Budget presented; council hears public concern about proposed 9% water/sewer increase and other impacts

City staff presented a recommended FY 2025–26 annual operating budget and opened a public hearing on May 19. The recommended budget totals approximately $93.18 million (an increase of about 8.5% or roughly $7.3 million over the FY25 budget). Staff described the budget as balanced without using fund balance and outlined major items and assumptions, including a proposed property tax rate recommendation of $0.69 (the presentation noted a revenue‑neutral rate of $0.5632) and a recommended 9% increase to water and sewer rates.

Finance staff and the city manager highlighted key investments in the proposed budget: a pay‑classification (compensation) study and COLA adjustments, three new positions (two in general fund, one in stormwater), a 1% increase to employee 401(k) contribution (to 5%), $1.2 million in street repaving funding and $3.45 million in equipment purchases, and a recommendation by consultant Stantec for a 9% water/sewer rate increase intended to support utility capital needs. Staff said the city must invest in water and wastewater system capacity and capital replacement (including a planned expansion of treatment capability) to support growth and economic development.

Public comment: Fifteen members of the public urged caution on raising utility rates and property taxes and asked for more transparent accounting of prior rate revenue and where it has been spent. Several speakers cited data from the North Carolina State Treasurer’s public financial records and argued the city’s enterprise (utility) fund working capital has risen substantially in recent years and therefore sought justification for additional rate increases. Speakers repeatedly cited hardship for low‑income and fixed‑income residents, noting prior rate increases and the cumulative burden of city and county taxes, and called for alternative funding approaches, slower phasing of increases, or greater public reporting on utility capital spending. Speakers also raised concerns about street conditions and asked that the city prioritize pavement funding and demonstrate how prior utility increases were spent.

Council discussion: Council members acknowledged public concerns and requested additional follow‑up from staff. Several councilmembers asked staff to return with scenarios that might restore a previously offered employee holiday bonus and to explore options for phasing compensation adjustments so lower‑paid employees receive priority. Councilmembers also proposed a work session to review the budget in more detail and asked staff to prepare additional materials explaining the utility fund balance, capital plans, and how rate revenue is being used.

Action taken: No final budget vote was taken at the May 19 meeting; the hearing was for information and public comment. Council directed staff to follow up with more detailed information on utility fund balances, capital plans (including the wastewater treatment expansion timeline and costs), and options for employee bonuses and paving funding.

Why it matters: The proposed budget funds several operational and capital priorities — public safety staffing and equipment, pavement maintenance, utility capital needs, and employee pay studies — while proposing a tax and utility rate structure to balance those investments. Public commenters urged the council to prioritize transparency and to seek alternatives to shifting additional burden onto low‑income households.

Next steps: Staff to prepare follow‑up material and to schedule a council budget work session; council will consider adoption of the budget at a later meeting after follow‑up and deliberations.