Town Struggles With Budget, Lost Funds

Given the town's dire financial situation, the disheartening message in his mailbox was almost appropriate. These days Horton seems to bring more bad news than good to the council.

"It seems that the only good news I bring you is that things have not gotten worse," Horton announced at the start of the meeting. "Well, they have gotten worse. This evening we are short $75,000 that we had at the beginning of the day."

The e-mail told Horton that the town would lose the money as a result of a recent Federal Communications Commission ruling prohibiting the town from taxing cable Internet service. This latest withholding comes nearly two months after Gov. Mike Easley's announcement to hold back more than $1 million from the town, and officials say next year's outlook is bleak as well.

"Some way, somehow, we've got to find $3 million," said Mayor Kevin Foy. "It's not going to be easy. It's going to be painful."

Tuesday night, Horton presented the council with a status report on next year's budget. The report outlines three possible budget scenarios that hinge on the state's own revenue disbursements. All three call for no expense increases next year.

Foy and others expect the worst of the bunch next year -- a $3 million shortfall for the town.

"Although that's unfair, it appears that's what's going to happen," he said. "We've got to raise taxes."

If the state holds back the anticipated $3 million, Horton's plan calls for a potential 7-cent property tax increase, from 46.1 cents to 53.1 cents per $100.

Another revenue generator would be to raise commercial garbage collection fees. The proposal calls for the establishment of a $750 to $800 annual fee for once-weekly collection.

"We're looking for any way we can to find money," Foy said. "So it's possible there will be some increase in fees."

The town's plan said the fee would generate additional revenues of about $300,000. But the recent economic downturn, coupled with the town's high living costs, drew a negative response from one agency representative.

"Since September 11, five businesses have closed in downtown Chapel Hill," said Robert Humphreys, executive director of Chapel Hill's Downtown Commission. "Any change in service will result in higher rents."

The town also is likely to trim its capital improvements program, which traditionally funds town infrastructure improvements like sidewalk repair and greenway development.

But with the town's constrained fiscal situation, the program's $438,000 will fund debt payments and repairs at the Hargraves Center and Inter-Faith Council Shelter.

Horton said the town's outlook for the next few years is brighter but that any economic uncertainty warranted the conservative spending plan.

"My crystal ball is not any better than the next person's, and I can't see that far out."

The City Editor can be reached at citydesk@unc.edu.