Title
Fiscal Year 2023 Operating Budget and Fiscal Years 2023-2027 Capital Investment Plan
Action
Action:
Adopt the Fiscal Year (FY) 2023 Appropriations and Tax Levy Ordinance, the FY 2023 Compensation and Benefits Recommendations, and other items related to the Annual Budget Ordinance adoption:
A. The FY 2023 Operating Appropriations and Tax Levy Ordinance,
B. The FY 2023 - 2027 Capital Investment Plan,
C. The FY 2023 General Solid Waste Fee,
D. The FY 2023 Storm Water Services Fees,
E. The FY 2023 Transit Operating Budget, FY 2022 Transit Debt Service Budget, and FY 2023 - 2027 Transit Capital Investment Plan which was approved by the Metropolitan Transit Commission on April 27, 2022,
F. The FY 2023 Charlotte Water Rates,
G. The FY 2023 Compensation and Benefits Plan and associated Human Resources contracts,
H. Outside Agency and Municipal Service District contracts,
I. American Rescue Plan Act Funding, and
J. Other budget items.
Body
Committee Chair:
Ed Driggs, Budget and Governance Committee
Staff Resource(s):
Marcus Jones, City Manager’s Office
Ryan Bergman, Strategy and Budget
Teresa Smith, Finance
Policy
§ As required by Chapter 159 of the North Carolina General Statutes, the City of Charlotte adopts annual appropriations and a tax levy ordinance and considers related actions by July 1 of each fiscal year.
§ The annual budget is an instrument that establishes policy. The budget identifies and summarizes programs and services provided by the City and how they are funded. It is the annual plan that coordinates the use of revenues and associated expenditures.
Background
§ The annual budget ordinance is presented in accordance with the City Manager’s Proposed FY 2023 Budget presented on May 2, 2022, and subsequent City Council budget adjustments.
§ The FY 2023 Budget is structurally balanced and focuses on five City Council Strategic Priorities: Great Neighborhoods; Safe Communities; Transportation, Planning, and Environment; Workforce and Business Development; and Well-Managed Government.
§ The budget development process includes input from the community, City departments, and the Mayor and City Council. To facilitate input, the City held three Budget and Governance Committee meetings on February 3, March 1, and March 31; three Budget Workshops on February 3, March 3, and April 7; a Public Hearing on the Proposed Budget on May 9, 2022; a Budget Adjustments meeting on May 11, 2022; and a Straw Votes meeting on Budget Adjustments on May 25, 2022. Public budget engagement occurred through three virtual budget listening sessions occurring on February 3, February 16, and March 1, 2022, and a budget public input survey that was available from January 19 through March 28, 2022.
§ The Mayor and City Council met on May 11 and May 25, 2022, to discuss budget adjustments for consideration to the Proposed FY 2023 Budget. Six budget adjustments were approved by City Council for inclusion in the FY 2023 Budget.
§ FY 2023 General Fund and FY 2023 General Capital Investment Plan (CIP) highlights include:
- Includes no proposed tax increase, and no City staff will be furloughed or laid off.
- Maintains services, with no reduction in core services.
- Maintains operating reserve levels; no use of one-time revenues such as operating reserves.
- Delivers a $10 million investment in Corridors of Opportunity to support housing and neighborhood stabilization and job and economic development initiatives.
- Operationalizes the SAFE Charlotte Plan:
§ Adds two new Alternatives to Violence sites with $1 million in federal funds;
§ Launches Civilian Assistance: Respond, Engage, Support (CARES) Team for mental health, substance abuse, and homelessness calls for service; and
§ Updates internal operations at the Charlotte-Mecklenburg Police Department by providing $118,000 for a new Early Intervention System.
− Provides $48.8 million to construct three fire stations, one of which will be the City’s first all-electric fire station.
- Supports the City’s Strategic Energy Action Plan by adding 55 fully electric vehicles to the City’s fleet.
