Mayor and Council - Regular Meeting

Turn town council meeting budget presentation December 1st 2025. Would you please introduce yourself?

Are you okay? I am Katherine Masa, the finance director of the Thomas. This is a great name. We have the 2026 operating and capital budget. Um so significant issues that have impacted our budget for this year. Um we had increased class and payroll. Um those are due to the various unions as well as another 12% increase in the health insurance. Um we have a 12% increase in Kent County sewer fee. Again we did go into a new trash contract that was a 30% increase. Um we are doing a $500,000 capital reserve contribution. Our legacy pension contributions for this year are 1.1 million approximately and our debt service payments for this year are $2.8 million. Um we did have an increase of $250,000 in payments this year due to the closing of the east street project last year. This is just an overview of our operating budget. um our general fund revenues and that's mostly taxes, permit fees and such is 13.1 million whereas our expenditures for the general fund government are 18.9 million. So the difference of point 5.7 million are coming from the water, sewer and electric departments. at the end of the um the end of the year that'll be moved over to zeroed out. Um for our water department, we're looking at 3.5 million in revenue where our expenditures are 2.1.

Our sewer department's 4.6 in revenue and our expenditures at 3.5 million. Electric departments over $19 million in revenue and 15.5 in expenditures. Trash department, we're looking at 2.2 2 million in revenue and 2.1 million in expenditures. And that's where we'll be able to get our $500,000 to the capital reserve as well. Our staffing currently we have 115 full-time staff members. We do have a few vacant positions that have been budgeted for 2025 and they are just still empty. We have an accounting manager in the finance department, a safety coordinator in the uh manager's office, a police administrator, three officers, a municipal worker in the parks department, and we are adding a new water department apprentice as a partial year hire in July. These are my recommended electric rate changes. Um we are reducing the PPCAC rate um which is currently 0277 per kilowatt and I would like to reduce that to 0244. Um, but with that change, I would like to increase the flat rates of the residential, commercial, and the general customer charges.

Yes, Kathleen, just for um clarification, can you please define what PPCAC is? So, it's the purchase power charge adjustment. power adjustment charge. Thank you. So that is a variable rate to offset the per kilowatt rate. So the per kilowatt rate plus that is what directly pays our DMC bill. Those are not revenues for us.

Thank you.

Okay. Um the average customer increase for electric would be for the residential customer is a 1%. A commercial resident commercial small business would be a negative 1%. Small general would be a 4% increase medium 3% and the large 2%. for the water and the sewer departments. Um we are looking to increase all water rates 10%. And that is due to the increased debt service and the increased cost to maintain the water system and a 12% increase to all sewer rates. Um that's due to the 12% Kent County sewer increase at 12% as well the increased debt service and the increased cost to maintain the sewer system. for the trash. Um, we would like to increase the customer charge from $ 36.50 to $38 and that is due to the new crash contract and we only did a partial increase in September to give the customers time for the full rate increase. This is what a average customer utility bill would look like. Um, this is 1,00 kilwatt hours, 3,000 gallons of water, no extra trash bins, no yard meter. Um, we would be looking at a 4% increase.

Question real quick. Yeah. Uh, of course, we got the new trash bin that's wider and the new recycle bin that's wider. Um, and it was a partial, but they'll be notified either in their bill or paper or a phone call about Yes. So this is um the fee schedule is to be p to go on to the regular meeting. So if everything passes tonight, we do post it the next business day and we will start notifying and it will be on this next utility bill and the following utility bill we'll be have Facebook posts on the website. And so these fees will take effect effective when

January 1. Thank you. So it would be the bill that we send out in February due in March. Um these are recommended rates and fees that are just miscellaneous. Um, we would like to increase the application fee, the rental inspection fee, the rental reinspection fee, the code enforcement administrative fee, um, a billable electric and PW labor rate. Um, a billable construction inspector rate. That one is new. Um, we would like to add 10% administrative fee to rebillable professional services. That is also a new fee. Um, and then we would like to increase our bulk water fees per load per thousand gallons. And we would like to add a new administrative fee for the customers that come in after hours or they don't tell us how much they took.

What are the fees from before? So, the application fee was $25. The rental inspection was $55. The rental reinspection was $80. Code enforcement was $50. The electric and PW rate was 50. And then the bulk water fee was $35 per load, 1920 per thousand.

And just for clarification, Kathleen, all that information was sent out to us prior, but the fees were prior to this and what you're presenting tonight. Am I correct? Uh the rate schedule was sent out today. I'm talking about the prior one. The prior ones on that are posted on the website. Okay. I just want to make sure that we all have seen the same thing.

And again, so let's let's kind of revisit what the uh the rates and fees are because I I think some people might be a little confused with actually what they are. The big one is like the bulk water. Um, a lot of people don't realize that people come to us to fill up tankers, trucks, right, for pool fills and stuff like that. So, there's a fee that's associated with that. These fees just haven't been updated in years, right? Um, a lot of times we have staff that get called out for certain things. We haven't updated these fee schedule in a while. So, it's not even covering what the overtime is

for the employee to get called out. So really, if we're calling somebody out, the town is eating a cost because we just have not updated with salaries over the years. So again, taking all this into consideration, a majority of this is just to cover operating costs for for the services that are being provided. So So when you say calling someone out to fill their pool, is that what you're saying? No, we don't fill pools. Okay. Okay. Okay. Cuz I'm like I thought that was the There are times where, you know, we have a lot of private contractors um that will come out. They'll fill their tanker trucks up. I some of the ones that are floating around can't even remember their names, but you'll see them, right? They're private pool, but they've got to get the water from somewhere. So, they come get it from us.

