Budget 101
Most, if not all, municipalities operate with an annual budget that runs from July 1 to June 30 of the following year. It’s called a “fiscal year.”
A fiscal year is a period of time lasting one year but not necessarily starting at the beginning of the calendar year. Countries, companies, and organizations can start and end their fiscal years differently, depending on their accounting and external audit practices.**
** Plagiarism alert. I stole this from a website somewhere.
The July-June model is not set in stone. For instance, many schools use an August-July fiscal year to encompass the entire school year. I worked at a land trust and we used a fiscal year of January-December to encompass the entire growing season. (We later changed it to match up with state organizations.) It seems like a good idea to avoid having important budget meetings around the holidays, but that doesn’t appear to enter into the thinking of most organizations.
Anyway, the Carolina Beach fiscal year starts on July 1 and runs until June 30 of the following year. The fiscal year is referred to by the years it operates. Therefore, the budget will be referred to as the 23/24 Budget. We’re currently about halfway through the 22/23 budget.
Staff and Council start planning the next budget in January with a citizen poll, open house and two days of budget retreat. There will be multiple meetings dedicated to it, with a final budget approved in June. (State law requires that the budget be adopted by June 30.)
General Fund vs Utility Fund
The General Fund includes all of the basic operating expense of the town… police, fire, parks, employees, road work, etc… The revenue sources are property taxes, sales taxes, parking revenue, road taxes, Room Occupancy Taxes (ROT) and others.
The Utility Fund just focuses only on basic utilities… water, sewer and stormwater management in our case. The revenue sources are mainly the fees you pay for the services. The important thing about having a utility fund is that we cannot hide the cost of bringing you these services.
If your water bill goes up, it’s not because we decided to build a park or hire another fireman… it’s because the costs associated with bringing you the service have gone up. We are not allowed to transfer money from the General Fund to the Utility Fund, because that would obscure the cost of providing water/sewer/stormwater.
The Budget Retreat
Recently we started the process of creating the 2023/24 Budget. We polled the citizens (lots and lots of responses which we appreciate) and we held a budget open house (not well attended… your loss if you didn’t go.)
Then we had our “Budget Retreat.” Two full days (January 26 and 27) of discussion at a location away from town hall. (In this case the little restaurant down in Fort Fisher.) The group consisted of the Town Council, Town Manager, Town Attorney, all of the department heads and an outsider to help guide the conversation.
It’s an official meeting and while we’re free to vote on specific issues, we don’t. The idea is to have free wheeling discussions, build consensus and give staff direction as they create the next budget. To a government nerd like me, it’s quite interesting.
Our Priorities
This is our second year together, so we aren’t starting from scratch. Last year we spent the first day developing a strategic plan which laid out our priorities and corresponding objectives. This year is a continuation of that. These are our priorities in no particular order:
- Infrastructure
- Communication
- Quality of Life
- Fiscal Responsibility
Infrastructure
Infrastructure… This is the biggest enchilada of them all. CB is growing and the pressure is on to ensure quality water, sewer and stormwater services going forward.
The headworks (the system of sewer lines that connect to the sewer treatment plant) are aging. This is a $4-5 million upgrade. Last year we asked staff to start planning and start looking for money, and that’s what they’re doing. Keep in mind that Kure Beach will pay about 22% of this because we treat their waste water too. This will not be in the 23/24 budget, but it’s very much on our minds.
We need more water storage capacity, another well and upgraded water lines. Upgrades pushing $8 million or more. Right now we have plenty of water, but we are pushing our capacity on the busy weekends. The big concern is a fire. We have to make sure that we have water to put out a major structure fire. Again, we’re ok now, but we need to prepare. Last year we committed money to start the planning process. This year we’re acquiring land in case our US Army neighbors won’t allow us to build a water tank on their property.
Stormwater improvements are ongoing. We currently have 11 projects underway all over town. 11! It’s ongoing. Staff is asking us to fund 12 more projects in the next budget. To me there’s only one way forward on the stormwater piece… constant continuous improvements. Can we fund 12 more projects in 23/24? We’ll see.
And then there’s Canal Drive. Many of the stormwater projects I mentioned are related to this difficult area. Continuous improvement is still the name of the game.
