The Chapel Hill Town Council is ending its fiscal year 2021 with $7.9 million more than expected, according to a presentation from its Jan. 5 meeting.
The Town’s excess fund balance was one of the main focuses of the recent meeting, and the council faces the decision of how to allocate those funds to best serve the interests of the community.
Chapel Hill Business Management Director and Finance Officer Amy Oland said the Town had an incredibly strong end to the fiscal year. The Town's conservative budgeting, unexpected sales tax growth and personnel savings from the hiring freeze contributed to the extra $7.9 million.
“The Town was very conservative going into the fiscal year '21 budget as we recognized that there were numerous factors that we did not know how the pandemic would impact,” Oland said.
When the budget was originally created, staff had predicted a 5 percent decline in average sales tax revenue. However, Oland said that there was a 15.7 percent increase from the prior year’s sales tax revenue.
Additionally, the hiring freeze implemented to curtail spending after the pandemic began resulted in $5.9 million in savings. Usually, only $2 to $3 million is saved by vacant positions due to turnover, retirement and other factors.
Of the $7.9 million in excess funding, Oland and Town Manager Maurice Jones recommended that only $4.5 million be made available for general use.
Town of Chapel Hill staff recommended that the $4.5 million go toward council and community interests in areas such as climate action, affordable housing, pandemic recovery and building/street maintenance, according to presentations from the meeting.
Of that $4.5 million, staff recommended that $500,000 go toward climate action projects in Chapel Hill, including the town's approved climate action plan.
Staff recommended that $500,000 be allocated toward affordable housing and human services projects that are in need of funding. Additionally, staff recommended that another $500,000 go toward building maintenance and $500,000 invested in streets.
"As we've mentioned numerous times to council, we have fallen behind in our building maintenance," Jones said in the meeting. "We have reduced that over the years ... and we believe that it's time to take a step forward in addressing some of those needs."
Jones recommended that the Town allocate $1 million toward vehicle replacement, which would go toward the current $5 million backlog in Town vehicle replacements that was caused by years of deferrals. Jones also said that $500,000 could go toward installing splash pads in Chapel Hill.
Council member Amy Ryan said that she would like to see most of the money dedicated toward climate action, maintenance and affordable housing projects.
“I don’t feel like it’s found money," Ryan said. "I feel like it’s kind of money we borrowed from the past, and we need to be paying it back.”
Council member Camille Berry said that she would like to see the money put back into the areas where it had been taken from and that she would prefer not to have splash pads included as one of the potential uses.
“We have been very cautious in spending, and it just doesn’t feel that there’s integrity there to then put it towards that when we have some needs that need to be addressed that we put on hold,” Berry said.
Mayor Pro Tem Karen Stegman said that restoration of vacant staff positions as well as maintenance should ultimately come first.
"I think that we've asked our staff and the public to go without and do more with less, and I think that we've paid a price for that," Stegman said. "We don't want to make that the new normal of our staffing level and workload. That's just not sustainable."
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