Board of Aldermen - Regular Meeting

Yes, basically to call, call the meeting to order.

This is going to be a continuation of the meeting we had. Um, do I have a motion to open a motion to read? I mean, I make a motion to return.

I'm sorry. I thought she was going to ask me from recess.

You have to sit up here.

I like that.

The second, the motion to return from recess.

All in favor.

All opposed. All right. So where we left this is we were going to start, we went over last time. So now we're going to start the budget meeting. And Larry, I don't remember. Did you do your PowerPoint already? And let's start. I'll turn it over to you guys.

So it's the mayor in order.

So if you're here, please, including me, silence your phones.

because I did not. Now it's silenced. Thank you. Sorry, Larry. If the mayor and board are so inclined, I would suggest this agenda or order of business allow me to offer an overview of the revenue-neutral tax rate methodology, followed by a review of Fund 10, 12, and 30. Okay, if that's acceptable. All right, so Ricky's got the... PowerPoint projected. Before advancing, Ricky, let me give a little bit of introduction. So this is an overview illustrating the revenue neutral rate methodology. Preliminary ad valorem revenue distribution between funds, and thirdly, a value of a penny in your tax rate based on the reevaluation amounts that Onslow County derived this calendar year. Caveat, we're tracking Senate Bill 889, which is basically called moratorium on re-evaluations for initially targeting nine counties, Onslow being one of them. We are doing this for the purpose of determining the valuation or property valuation basis and revenue neutral tax rate, whether we would be using the 2026 reevaluation amount or the 2025 values that were in play for the current fiscal year. Slide. So this is the statute that defines how the town how towns, cities, and counties shall calculate the revenue neutral rate in the year of a reevaluation when it's conducted. We're required to announce the rate and publicize it. A possible misconception over what revenue neutral is, what is it? Simply, it's the tax rate that a town, city, or county needs to produce an equivalent amount of revenue had there not been a reappraisal, simply put. Revenue neutral rate will affect individuals differently. Just a brief example, two different scenarios or situations. You're a property owner whose reevaluation or appraisal amount is above the average for the community. Collectively, we've represented or folks have represented that North Topsail Beach aggregate values went up 45%. So a property owner whose value increased above that percentage would receive a tax bill that is above his previous bill. A property owner whose reevaluation is below the town's aggregate increase in value has the opposite. Their tax bill would be below the previous bill. Both of those scenarios are using two basic assumptions that we're using the revenue neutral rate and the new values. In other words, the values that came out through this appraisal. In terms of this statute, just to briefly kind of go through it, the formula components, and I'm paraphrasing, to calculate the revenue neutral tax rate, we determine the rate that would produce revenues equal to those produced for the current fiscal year, then increase the rate by a growth factor, which is the average annual percentage increase from between reevaluation years. And the third factor, which doesn't apply in North Topsail Beach, is accounting for annexation, de-annexation, mergers, or some other similar event. We do not have that. Slide. So this shows the revenue-neutral formula components, the current tax rate, tax revenue, approximately $7.5 million, the annual growth and growth rate, which we calculated as 3.12%, the reevaluation amount approximately 2,300,000 and change. The 3.12% is the average of three years growth in property values, and that's represented in the second column from the right.

You might want to mention, Larry, too, that those were not reval years. Those are the years between the last reval and this one. Yes, sir.

Yes. Slide. So this illustrates the mathematical steps. So step one, current revenue times the growth rate equals approximately $233,000, which is added to the current ad valorem revenue. Second step, the adjusted tax revenue amount is divided by the reevaluation amount and used to identify the revenue neutral tax rate. And the third step, again, we don't have annexations or de-annexations. The calculated revenue-neutral tax rate is, at the time these numbers were published, and I'll add some commentary to that, is 32.33 cents. That's the revenue-neutral rate. you're not required to adopt that rate. You could adopt a rate below that or above that. Just as a matter of reference, each month the tax assessor updates the communities in Onslow County with adjusted values. Why might that happen is that we're going, or the communities, property owners are going through appeals processes which will affect values. I would suggest that in North Topsail's case, it may be significant for an individual property owner. It probably won't be significant for the town in terms of actual dollar amounts or the revenue neutral rate. Sure, it may change by a tenth of a percent or two hundredths of a percent. So technically, the numbers that we're projecting there have changed. We got updates. We got an update yesterday afternoon or so. And quite admittedly staff was kind of getting frenetic of oh gee do we need to change all these slides said no no we'll in the interest of being transparent we'll share it with the board uh so we know that there's a change this month there will likely be a change uh on or about the uh the 15th of june and uh which will has the opportunity of of you know shaving the uh our calculations

This also includes homes that were built during this period. So when they're making the adjustment, like across the street from me, house just got built. I saw the guys out there a month or two ago. That'll be added into the tax base too, right? So it can go both ways in theory.