My take… you might hear some “sky is falling” rhetoric from people, but we’re doing fine… for now. But it’s imperative that we plan for the near future. I liken it to a family with kids in middle school. College is looming and you’d better be getting ready, but there’s no need to panic. Make a plan and prepare for the future expenditures that are coming. That’s what we’re doing.
Staff is actively seeking grants, but let’s be real. Free money isn’t so easy to get. Most grant funding goes toward middle and lower income communities. We are not middle or lower income. We just aren’t. I’m all for trying, but we have to be prepared to pay for these things the old-fashioned way… ourselves.
As stated in the Budget 101 section, increases in utility expenses will show up on your water bill, not your tax bill. And I hate to say it, but more increases will come. Maybe not this year, but definitely in future years. Why is that? Partly because the things we need to buy to bring you water keep going up (materials and manpower) and partly because we’re constantly fixing aging infrastructure.
When it comes to utility bills, you’re welcome to think we’re making terrible decisions, but you can’t say that we’re wasting money on frivolities. Any money spent in the utility fund budget is purely for utilities.
Communication
It’s important to us that we share information with you, the public. Last year we committed funds to hire a communication professional and to improve the audio-visual equipment at town hall. Nothing specific has been proposed for 23/24.
My take… I voted against the 22/23 budget mainly because I was uncomfortable bringing on more staff, specifically in communications. While not perfect, I think our communication is adequate. Our website stays up to date, meetings are live streamed (and available for later viewing), town staff sends regular press releases and each of our 5 council members shares information regularly (like this blog.) And don’t forget that communicating is a two-way street. Any citizen is free to visit our website, attend a meeting or reach out.
That being said, I recently screwed up by not including some business owners in a conversation about S Lake Park bike lanes… so yes, there can always be improvements.
Quality of Life
This is where we focus on things like park maintenance, events, nonprofit support, bike/ped improvements, beautification and safety. The Parks & Rec team is proposing to double the size of the skatepark and improve the Rec Center. We’re looking at a new bathroom at the Boardwalk, bike/ped enhancements along S Lake Park Blvd, improving CB Lake and general beautification efforts. Our public safety departments are always in need of new equipment.
My take… we’ll do what we can, when we can. Infrastructure and safety must come first. You may recall from the 2021 election that I like bike and pedestrian improvements. Well it’s true, and I’ll continue to harp about them. My goal for the next budget is to see projects get going.
I generally prefer spending money on permanent features (parks, bike paths, etc…) over ephemeral events (movies, fireworks, etc…)
Fiscal Responsibility
There is no specific budget appropriation here, it’s just a philosophy that we try to maintain. We’re looking at every expenditure and revenue closely. As discussed in the “infrastructure” section, we have some large expenses coming our way. Staff is not only seeking grant funding and state legislature help, but also examining the best way to borrow money and when to do it. The money required to complete the needed water, sewer and stormwater projects is too much for a “pay as you go” approach.
My take… I don’t like borrowing money, but there’s no way around it for the very big stuff. That being said, I’m a Dave Ramsey kind of guy. Whenever we can pay cash for something I’d rather do that. I don’t like paying interest if it can be avoided.
As I said earlier, I’m much more comfortable spending money on permanent amenities than on ephemeral events. I think we should stick to simpler things rather than things that have long-term maintenance costs. I’d rather spend money on bike paths and trees vs splash pads and swimming pools… but that’s just me.
Parking
You didn’t think I’d avoid this issue, did you? Let’s face it, parking is a big part of the fiscal responsibility picture. We have basically 3 ways to raise money that are within our control… taxes, parking and Freeman Park. That’s it. Yes, we receive money from many sources (ABC store, sales tax, road taxes, etc…) but we can only control those three.
The parking policy will remain the same since our reforms voted on last November. The debate is over. I wanted to sell season passes to off-island residents and I wanted to make December free. But I don’t have the votes. That being said, the reforms are a solid compromise. A committee was formed that has a good cross representation of the town. They made 12 recommendations and 11 were adopted.
Thanks Mike,
Well said and understandable. Thanks for your commitment to our community.