City looks ahead to big budget bite
A recent court ruling and possible action by state lawmakers could have significant impact on High Point’s budget, city officials warned Monday.
The hit could total more than $2 million for the budget year that begins July 1, 2013, according to estimates shared with the City Council. The city could be liable for as much as $1 million in damages and fees against the agency that oversees the Randleman Regional Reservoir following a decision issued last week by the N.C. Supreme Court.
In addition, the city stands to lose about $500,000 in state hold harmless funds that are being phased out, and could face $330,000 in new costs if the N.C. General Assembly imposes an unemployment payroll tax on local governments to help the state repay a $2.5 billion debt to the federal government for unemployment benefits. The state is also increasing local governments’ contribution rates for some types of retired employees, which is projected to add up to a $225,000 bill for the city.
All of these developments could add up to about $2.05 million, which would equal about two cents on the city’s property tax rate.
“Importantly, there is no reason to panic at this time. Yes, the numbers are significant. However, I ask that you all please keep things in perspective and trust us to carefully and diligently work out the finance details — including service levels and revenue alternatives — with you in an orderly way as part of our 2013-2014 budget preparation process,” City Manager Strib Boynton wrote in a memo to council members Monday.
The exact amount the city owes in the Randleman case hasn’t been determined. High Point has a 19 percent ownership stake in the Piedmont Triad Regional Water Authority, which must compensate five small power plants that were hurt by construction of the reservoir.
The Supreme Court initially agreed to hear the authority’s appeal of a lower court ruling in favor of the small plants, but reversed itself on Friday.
The case could involve as much as $5 million to $6 million in damages and fees against the authority. High Point is on the hook for 19 percent of the final amount, which could be determined by a jury trial.
Boynton warned council members that city funding for pet projects will be scarce because of the budget squeeze.
“I ask that you please resist the natural temptation Council members have to pledge or support earmarking unbudgeted dollars to this or that outside agency or program no matter how enthusiastic their energy or need may seem to be,” he wrote.
The manager suggested that the council host a forum in March for “outside agencies” – various nonprofit groups to which the city traditionally provides funding — and other programs for their representatives to make their funding pitches.
“You will want to see the bigger picture before making too many commitments this far in advance,” he advised the council.
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