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Sharpen those pencils -- it's budget time, and Durham's hiring

As the Herald-Sun and N&O both pointed out yesterday, the City of Durham's proposed FY2009 budget represents a pretty sizable jump in spending from the current year's issue.

The City is proposing an increase in spending this year of 5.3%, a rate that's a fairly digestible number in the abstract, and representing $17.9 million in additional spending for the coming budget year over this year's figure.

Who's Paying the Bill?

Of course, the number that's garnering attention is the increase in property tax revenues: a sizable 16.5% increase over the FY08 figure. The biggest contributor to that is a 28.6% increase in Durham's assessed property values thanks to last year's revaluation, bringing the Bull City property tax base from $17 billion to about $22 billion. Yet the City's budget proposes only a 9.4% reduction in the property tax rate. (Which also means, an 11% rise from the revenue-neutral rate.)

The net result? A $17.6 million increase in Durham's estimated property tax collection. Though that's not the only net new increase in cost to most residents. An additional $12.3 million in operating revenue increase is projected, almost of all of which is attributed to the implementation of tiered water rates.

Of course, this impacts businesses as well as residents, but given the increase of pricing across-the-board for all residents with the increase of base sewer and water fees, this revenue source is one to be borne by practically every household. (And don't expect the rates to stay constant -- the city is projecting water/sewer revenue to rise from $58 million this year to $70 million next under the tiers... then all the way to $93 million by 2014.)

So we have almost $30 million in new property tax and water bill fees, yet just $17.9 million in new spending. Where's the gap? From $18.1 million in decreases in six different categories of revenue, including:

  • A $2.3m reduction in collection of other local taxes, primarily due to the changed city/county sales tax split and the slowing economy;
  • A $5 million reduction in drawdown of fund balances, primarily by eliminating this year's $4.7 million draw from the water/sewer fund (given that higher water/sewer rates can make up some needed revenue)
  • A $7.8 million drop in license/permit, investment/rental income, and current services charges funding.

Bottom line: look for more of the cost of local government this year to come from households and businesses across the board, and less from various fees, charges, and licenses, due in some part to the changing national economy.

What Are We Buying?

In his budget transmission letter, outgoing City Manager Patrick Baker highlights a few key elements as across-the-board changes in the budget, including:

  • Staffing for the new North Durham fire station, as well as authorizing "overhiring" of the current police officer count in order to be prepared to handle vacancies;
  • Addition of a commercial code and residential code inspector to search for violations under the City's essentially voluntary program;
  • $1 million in neighborhood revitalization, infrastructure and streetscape funding;
  • A comprehensive yard waste program, including free pick-up of yard waste items as well as a pilot program for leaf vacuuming -- together, this represents one of the major drivers of increased operating costs, representing about one-sixth of the expense.
  • A reorganization of City/County Planning, including 5 new staff members, to improve the efficiency of that department's operation;
  • Funding for a feasibility assessment for the conversion of the Downtown Loop to two-way traffic;
  • Increased youth services -- more on this to follow in discussing Parks & Rec below;
  • No new major bus routes or increases in frequency, save for a downtown "circulator" route to help serve the Durham Station. (We're looking forward to more details on this, which could be an excellent new transportation service downtown.)

Still, one of the big things we're buying with a program like this is people -- that is, full-time staff, increased expesnes of which represent $10 million in new spending.

Where's that new hiring happening? Not where you might think.

The biggest increase would come in Community Services & Development, at a 9.4% increase in the number of new staff.

Public Works, for instance, would increase by 11 FTEs, or only 4.2%, not including the transfer of street-cleaning responsibilities from Solid Waste Management.

For its part, Solid Waste Management would increase by 9 FTEs (7.6%), all in residential collections, which would increase from 58 to 67 staff. What's odd there, though, is that the North Carolina Benchmarking Project has identified Durham as having above-average staffing yet below-average waste creation levels relative to other major N.C. cities already. Durham's refuse tons collected per municipal collection FTE is also the pits: 855 tons/FTE in Durham vs. an average of 1,467 tons/FTE among other municipalities.

Are these new refuse collectors intended to staff the yard waste program? Perhaps -- but the org chart for Solid Waste shows no change in the staff on Yard Waste Collections (17 FTEs), and all the growth in Residential Collections.

Perhaps the new staff are intended to address the level of complaints about garbage service, which are 30% higher than in other N.C. cities. (On the other hand, SWM adopted higher targets for number of complaints in FY2008 than they actually received in FY2007. Hey, that's one way to make sure you meet your goals -- set 'em weaker than the year before!)

For its part, Water Management is set for a 5.8% increase in staffing level, with almost all of the 17 new FTEs aimed in the Systems Maintenance & Construction and System Rehab groups, both of which are involved in adding to and replacing core trunk, line and pipeline infrastructure -- all of which we all know is challenged in Durham. Seems to make sense.