Thank you. Slide. So we've illustrated the recommended change in revenue distribution between fund 10 and 30, which is approximately $377,000 at the at the date on a prior date. These slides have been updated a bit, so my remarks are a little bit off. But if you look at the Fund 30 and go from left to right, you can see the column that describes percentages. Current year, the distribution rate was 23% approximately to Fund 30. Proposed at this moment is close to 30%. And how we've accomplished that is the efforts of the board to right-size expenses and also to we've increased the distribution to Fund 30 from Fund 10, basically. The other fund is pretty much close to constant. And it's coming out of the contingency line.

Before we leave that, just a question for you. On the capital side, too, now that we have the new firehouse in and effectively paid for, it's a note, that might be another reason, because I know we were putting money away originally, preceded you in terms of what was going to be in the capital fund. Because I remember when we started that years ago, and Connie, you remind me if I'm not correct, one of the reasons we were putting money in that fund was to pay for the firehouse. So is that kind of a reason? And then the thought on the shoreline is... is to make sure we've got enough money to do the big project. So that's why the money is going in there, correct? Yes. Okay, thank you. I mean, that's consistent with what we've talked about as a board. The biggest project and number one priority after public safety, so the two guys in the back don't get nervous, is the beach, and this reflects that.

Wayne is reading y'all's collective mind. Okay, good. Okay, slide, thank you. This final slide illustrates the approximate value of a penny on the tax rate based on the reevaluation amounts. That, I expect it will change 1,000, 2,000, a couple thousand as we get closer to June 30th and the appeals that would be considered this fiscal year come to an end. I'm not sure how long the appeal process can last, but we will be making a decision from a calculation standpoint between now and the 24th. So I'd like to just highlight the budget process and kind of steps that we were going through or have gone through subject to your guidance received in today's budget session we'll finalize what I would call the managers proposed budget emphasis on manager's proposed budget. It's not the budget that the board has to adopt, but at best, or at worst, it'll be a snapshot in time of what we think is the consensus, and in my and staff's opinion of needs and requirements. This is kind of critical in that we are on a timeline, if you will, prepare documents for publication and formal transmittal to the board. We intend to do that, finish doing that this afternoon, tomorrow, and transmit formally the 21st material to the board and submit an advertisement to the paper on the 21st announcing a public hearing for the 3rd, June 3rd, and that budget documents are available for public inspection. I imagine because of the holidays, the paper is requiring our legal ad on the 21st for publication on the 25th. So kind of a flash to bang is kind of long, but so we're racing to meet those deadlines in this These requirements are set forth to a large degree in the general statutes in terms of public hearing notice, um, timeframe collapse between the data of public hearing and the date the board can adopt a budget, which is approximately 10 days and a budget at the local level needs to be adopted by June 30th and the tax rate set. So backing into the other dates prior to June 30th, I mean, we're racing.

We go over a couple of things that you educated me on. One, when you and I had the meeting, I keep losing track of today. When do we have the meeting at the county? Was that Monday? You were Zoom and I was there. That was Monday. I think so. That was Monday because I had another meeting afterwards. So by law, the only tax base that we can use is the one that the county gave us on January 1st, 2026. Right?

Unless the legislature changes the rules. Unless something changes.

No, because there's been a lot of discussion around that. There's a lot of things going on at the legislature. There's two different bills that are being looked at. In the Senate, it's freeze it. On the House, it's kick it down the road and have a referendum. And so we had a lot of discussion about that, and he had filled me in. The second thing is that you have brought up here just to make sure people understand it. statutorily you as a town manager must make a filing that lays something out as it as your budget the board has the ability to change that modify that budget yes okay we have a public hearing which would probably be on the manager's budget but also a discussion so that we are able to modify that budget as we see fit okay but we have to get something out there literally The conundrum in this thing is when Larry throws up the two different numbers up there, the concern we've got is one says 43 and one says 32. And I'm pretty sure the only one people are going to remember is 32. And I know we're striving to go revenue neutral, but it's important to remember we have to publish those. that number based upon what we've seen and if if legislation changes whatever the other thing we've been advised about and again with your experience is if we adopt a rate on june the 3rd right and on july 1st the legislature passes something reversing the um the reval we're still stuck with that rate for a year okay and that is something it was a lot of the discussion we had on monday some of the other towns didn't have his expertise and kind of laying that out for us and there was a lot of people saying why can't we publish two budgets why can't and you can't do that we have to adopt one rate okay it's got to be done by june 30th and what they do in raleigh it's nice to look at but it doesn't affect us unless they actually do legislation is that fair yes yes and i would i would i would add um

emphasize we're getting the messaging right. I don't know to what extent it will, I hope not to complicate our community's understanding of what's happening. I've offered the mayor a very draft public notice that the main feature is that it includes, and I'm not sure if we can project it, but a table that shows our current tax rate, the valuation, proposed tax rate valuation using current values, proposed tax rate using 2026 reappraised values And then the fourth column is the statutorily defined calculation of revenue neutral rate. So a lot of numbers put a number of different caveats in those columns to try to help. So I can remember what version of the truth we're trying to explain because there's a number of nuances. And just as one example, we're using for proposing revenues in ad valorem revenues, 98% collection rate. The past, the town has used 96. That's 2% difference. So the numbers will be different just comparing revenue neutral rate for this year and next year would be different. And then the biggest change difference is what valuation is going to be required to be used. So hopefully we get it right. The table I will include in the manager's budget message, so you will see it there. And hopefully, my intent is that it helps explain. We offer a narrative explaining the legislation that's working its way through the General Assembly as kind of a foundation of why you see all these numbers.