- Supports $30 million from the American Rescue Plan Act Tranche 2 for affordable housing initiatives that support strategic partnerships, reduce displacement risk, and advance staying in place.
- Provides $157.3 million towards new capital roads and intersection infrastructure projects over the next four bonds. FY 2023 includes:
§ $12.7 million to improve Eastway Drive/Shamrock Drive Intersection, and
§ $7.3 million to improve Rea Road.
- Proposes the 2022 Bond, highlights include:
§ Provides third consecutive $50 million allocation to create and preserve affordable housing,
§ More than triples the 2020 Bond funding for the Sidewalk Program, from $15 million to $50 million,
§ Doubles the 2020 Bond totals for the Bike Program, from $4 million to $8 million,
§ Provides $17.1 million of funding for Vision Zero strategy:
- $12.6 million to enhance Transportation Safety, more than six times the previous bond funding of $2 million in the 2018 and 2020 bonds,
- $4.5 million for street lighting to implement new street lighting projects along high-injury network streets or to enhance existing street lighting by converting existing lights to LED,
§ Invests $10 million for the Corridors of Opportunity, and
§ Provides $10 million for congestion mitigation improvements in the South Charlotte, Steele Creek, and University City areas.
§ The FY 2023 - 2027 CIP matches the City’s highest priority needs with a financing schedule. The General CIP focuses on investing in projects that generate the most community benefit and improve the overall quality of life in Charlotte. The Nongeneral CIPs respond to aging infrastructure and increasing service demands associated with the provision of water and sewer, storm water, transit, and aviation services.
Recommended Changes to the Proposed FY 2023 Budget from the May 25 City Council Budget Straw Votes Meeting
§ During the May 25 Budget Straw Votes Meeting, City Council approved the following adjustments:
- $42,000 to increase the Planning Commission members’ monthly stipend to $375;
- $50,000 to enhance Housing and Neighborhood Services’ Community Engagement Program, including expanding the Civic Leadership Academy;
- $75,000 to support home-based daycare reimbursement for participants in workforce development programs;
- $84,354 to provide funds for the Charlotte-Mecklenburg Historic Landmark Commission;
- $100,000 to increase TreesCharlotte funding to develop a broader, more intentional Canopy Care Program, improve community education efforts, and enhance growth; and
- $78,902 for an additional Planner position in Planning, Design, and Development to enhance the Charlotte Future 2040 Comprehensive Plan and Community Area Planning resources.
§ These adjustments are being funded by reducing the undesignated fund balance by $201,467 and trough the elimination of inflationary maintenance increases by $228,789.
A. Adopt the FY 2023 Operating Appropriations and Tax Levy Ordinance
Budget Overview
§ The total FY 2023 budget is $3.24 billion net of transfers, with $835.0 million for personnel expenditures, $825.3 million for operating expenditures, $1,369.1 million for capital expenditures (all funds), and $215.5 for debt service expenditures. The General Fund operating budget totals $784.8 million.
§ The total budget includes the following key revenues:
- A property tax rate of 34.81¢ per $100 of assessed valuation, which is the same as in FY 2022. The FY 2023 assessed value is estimated at $155.2 billion, with an estimated collection rate of 99 percent,
- The FY 2023 Water and Sewer Fee is proposed to increase by 3.54 percent for the typical homeowner, which is an average increase of $2.49 per month,
- The four tier Storm Water rate methodology (adopted in FY 2016) is expected to increase by 3.8 percent from FY 2022 across all tiers. This methodology charges detached single-family parcels a flat rate for each tier based on the same per square foot rate ($0.00375) applied to the median impervious area of each tier. All other parcels (multi-family and commercial) are charged the same rate ($0.00375) per actual square foot, and
- Charlotte Area Transit System (CATS) base transit fare remains flat from FY 2022 to FY 2023.