But the real gutbuster for Community Services & Development? You betcha: it's everyone favorite, Parks & Recreation, which would see a whopping 12.3% increase, with 18 new staff increasing its base of employees from 97 to 115.

And what will these new Parks & Rec folks be doing, other than apparently not keeping cars out of Duke Park? You guessed it -- rec centers! New staff for the Lyon Park center and the Holton Middle School center, plus to provide alternative programming for Walltown (with its center closed for renovations). And we haven't even built the new Walltown or bought the Trinity Ave. centers yet. Add in five more folks for aquatics, mature adults and special populations.

The best place to put things in comparison? The Public Protection category, which is adding just 21 FTEs to its 1,013 budgeted level. And 18 of those staff are new firefighters for Fire Station 15 in North Durham.

New police officers? Just two, or an increase of 0.3% in overall police staffing. Clearly, of course, a sign that our anti-crime strategy is working, right? Right?

Tongue out of cheek for a moment, one can assume that the authority to overstaff existing FTE positions in the D.P.D. -- which basically means hiring more people than you have allocated positions, in the idea that you'll always have some vacancies, and the two add up to get you to the allocated number of positions -- is really the equivalent of adding many more positions.

Still, this is an image-conscious place. And it just doesn't look good to propose adding 9 new Parks & Rec staff for every new D.P.D. officer. We'll see how the City can spin this; I can already imagine how the John Locke Foundation will skewer Durham leadership over that number.

Overall, staffing would grow by 3.8%, bringing the City to 2,455 full-time employees.

...

Folks, that's a mouthful of numbers, and we haven't even gotten to the capital projects. We'll cover that in the next couple of weeks as the data become clearer.

Want to see things for yourself? Visit the FY2009 budget proposal web site on Durham's home page. The 2007-08 budget is still posted, too, if you want to compare the year that is to the year that might be. Municipal benchmarking data is also available.

 

Comments

KeepDurhamDifferent!

Go nuts! Free yard waste is nice, but what I really want is for the garbagemen to come up into my yard, haul the cans down to the street, empty them and put them back. They did this once a week in Charlotte.

Just kidding. What I really want is some of this money back in the form of lower taxes, or at the least a property tax exemption for areas like C-H and E. Durham to slow the pace of gentrification (think "enterprise zones").

Derek

Thanks for the breakdown. Your post was a lot more useful than the N&O article which focused heavily on yard waste. This budget is so bad it's unbelievable. I would keep the solid waste and parks/rec FTEs unchanged (they can't always get what they want...) and increase police and fire only (...you get what you need).

Derek

I'm a yard waste customer currently, but it sure ain't "free" just because the fee is waived. The tax increase on my house is pretty damn close to the $60/yr I pay now. Why is Baker pushing this? I haven't seen an explanation of what's wrong with the current voluntary system. I'm guessing that Baker spent so much getting a facility in order that will meet state requirements for a permit that it will be running a net loss unless they jack the voluntary fees. So instead of that embarrassment, they'll cover it up by making it mandatory.

Myers Sugg

One benefit, albeit small, is that you will now be able to deduct that $60.00 as property taxes, if the fee is incorporated into general ad valorem taxes. The yard waste service has been available for a while. After 2003 or 2004 the fee for service sticker program was introduced.

The big debate to me is about whether the yard waste program discourages folks from composting. In some cases, I'm sure it does; however, the appearance of this City is something that needs improving. Perhaps this is a way to encourage folks to do a better job at yard maintenance? I do know that illegal yard waste dumping is a problem. If collection was more widespread, I presume that illegal dumping wouldn't be as much of an issue?

Not that this is a reason to do it, but surrounding muncipalities, Raleigh & Chapel Hill both have citywide yard waste collections for all, including leaf vacuuming which keeps storm drains cleaner....

Myers

Ray Gronberg

Re police staffing, I'm guessing that Baker's thinking in not asking for more FTEs is that because of attrition DPD hasn't really been able to fill the 512 sworn slots it has now. If so, what's the point of adding more FTEs? Lopez has been clear that he thinks DPD has more of a retention than a recruiting problems and pins the blame for that on low starting salaries and a habit of advancing officers up the pay ladder more slowly than neighboring jurisdictions. You fix that sort of thing with your pay plan, and so far, that's the one component of all this we haven't seen yet.

Re yard waste, the problem as Baker and Donald Long see it with the current $60 annual fee is that 2/3s or more of the city's households simply refuse to pay it and get into the program. The result is that a lot of people are dumping yard waste on their own, which contributes to sewer clogs, etc.

Michael Bacon

Kevin, do you happen to know if this budget takes into account the proposed increase in water, sewer, transportation, and parks and rec impact fees? Is it possible that if those impact fees are increased, that the property tax hit will go back down some?

