Durham projects $12.4 million general‑fund variance in Q4 report; resident urges clearer CIP stoplight

Tim Flora, director of finance, told the Durham City Council on Sept. 4 that the city's unaudited fourth‑quarter financial report (through June 30, 2025) shows a projected overall budget variance of $12.4 million and a plan to use roughly $9.5 million in fund balance to close the gap.

Flora said general‑fund expenditures are projected to be about $14.8 million under budget while revenues are roughly $2.4 million under budget, producing the net variance. He told the council the city spent roughly $305 million from the general fund and that 77% of those expenditures were for personnel.

The report showed $295 million in total year‑end revenues; property taxes (52%) and sales tax (35%) were the largest streams. Flora and Christina Reardon of Budget & Management Services said sales tax receipts were about $2.8 million below the adjusted budget, and timing and refund activity by the North Carolina Department of Revenue contributed uncertainty in the final month. Reardon described nonprofit refund timing and occasional negative refund adjustments as drivers of volatility in the sales‑tax number.

Why it matters: council members and staff said the pattern of spending more than revenues in recent years has drawn down reserves the city built up earlier in the decade. Flora said the city is "almost to the point" of having used the reserves accumulated in prior surplus years, and urged caution in future budgets.

Flora reviewed the enterprise funds and other major funds. Highlights included a small net revenue shortfall in the water and sewer fund after loan proceeds and investment income adjustments; a projected $2.6 million negative variance for the transit fund tied in part to planned service expansions delayed by vehicle and maintenance constraints; and an overperformance in stormwater revenue. Parking operations remain revenue‑insufficient and continue to be subsidized by debt service, Flora said.

Public comment and CIP accountability: resident Dale McKeel used his three‑minute public comment slot to criticize the quarterly "CIP stoplight" summary that accompanies the financial packet, citing multi‑year schedule slides for trail projects including the Third Fork Creek Trail phase and the downtown rail trail. McKeel noted several projects appeared to be at roughly 65% design for years while the stoplight still showed "green." He asked council to improve the stoplight report and to address chronic delays on trail, bike and sidewalk projects.

Budget staff acknowledged shortcomings in the current stoplight report and said the system that produces it is technically obsolete. JJ Scott, assistant director of Budget Management Services, said staff will replace it with a clearer report for the first quarter of the new fiscal year, with more explicit definitions of red/yellow/green and a stable original versus expected delivery date. General Services staff and the deputy city manager described quarterly internal project reviews that are now underway to identify barriers and speed delivery.

Flora and Reardon answered council questions about the fund balance, the carryover/carryforward process for encumbrances and projects, and the timing of more detailed fund‑balance slides. Reardon said staff purposely held final fund‑balance calculations for the carryover presentation (to be presented in a later work session) so numbers would reflect late invoices, accruals and audit work. Flora said he expects the external audit to be complete by Oct. 31 and that Q4 numbers remain unaudited.

Ending: Council members praised staff for the report, expressed concern about the fund‑balance trajectory, and said they will press for deeper budget work ahead of next year's process. Budget staff said they will provide an improved CIP report and the carryover/fund‑balance materials at upcoming meetings so council can decide next steps.