City faces uphill battle with budget planning

• (THOMAS WALLNER | THE GRAHAM LEADER) Mayor Alex Heartfield speaks with the Graham City Council during their meeting Thursday, May 23. A presentation was made during the meeting on the upcoming proposed budget.

Graham City Manager Eric Garretty gave an update on the proposed budget last week and with a loss of employees, needed street repairs and other challenges the city is looking to face an uphill battle as it approaches its budget workshop in June.

The general fund includes property taxes, sales taxes, fines, fees and other sources of revenue and expenditures for core city services such as police, fire, parks, streets and more. In the proposed budget at this stage in its development there is a deficit which Garretty said Thursday, May 23 needs to be addressed.

Under the current budget assumption there is a $193,031 deficit in the general fund with increases and decreases across multiple departments. This is without another $70,000 in increased software costs, cost of living expenses and an additional $25,000 requested for ambulance service by Graham Regional Medical Center.

“The bottom line is, there’s a… deficit in the general fund and I’ve run out of places to find it. One of the things that I say, and I’ve said this ever since I’ve been city manager, I do not recommend that you use fund balance to support recurring expenses, like pay, because all you’re doing is you’re just buying yourself trouble down the road,” he said. “…But where I’m stuck is I don’t know how to meet this number without cutting something else out.”

In the proposed budget at this stage the tax rate is the same of $0.635 per $100 valuation, but the Graham City Council will have to make tough decisions in the coming months if it wants to raise the tax rate, water rates and sewer rates to make up for deficits.

A one-cent raise in the tax rate provides near $50,000 in revenue for the city. Garretty asked the council if they would be willing to consider a 2% increase, which they agreed needed to be part of the future workshop set for Tuesday, June 18.

“I agree that I think it has to be on the table, but we have to do an exceptional job as a council and as a city in educating our populace at what this money is being spent on,” Council Member Brant Lundgren said. “...I think we would just have to do as good a job as we can of educating everyone as to the situation that we’re in and that we’ve trimmed the fat as much as possible.”

One place where the city does not want to cut in the budget but continue an upward trend year-over-year is in the street department. Garretty said that money is untouchable if the council wants to continue the trend of street maintenance.

“There’s $700,000 in street repairs and improvements in this proposed budget. That money is divided between $530,000 from the general fund and $170,000 from the garbage fund, which is an upward trend in what the city is investing in street repairs and improvements,” he said. “We’re trying to go up every year.”

The city received a preliminary water study report which could result in water and sewer rate increases. The report recommends two options for the city to implement with five-year annual water rate increases adjusting the base rate and volume rate.

“Unfortunately for this council, what you’re dealing with is you can’t have costs continue to increase without modifying your rates and that’s part of the reason we’re looking at the numbers we’re looking at,” Garretty said.

The last water rate increase for the city was in 2017 and the city manager said these increases are needed to invest in capital improvements to provide drinking water and sewer services for the city. In the proposed budget’s current form the water fund has a deficit of $471,805 and the sewer fund has a deficit of $133,578.

“Once again, it’s going to cost us more to continue to maintain an old (sewer) plant. You’re going to see that every budget year, that’s the way it always goes with things like this,” Garretty said. “Once again, on that side, without a rate increase we would be looking at wiping out that fund balance that I talked about that we had been gaining ground on... to balance this budget.”

Another challenge for the city is losing employees due to compensation, with exits recently from senior employees.

“We have got to stop losing people and I think the reason we’re losing people is compensation. I don’t have a study to back that up, but anecdotally that’s why they’re going to work somewhere else for higher pay,” Garretty said. “With the revenues that we have available and that compensation plan, we are in a hole. I think that hole is going to get a little bit deeper than what we have here.”

Garretty said under the new final rule from the Fair Labor Standards Act all city employees, with exception of the city manager, could be eligible for overtime pay starting July 2025.

“Currently, the city provides compensatory time to what is known as the Fair Labor Standards Act to exempt employees in lieu of overtime compensation. It is possible that department labor will leave in a requirement that allows employees to select compensatory time or comp time in lieu of overtime,” he said. “However, in this provision it says the compensatory time is one and a half hours for every hour worked similar to the overtime rate. Your overtime rate is one-and-a-half times the base rate.”

The city has four employees in the water department currently while in the collection and distribution portion of that department usually operates with a crew of six.

Council Member Jack Little said the city is at a critical stage with its employees and making sure they are able to make a wage that allows them to live comfortably.

“We’re at the point where we’re losing people, we’re running short handed (and) we’re going to be where we can’t even fix what breaks, much less move forward with enhancing what we have out there,” he said. “Let’s forget all that, it’s not fair to our people. If you are going to come work here, it’s our responsibility to make sure that you can supply your family... and we’re not there and we haven’t been there.”

Along with these issues are aging leased police vehicles which will need to be replaced in the future to make sure they are operational for the department.

The city will have to address these issues and more at the upcoming budget workshop in June before they can move onto required public postings and public hearings.

“At that (June) workshop, we really need to kind of nail everything down because now you’re getting into when you have your public hearings and when you have to pass the tax rate,” Garretty said.

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