There's a way for them to come out. They go to public works. They hook up. They fill their trucks up at a fee, right? Um and then they go out and that's where they make their money. So, They say, "Yes." Yes. Like, so there's this is a contract fee. Okay. Right. This isn't this isn't really going to anybody in in citizen or anything like that. So, we have a way to track everybody that uses that water so that we know what we're getting so that we're not giving it away for free, right? Yes.

Thank you. Where are the taxes? Uh we do not wish to increase taxes at this time. Um we are also not looking to adopt the county taxes just yet. Um we're trying to wait until the Newcastle County is settled with their great taxes because we will have to adopt both at the same time. But you mean adopt them? Like their assessments. We would take their assessments and we would adopt those assessments and then change our tax rates so that we would be revenue neutral with the change, but we would utilize their assessments. Okay.

Um on to the capital budget. Um some of our new 2026 capital projects over at the police department. Um we're going to do the fence and the back doors. Um this is due to safety concerns and we are financing this with impact fees. Um we have an electric project project the distribution circuit automation. Um this is to prep for the SCA system. We're also financing this with impact fees. Uh we have a cable replacement at Duck Creek. Um this is not quite financed yet. We are waiting to see what our final 2024 numbers are and are hoping to utilize some of the funds that are over with that audit. Um continued, we have the Cory Lane sewer. Um this is necessary to prevent a larger problem. Um we're going to finance this with impact fees and we also have small amounts of budget remaining on some completed projects we would like to utilize. Um, for the parks department, we have a ball fields upgrade and this is with an OPT matching grant. So, we pay all of it up front and then they pay us back half of it. And this is also financed with impact fees. Um, our ongoing projects, we have the North North Duck Creek Utility Extension, which is fully funded. We have the substation. Um, we are in the engineering stages of this and we are working with DME for funding. We are in the engineering stages of the second water treatment plant and we are working to get state funding for that. Federal funding and we do have quite a bit already funded. Um this the electric infrastructure mapping and EAP project. Um we are adding on an additional part to that project and we will also be funding that with impact

fees. Um the blue renovations, we do have that funded and that's just ongoing as well as an electric circuit upgrade as that happened. Um any questions between this and what we provided? I did send out a lot of information last week. you talking about any questions on anything or budget wise?

Yeah, budget wise. Well, you know, the uh thing is we're increasing the transfers from the utilities to the budget by a lot. We're increasing them by $2 million into the general fund. into the general fund. Right. And by the way, you know, this this this uh paper that was left here of revenues increase and decrease, I noticed you corrected the numbers that are in yellow there. Well, the one just below level yellow needs to be corrected, too.

And that says 189% increase in the water and sewer transfers. So, that was the much larger increase this year than it was last year. Well, it's not even 189, it's 289. It's 289%. Okay. That's quite a big increase. And the uh I mean, is this the total report right there or uh go I want to go to the town manager's part of the report. Okay. Now, he's getting his budget doubled. Yes. From from 895,000 to 1,815,000.

Yes. Y and that's mainly due to hiring new people. No, it is. That's incorrect, sir. So, what has happened is there were positions that were in other departments that I moved from. When I came in, there was three people in the town manager department. I've moved other positions that were already funded under this. So what has happened is is those positions then came over here underneath of myself and they're funded underneath the so there's all with the purposes but your budget is getting increased by $1 million but it's being decreased

like like where so I move the screen positions from the police department. We moved two empty positions from planning police department certainly didn't decrease their budget. So these these are administrative positions that were moved to

course. Okay. Under the town managers, it says town provided utilities $100,000. What is that? So the town provides utilities for certain nonprofits within the town. So you have the fire department, you have the opera house, you have the other entities like that the town provides utilities. So it's going up from 28,000 to 100,000. It's also all the town buildings as well. And why would that be tripling?

So, as you just heard, 12% increase that's coming from the county, right? That's a pass through. So, you take that and you look at a large number, that number is going to increase. Um, again, we have taken on the new library, the new library. We've taken on the other places that we have. So, these are all things that we're So, the town provides electricity for the library. Does.

Okay. And it's minimal because they have solar panels to to adjust for those things. But in lie of doing donations at a lump sum, we are giving those things to certain entities within the town. And I noticed both in the police and in the town manager budget some some big increases in health insurance and pension. The health insurance was is quadrupling there. At least one of the types there under the town manager the health insurance and the police is two up 240%.

So it wasn't budgeted correctly last year. There was increases that came that they are passing through to the town. So it was about a 35% increase I think is what it was or no sorry pension. the pension went up and also the medical did go up yes 12% last year it's going up 12 again so I'm sorry 12% too but I mean if they were 12% or 35% that's not the same as 400%

it's also a difference of um the employees and what benefits they are receiving so an employee who's just getting benefits for themselves it costs us 15,000 an employee getting a full family benefit on the most expensive one it's about 40,000 So, it's a difference of what benefits they choose for their family itself. And uh I on the under the police, what are contractual services? $28,000.

So, there's a lot of things that are contractual services that we have with in the police world. There's a lot of things such as Axon. Axon's a contractual service. Axon is incar cameras, body cameras, um the interview room cameras, um and that amount continues to go up and it is a necessary ebook. But I can promise you, it's a little over $100,000, right? Um which is a much needed tool in that world because you don't want that lawsuit. And then it's other stuff around the building. They're building maintenance, air conditioning, elevator maintenance. So those are all contracts and that's contractual sources.

I think if I remember correctly last year there's nothing listed under that and now it's 28,000. It was in various different GLS and then combined into one this year. Okay, I guess that's all the questions I have for now. Okay, that being said, we will close this portion of the meeting and wait for the 7 o'clock meeting to