Masshole

There are some interesting projects on that list, but the dramatic increase in the costs to the citizens disturbs me.

The property tax revaluation likely overstates the value of homes, given the current state of the market. At best, it is right at what people can get for their homes (from what I can tell - anecdotal evidence but...) or less. All of that nonsense about how this might be revenue neutral when homeowners factored in the rate and the valuations gets revealed as what...nonsense?

We have a one-year drought and now tiered water rates come in. This year there is no drought. This year there are still water restrictions. And now we will be paying more for water even though we have more of it than last year or, more broadly, are right where we should be.

It is all well and good to chat about good government, great things for a shining Durham but these types of things hurt people in economic times when many people do not have all that much flexibility in terms of where there money goes.

Make no mistake that there are going to be people who really feel the bite of this stuff.

barry

I've been a huge vocal advocate for getting rid of the yard waste program as currently implemented.

why?

Because 60 bucks a year discourages the overwhelming majority of Durham households from participating in the program. Participation rates have ranged from (and i'm sure someone will correct me if i've gotten these figures wrong) something like 18% to 25% of Durham households in the 5 or 6 years the program has been in operation. I can guarantee you that the remaining 75% or so of the yard waste being generated in Durham is not being composted. It's being dumped, or just blown out into the street during the fall leave season, where it negatively impacts the storm drainage system.

Imagine if garbage pickup was a fee based system and only 25% of Durham households participated in that. Now imagine if folks like me (who both compost most of our yard waste and participate in the voluntary fee based program) drop out of that program because we're tired of paying an extra 60 bucks a year to cover the cost of the slackers who just dump their yard waste at the nearest available empty lot or blow it into the street.

Every place i lived in before i moved to Durham had a system in place to pick up everyone's yard waste, especially during leaf season. Why Durham can't figure out how to do that is beyond me. And why some residents think it's an unimportant municipal service is even more baffling.

Kevin Davis

Ray: Thanks for the insights. As I noted above (or tried to), it's really a matter of the image/PR issue on this one, not the reality. The reality is, improving pay/retention and approaching this from an overhire situation is a good approach, though the devil's in the yet-unseen details. But man, the opposition is going to have a field day with this one.

Myers: Interesting point on the tax deductibility; hadn't even crossed my mind, but that is an intriguing plus to this.

Masshole: I haven't had a chance yet to pick through the capital projects, but my _hope_ on the tiered water rates is that that extra revenue goes to fund important water sourcing projects, like a second Jordan Lake intake, expanding the current reservoirs, new treatment plant, etc. Yes, the tiered rates are intended to induce conservation, which is a Good Thing(tm) even if we're not in a drought. But they're also intended to bring in more revenue to pay for something we need to catch-up on: water supply expansion. Before the rate increase, Durham's cost for water was one of the cheapest in the state, and the extra $$ _ought_ to be being put to use expanding our supply. Though, again, I'd want to see the numbers on this. Ray's reported in the H-S that we're looking at a $12m cap ex for the Teer Quarry, which is a good thing.

Will the tax bump be controversial? Oh yeah. Selling this one to residents is going to be hugely important.

I'm not one for perspective on home sales; properties that are well priced are moving like hotcakes in my neck of the woods, still. (A 2 bedroom, 1 bath, just-renovated tiny home on N. Duke St. just got snapped up at an asking price of $220k after just 2 weeks on the market -- yipes.) But broadly speaking, with higher foreclosure rates and fear over house prices, we'll see a lot of concerns of that sort.

Ray Gronberg

Well, here's the water items in the CIP:

$5.4m to install radio-read water meters. They're more reliable and quicker to read.

$4.6m for new water tanks. These beef up not the supply of untreated water, but the system's ability to deliver treated water.

$1m for planning a water-treatment plan at Jordan Lake. This is a down payment on likely a $50m-plus investment in expanding water supply.

$5.2m on an interconnection with Raleigh's system. Improves ability to wheel water between systems as needed in emergencies.

$800k to plan a new pressure zone in southeast Durham. This accommodates growth.

$12.1m for Teer Quarry. Expands water supply.

$5m for water-line rehab. Fixes or prevents leaks.

$1m for water extensions. Partly growth-related, partly to serve existing neighborhoods.

$11.6m for repairs at the treatment plants and other facilities.

$1.5m for work to comply with state water-treatment regulatory mandates.

$200k for land acquisition, i.e. buying property near Lake Michie needed for an expanded reservoir. Sounds low until you notice that there's $5.6m left over from prior-year allocations and the city is only buying as land hits the market rather than using eminent domain.

Masshole

I think the yard waste pickup makes a lot of sense. It is certainly a glaring omission in some ways. However, while its something I have always seen in the burbs, I am not sure all cities offer such services. I am sure someone else knows. The lack of such a program does not mean everyone needed one. Anyone know if a study was done in advance teasing out some of this?