B. Adopt the FY 2023 - 2027 Capital Investment Plan
General CIP
§ The General CIP is supported by a portion of the 34.81¢ property tax as follows:
- 6.77¢ for the Municipal Debt Service Fund, and
- 0.73¢ for the Pay-As-You-Go (PAYGO) Fund.
§ The FY 2023 - 2027 five-year General CIP totals $1.0 billion and includes General Obligation Bonds, other sources, Municipal Debt Service, reappropriation of prior authorization, and PAYGO funds.
Nongeneral CIPs
§ Nongeneral programs are financially self-sustaining and do not rely on property tax support.
§ The FY 2023 - 2027 five-year nongeneral CIPs include:
- Aviation totals $1.9 billion and is funded by $1.0 billion in revenue bonds, $143.4 million in Aviation PAYGO, $357.8 million in federal grants, $251.0 million in passenger facility charges and $25.0 million in customer facility charges.
- CATS totals $144.1 million and is funded by $100.0 million in federal and state grants and $44.1 million in other sources.
- Charlotte Water totals $2.6 billion and is funded by $1.1 billion in Charlotte Water PAYGO and $1.5 billion in water and sewer revenue bonds.
- Storm Water totals $538.0 million and is funded by $315.0 million in revenue bonds and $223.0 million in Storm Water PAYGO and program income.
C. Amend the General Solid Waste Fee Madison
§ The annual Solid Waste Fee for residential customers changes from $75.02 to 86.06 in FY 2023 to help support the increased cost of services.
§ These changes become effective on July 1, 2022.
- The revised fee will be included in the tax bills that will be mailed to property owners by September 2022 and are due by December 31, 2022.
D. Approve the FY 2023 Storm Water Services Fee
§ In accordance with the Interlocal Agreement on Storm Water Services, this action will inform Mecklenburg County of the amount to be charged for the City’s portion of the fee.
§ The FY 2023 Storm Water Services Fee changes include:
- Detached single family homes with less than 2,000 square feet (sf) of impervious area changes from $6.04 per month to $6.27 per month in FY 2023,
- Detached single family homes with 2,000 to 2,999 sf of impervious area changes from $8.91 per month to $9.25 per month in FY 2023,
- Detached single family homes with 3,000 to 4,999 sf of impervious area changes from $13.17 per month to $13.67 per month in FY 2023,
- Detached single family homes with 5,000 sf or more of impervious area changes from $21.78 per month to $22.61 per month in FY 2023, and
- Commercial and multi-family per acre of impervious area changes from $157.23 per month to $163.20 per month in FY 2023.
E. Adopt the FY 2023 Transit Operating Budget, FY 2023 Transit Debt Service Budget, and FY 2023-2027 Transit Capital Investment Plan which was approved by the Metropolitan Transit Commission on April 27, 2022 Madison
Policy
The Transit Governance Interlocal Agreement calls for the Metropolitan Transit Commission (MTC) to annually approve a Transit Operating Program and a Transit Capital Program by April 30. Following the MTC’s approval, the Transit Operating and Capital Programs are forwarded to City Council for approval. Upon approval, City Council shall fund the programs through its budget process and/or project ordinances.
Budget Overview
§ The FY 2023 Transit Operating and Debt Service Budgets and the FY 2023 - 2027 Transit CIP have been developed in compliance with CATS Financial Policies, including an annual contribution to the Transit Revenue Reserve Fund, year-end fund balance, debt service coverage ratios, and the transfer of balances to the capital program.
§ The FY 2023 Budget includes no proposed fare increases and no proposed new fees.
§ The FY 2023 Budget for CATS represents three key ideas: responding to customer needs, maintaining a safe and reliable transit system, and planning for the future.
F. Adopt the FY 2023 Charlotte Water Rates
§ Water and sewer fees are necessary to maintain current infrastructure, accommodate growth, and respond to changing regulatory requirements.
