overall proposed $504.3 million budget for the 2020-21 fiscal year that starts July 1 marks a 5.5% increase over the current year. It includes a $5 million fund to help businesses and others affected by the pandemic.
About $24 million of the $26.5 million increase in the budget is related to debt refinancing, Bonfield said.
Tax rate, sewer rates and road constriction
The current city property tax rate of 53.17 cents per $100 of assessed property value generates a city tax bill of about $1,229 per year on a home valued at $229,246, Durham’s median house value, according to the Durham County Office of Tax Administration.
Water and sewer rates will increase about 2.9% for the average customer. Bonfield has said officials tried to avoid an increase but need to move forward with capital improvements to avoid significant increases in future years.
The $214.6 million general fund, which pays for core city services, would decrease nearly 1% under the recommended budget.
The spending plan uses $7.2 million in general fund savings to cover anticipated revenue losses of about $7 million, and also achieved $12.6 million in savings through reduction in travel and conference budgets, fuel savings and suspended programming.
The budget also reduced funding for street paving from $10 million to $6 million.
“This limited level funding is not sustainable for more than one year,” Bonfield said.
$5M response and recovery fund
In addition to potential federal and state relief money, Bonfield proposed a $5 million COVID-19 response and recovery fund.
City officials can’t anticipate the pandemic’s full financial impact, but they do expect to help small and disadvantaged businesses, community nonprofits and families.
“And to cover increased costs associated with sanitation and space modification in city facilities,” to enable physical distancing, Bonfield said.
City officials plan to discuss funding for small businesses at the council’s Thursday work session, he said.
Employee pay increase suspended
Suspending employee raises was “the most anguishing and difficult” recommendation Bonfield had to make in the budget, he said.
“Our employees have been the backbone of every success I and we have enjoyed for the last many years,” he said.
Over 1,250 employees continue to provide front-line services to the public, exposed to dangers that most people have been told to avoid, he said. Another 700 pivoted to provide services from their homes.
The city has provided premium pay to employees who have been on the front line, and additional leave benefits to all employees.
But Bonfield couldn’t find the $7 million needed to provide pay increases, he said.
“I am confident that the City Council will continue to support future opportunities to support and recognize the incredible work of our employees in the brighter days that I know lie ahead,” he said.
A virtual public hearing on the draft budget is scheduled for June 1 with final approval set for the June 15 City Council meeting.
Durham County Manager Wendell Davis has also proposed a budget without a tax increase for the new fiscal year. His recommended plan provides no raises for county employees and gives the Durham Public Schools just over a quarter of the nearly $19 million increase in local money the school board requested.
This story was originally published May 18, 2020 at 9:32 PM.
