Town Manager Addresses Budget Shortfall

Last week, Gov. Mike Easley declared a fiscal emergency due to a $900 million shortfall for the fiscal year. To deal with this problem, the state passed part of the deficit to the municipalities of North Carolina by withholding certain revenues that were to be distributed to local governments.

Town Manager Cal Horton proposed a list of potential budget adjustments to the Town Council at its Monday meeting.

Within 30 minutes, the council opted to suspend approving Horton's proposal until it meets for a budget work session Wednesday. Horton also said he wants Foy to send Easley a town-approved letter explaining how Chapel Hill is going to handle the budget cuts.

"We are faced with a more drastic situation than anything since the (Great) Depression," Horton said, speaking about the severity of the situation.

"What was a state problem now affects over 400 cities and over 100 counties."

After further reviewing the budget, Horton said he determined that Chapel Hill's budget shortfall would be more than $1.4 million, rather than the original $1.04 million estimated last week.

Horton suggested that the town allocate $215,000 in accumulated interest from general bond proceeds to make payments on the debt caused by the budget cuts rather than using it to pay for new buildings or maintenance of existing buildings. Horton said he advocated this action because of the market's low interest rates.

Another $200,000 from the town's Debt Service Fund also would be allocated to the debt payments, he said.

Additional funds would be drawn from the Capital Reserve Fund, the Off-Street Parking Fund and the Vehicle Replacement Fund.

Council member Edith Wiggins asked Horton which town positions would be affected by the budget crunch.

Horton informed the council that there are 15 vacant town staff positions. He said six positions that must be filled include a human resources director, a traffic signal technician, a landscape superintendent and an assistant recreation supervisor.

Another eight or nine positions that are vacant could be left unoccupied at this time to save about $150,000 for the 2001-02 fiscal year, he said.

The council agreed that it would be in the town's best interest to maintain a balanced budget, as well as to preserve a reasonable fund balance.

The fund balance, which amounts to $4.3 million, is a reserve fund for the town's emergency needs.

Horton said this balance should not be withdrawn at this time because the funds are used as a reserve for weather emergencies. He also said the money should be saved because next year's budget problem most likely will be more difficult than this year's.

But Horton said he will continue to assess the budget situation. "We are going into every cupboard and taking everything that is not nailed down."

The City Editor can be reached

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