§ FY 2023 rate changes include:
- Typical resident water and sanitary sewer availability fees at $10.04 per month, an increase of $0.05 from Fiscal Year 2022,
- Typical resident water and sanitary sewer fixed fees at $10.60 per month, an increase of $2.16 from Fiscal Year 2022,
- The typical monthly total water and sanitary sewer bill for residential customers is estimated to be $72.88 in Fiscal Year 2023, an increase of $2.49 per month, and
- The typical bill assumes 5,236 gallons, or seven Ccf, used each month. Based on the current rate structure, users consuming more than the typical level of consumption are charged a higher rate to encourage conservation and responsible use of this resource.
G. Adopt the FY 2023 Compensation and Benefits Plan and Associated Human Resources Contracts
The FY 2023 Pay and Benefits Report includes the following:
Compensation
§ On May 2, 2022, the City Manager presented pay and benefits recommendations. This action authorizes the City Manager to implement all of the recommendations as presented in the FY 2023 Compensation and Benefits Recommendations including, but not limited to the following items:
§ In the Public Safety Pay Plan:
- Merit steps of 2.5 percent to five percent to be funded.
- Revisions to Police steps effective July 2, 2022:
§ Eliminate Police Officer step one, and
§ Increase step two to an amount 2.5 percent less than current step three.
- Revisions to Fire steps effective July 2, 2022:
§ Eliminate Firefighter I step one, and add a new step to the top of Firefighter I, and
§ Increase step two to an amount 2.5 percent less than the current step three.
- Two market adjustments to the pay steps, each funded at 1.5 percent. The first adjustment will be effective July 2, 2022. The second adjustment will be effective January 7, 2023.
- Revisions to Fire steps effective November 12, 2022:
§ Merge Firefighter II steps seven and eight from two 2.5 percent steps to one five percent step,
§ Merge Firefighter II steps nine and ten from two 2.5 percent steps to one five percent step,
§ Merge Firefighter Engineer steps four and five from two 2.5 percent steps to one five percent step, and
§ Merge Firefighter Engineer steps six and seven from 2.5 percent to one five percent step.
§ In the Salaried Pay Plan:
- Merit increase pool funded at 4.0 percent, and
- Adjust the pay ranges up two percent effective July 2, 2022.
§ In the Hourly Pay Plan:
- Two across-the-board pay increases of four percent each. One effective July 2, 2022, and one January 7, 2023,
- A new minimum pay rate of $20.00 per hour as of January 7, 2023,
- Adjust the market pay ranges up 4.0 percent effective July 2, 2022,
- A four percent market adjustment to the Hourly Pay Plan ranges,
- Effective July 2, 2022, a Commercial Driver’s License premium of 2.5 percent for employees whose job classifications require this license.
§ A shift differential incentive of 2.5 percent beginning in January 2023, for employees in job assignments with multiple shifts, who are permanently assigned to either second or third shifts.
Benefits
§ No employee medical plan premium increase.
§ No non-Medicare-eligible medical plan premium increase for retirees with 20 years of service.
§ Maintain the approved 10-day vacation benefit for new hires, yet change the accrual method to a one-time advancement of five days and accrual of five for the first year of employment.
§ Provide the City Manager the authority to make medical plan and wellness incentive design enhancements within the overall health insurance budget.
§ Provide the City Manager the authority to approve rate increases and vendor changes as necessary to appropriately fund Medicare-eligible Retiree Health Plans upon receipt of renewal rates from the Administrator of the Medicare-eligible retiree coverage.
§ Provide the City Manager the authority to renegotiate the current contracts, or if the contracts are rebid, to select vendors, execute the contracts and future contract amendments and determine plan design within the selected vendors for Employee Assistance Program, Prescription Drug Plan, Flexible Spending Accounts, Health Savings Account Administration, Health Advocacy, Short-Term Disability, Long-Term Disability, Family Medical Leave Administration, Life insurance, Stop Loss insurance, voluntary benefits, and wellness services.
H. Approve Outside Agency and Municipal Service District Contracts
This action authorizes the City Manager to negotiate and execute contracts related to outside agencies and municipal service districts. The outside agency and Municipal Service District contracts are outlined below.