As for housing sales, I get where you are coming from. From my perspective though, it appears you are leaving an awful lot out. For example, houses priced to move are selling in my neighborhood. However, the only people pricing them at that point are the original owners of the subdivision because their property values have substantially increased. If you bought in the last couple years, good luck breaking even in many places in the area. Of course, it could be a lot worse as there are places in the country that have housing markets a lot worse than here. I would guess that if my wife and I were to put our home on the market at the tax assessed value, it would not move. Neighbors of ours are selling (the ones who can) at a price lower than the assessed value. To me, it seems the assessed value was set in a different housing market than the current one. This is a common problem around the country, but where our rates move every five years or so they could have worked under it. In regard to the house you mentioned, I wonder what the assessed value would be? Judging by what I see down in the Southpoint area, it wouldn't surprise me if the assessed value was $230-35.

Anyway, as to the water rates, I think it would have made a lot more sense to have the discussion as to what was needed, where the money was going to go, how it was going to be spent, and whether the policies in place would be enough to address the issues at hand and how would future rate increases be handled. It has been one of the things that has surprised me in moving to NC - how quickly and often (apparently) half-assed things are fired through the hall of government before they rattle out in terms of policy. I would submit this as a good example especially given the amounts of money at stake, the costs to residents, and the importance of our drinking water. Basically, we have given a huge blank check (once tiered rates are in place they can be increased a lot more easily) without knowing what we are buying. It wouldn't have killed anyone to wait one more year before implementing the tiered rates and it would have likely resulted in a better understanding how everything will play out.

Having worked in government, my sense of things is that unless the money in nailed down to a particular use it is not guaranteed to go there. It wouldn't surprise me to see water rate increases being used elsewhere (think of the settlements with big tobacco). Anyway, I would feel better if government was more accountable to the citizenry and this complaint isn't limited to Durham by any stretch. Since I have chosen to make Durham my home and am a stubborn sob, I now care about Durham more than most places in this regard.

Michael Bacon

Money from water rates, as well as from water and sewer impact fees, go into a separate fund in city hall that can't be used for anything but water and sewer. This is due to federal regulations -- you get all kinds of breaks if you're a municipal system that plays by the rules, but it means you have to put all that money in, for lack of a better word, a lock-box.

Whether that money gets spent well is another question. But it can't be siphoned off for, say, business incentives or something.

Samantha

As part of the yard waste program, I hope there will also be some attention to getting an actual yard waste/ processing facility functioning again. If I'm not mistaken, the city hasn't been doing anything with our yard waste other than landfilling it (either here or at a remote location) since the infamous yard waste fire at the Club Blvd facility in 2006. I'd love to be proven wrong and learn that we actually do have yard waste processing in place now (which would make me feel better about the bins full of green stuff we roll up to the curb every week), but haven't been able to turn anything up in a cursory Web search (or via a call to Durham One Call).

Myers Sugg

Remote radio read meters like the ones now used by Duke Energy & PSNC Energy are the way to go. Although it doesn't bother me personally not to have monthly water bills, it does seem that monthly bills would do a better job of helping people budget, and help people better determine their usage...60 plus days is a long time to try and get a handle in your mind on things...

I'd be nice too if Durham would go to electronic billing of their utility services. I don't need a paper bill each month or every two months. An email like I receive from some of my other "Ebillers" through my bank, would work for me....

Myers

Ray Gronberg

Re landfilling yard waste, the city's said to be close to getting a new permit to process debris at the site off Club Boulevard. The sticking point there was figuring out a way to pollution-treat water running off the site. The plan is to contour the site in a way that channels it into a tank, then pump the contents of the tank into a truck and take it to the nearest sewage plant.

Re monthly bills, the city wants to do that but wants more of the new meters installed first. The alternative is hiring more people to read meters, meaning more FTEs.

Tar Heelz

Gotta love the City of Durham Job Bank.

Tar Heelz

Gotta love the City of Durham Job Bank.

Tar Heelz

Gotta love the City of Durham Job Bank.

Alan Davis

I see no problem with adding Parks and Rec staff as long as we see improvement. Durham has the potential to have great parks. We need someone over our Parks and Rec department that can manage programs, maintain parks, and add new facilities. If their is no money then charge more for using them. I am tired of hearing that we have no money and do not want to charge but oh maybe something will change. The lottery perhaps? What is going to change. Charge for play and build the facilities.

Mayor Bell and Council also need to step it up. If they cannot manage the Parks how can we expect them to manage more difficult things like crime, water, and education.

Parks are important because studies show that good ones can reduce crime and raise the value of our homes and community. Get with it Durham because you stink at living up to your potential for parks.

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