Mebane work session narrows FY26–27 budget options; council signals preference for split or 2¢ tax increase

City Manager Richard White opened a work session of the Mebane City Council to review the manager’s recommended FY26–27 budget and alternative scenarios, asking staff to prepare final materials for a June adoption vote.

Finance Director Daphne Schwartz told the council she projects revenues over expenditures of about $4,600,000 as of June 30, 2026, but said several purchase orders will likely roll forward (notably a 7-mile farm PO and a stormwater/street-resurfacing PO estimated together at roughly $580,000 and about $553,006 in other rollovers). After accounting for those obligations and a set of payroll vacancies and deferred debt payments (including a recently delivered fire engine whose debt service begins next year), Schwartz said the amount likely available would drop to about $1.1 million.

"I am estimating to be approximately 4,600,000," Schwartz said, summarizing the revenue-over-expenditures estimate before rollovers. She cautioned that county property-tax data (from Alamance and Orange counties) are often incomplete early in the process, and appeals or late filings can change final tax revenue collections.

White outlined three budget pathways staff prepared for council consideration: a one-cent increase, a two-cent increase (described in staff materials as 1¢ to general fund and 1¢ to a capital reserve), and a no-increase scenario. He described the kinds of cuts staff would pursue under a no-increase option—repairing rather than replacing equipment, delaying some capital projects (including potentially the fire station or a public-works shed), and hiring fewer positions.

When asked about homeowner impact, White said a two-cent increase would equal roughly a $79 annual increase on a $400,000–$500,000 house. "It will be a a $79 would be the increase with the 2¢ tax increase," he said.

Council members pressed for more clarity on fund-balance accounting and how purchase-order carryforwards affect the appearance of year-to-year gains. Schwartz reiterated that audited fund-balance totals differ from available cash when outstanding purchase orders and carryforwards are counted, and said auditors reported a prior-year net audit gain of about $2,500,000 that converted to a roughly $985,010 increase after rollovers.

Council debate focused on balancing short-term operating pressures (staffing, rising insurance and fuel costs) with long-term capital needs. Members noted that building a fire station or staffing new public-safety shifts entails multi-person hires and ongoing debt service; staff said the capital-improvement plan (CIP) shows both one-time purchase amounts and the debt proceeds used to finance those purchases, but that the relevant recurring cost is the debt-service payment.

Staff also updated council on the Downtown Mebane Development Corporation (DMDC), saying DMDC’s revenue mix is shifting toward more non-city contributions (membership programs, event registrations and sponsorships) and that the organization is working to become more self-sustaining. "They're relying less on the city as they move forward," staff said.

On council compensation, White said his proposed budget included increases (10% for council members, 15% for the mayor pro tem and 20% for the mayor). Council members disagreed about adopting a one-off raise during a budget year that might include a tax increase; several urged development of an ongoing policy (COLA or inclusion in the next compensation study) rather than a stand-alone adjustment.

No final vote was taken at the work session. Council members signaled a preference from several members for the split 1¢/1¢ option or the full 2¢ package but left a final decision for the regular June meeting, directing staff to prepare the budget and associated ordinance language for that vote.