§ 100 Percent Federal Grant Funded Financial Partners:
- Carolinas Care Partnership: $2,961,512
§ PAYGO/Federal Share Funded Financial Partners:
- DreamKey Partners (formerly Charlotte-Mecklenburg Housing Partnership, Inc.) - Affordable Housing: $1,690,000
- DreamKey Partners (formerly Charlotte-Mecklenburg Housing Partnership, Inc.) - House Charlotte: $2,231,000
§ In FY 2023, $2 million in funding is dedicated to home ownership assistance for City of Charlotte employees.
Charlotte Center City Partners ($6,232,801)
§ District 1: Center City
- Tax Rate remained the same, 1.36¢
- FY 2023 Contract: $1,862,870
§ District 2: Center City
- Tax Rate remained the same, 2.27¢
- FY 2023 Contract: $1,345,174
§ District 3: Center City
- Tax Rate remained the same, 3.38¢
- FY 2023 Contract: $1,976,378
§ District 4: South End
- Tax Rate remained the same, 3.90¢
- FY 2023 Contract: $1,314,428
University City Partners
§ District 5: University City
− Tax Rate remained the same, 2.79¢
− FY 2023 Contract: $1,239,724
South Park Community Partners
§ District 6: South Park
− Tax Rate, 4.00¢
− FY 2023 Contract: $1,353,727
• This amount is what was included in the Proposed FY 2023 Budget. The contract amount will be adjusted based on the final Mecklenburg County tax assessment.
Public Art
§ The Arts & Science Council administers the Public Art Program, which is outlined in Chapter 15 Article IX of the Charlotte City Code.
§ The FY 2023 CIP Public Art allocations include:
- Aviation: $2,422,928, and
- Charlotte Water: $2,119,153.
School Resource Officer Program for Charlotte-Mecklenburg Schools
§ The Charlotte-Mecklenburg Police Department (CMPD), through the School Resource Officer (SRO) Program, has a security presence at Charlotte-Mecklenburg Schools (CMS) middle and high schools in their jurisdiction.
§ The SROs provide police services to their respective school communities as their primary assignment.
§ CMPD will provide approximately 50 Police Officers and one Sergeant to CMS for the 2022 - 2023 school year.
§ This action authorizes the City Manager to negotiate and execute the FY 2023 contract with CMS for continued funding for these SRO positions.
Charlotte Works
§ Annual contract for implementing federally funded Workforce Innovation and Opportunity Act.
§ This action authorizes the City Manager to negotiate and execute the FY 2023 contract with Charlotte Works for fiscal integrity and performance management.
I. American Rescue Plan Act Funding
§ The American Rescue Plan Act of 2021 (ARPA) provided the City with $141,618,325 through the State and Local Fiscal Recovery Fund.
§ The City received the first tranche of this funding, $70,809,162.50, in May 2021. Investments from this tranche of funding focus on housing and homelessness, workforce development and employment, community vitality, and City operations.
§ This action authorizes the use of $20,800,000 from the second tranche of ARPA funds for investments in employee retention ($10,800,000), COVID-19-related healthcare costs ($6,000,000), and IT Infrastructure ($4,000,000). Any contracts or agreements related to these investments will remain subject to the City’s existing procurement policies regarding City Council approval.
J. Approve Other Budget Items
§ Various updates to the schedule of regulatory and non-regulatory user fees.
§ The budget ordinance included is the City’s annual budget operating ordinance. Sections 1 through 14 of this Ordinance reflect the items included in the FY 2023 Budget and all Council adjustments.
§ The remainder of the Annual Ordinance (Sections 15 through 103) serves to make budgetary corrections to the current fiscal year for technical, accounting, and other adjustments necessary prior to the fiscal year’s end.
Attachments
Attachment(s)
Annual Budget Ordinance
Resolution by MTC
FY 2023 Compensation and Benefits Recommendations