And just, I'm going to reiterate something, and I know that you've made it very clear. Two things. The reval was given to us by the county, and that's part of their statutory obligations to give that to us. Two is, you have the right to appeal that number. I was talking to a group of homeowners that were up in the north, and they were talking about comparables and things like that. And I know that somebody sitting to to my right actually did this a couple years ago and so I think my suggestion that if you want to appeal it is In KIPP you can weigh in if you'd like is do your homework do comparables when you go in there Because if you just walk in and say I don't like the number that's gonna be very hard for them to change it So KIPP did you want to add anything?

Yeah, I mean, obviously everybody has the right to appeal. And, you know, for our situation, the value of my model home, which is prolific on the island, was drastically different from my neighbors. And so I appealed it on those grounds a couple years ago. Appealing this year, it's kind of similar in that you're trying to say, All right. Here, I have had an appraisal done on my home within the six months and presented that. I'm still waiting for information. I need to reach out to them since I've been gone for the month. I need to find out. But I encourage any resident, if you feel that the values are too high, reach out to somebody who's knowledgeable in these things, a financial advisor, a real estate expert, your neighbors, they're going to provide you with the best strategies that they may have employed in order to have the county recognize. I mean, I was fortunate enough the first time going through this that, uh, an actual employee in the tax office said, you know what? I agree with your, your presentation and I'm gonna recommend you did it in person too. No, I, no, I did this virtually because I was, I was actually down in Florida helping my mother.

So they're very, you're, you're a zoom call.

Yes. Yes. That's what I meant. But it wasn't, I didn't, you didn't just send papers. This was before the, the panel. Um, which are not county employees. They're very a county. They're very, uh, uh, accommodating. So I, I was fortunate. But, yeah, I'd recommend anybody if you feel that the values are drastically off to file that appeal. But it can also go the opposite direction. They do warn you that your appeal can cause a revaluation in the upward direction as well. So it's everybody's own decision.

Okay. Any other questions on Larry's presentation? Because I think now we're going to get to the meat, right?

Real quick. If we're talking about, obviously, we're trying to wait to figure out what the state's doing. What are we talking about differences in the 43 versus the revenue neutral number? It's 32. 32. It's 11 cents. So what's that equate total dollar value for the town? It's the same. If we set 32 and they keep the rate at the previous, what shortage are we looking at?

I would spin it this way for you is that we're – holding revenue generation constant, what changes is the tax rate to generate that revenue and the property value that it's based on. So for example, we're suggesting approximately 7.3 million in property revenue ad valorem revenue, the tax rate under the reevaluation numbers would be approximately 33 cents tax rate.

Can I interrupt just for a second? I thought the question was a little bit different.

We're on July 1st when they change the tax rate.

Right. Because right now, whichever one they use, as long as we can do it by June 30th, the 43 and the 32 will generate exactly the same number. High reval, no reval. On July 1st, if they go from the two, whatever, down to the one seven. That's a big number drop, right? Is that what you're looking for or just what it?

You know, I'm afraid that obviously we are on a time schedule. We don't want to put any undue pressure on you and the staff to try and come up with and then try to predict what's going to happen in Raleigh. But if we set the revenue neutral at 32 and the state then suspends all or a portion of the revaluation and then that's going to lower our revenue overall, What is the worst-case scenario if we set the rate at 32 and they suspend all revaluations back to the original number? We're lowering our rate by 11 cents. So Connie just punched in her calculator, about $2.5 million shortfall.

11 times that number. Exactly. But I would say that I would say that I say this in good faith. legislature if they want that the legislature wants to affect a moratorium on reevaluations it would necessarily needs to be done before june thirtieth because every community in unlike unless as part of the bill they extend time frame that budgets have to be adopted so i don't know that they can do both They can walk and chew gum at the same time, but I don't know that they can do both those items. So I would expect that it'll be OBE if on June, if they have not adopted a moratorium by june twenty nine so we're monitoring uh... uh... we have i think we've been with close close whole conversation we've had with uh... some members that uh... you know if if the legislation is still uh... moving but hasn't been adopted by june twenty fourth our proposed date for the board especially for the border dot the budget then we would suggest

Postponing rescheduling that meeting for a later date to like June 30th, which I believe is a Tuesday Thank you It's a hard one because a gap the gap is huge if they do it at the wrong time And I think I think I don't think they're gonna do that because I think that like you said you can't If you would have seen the discussion we had on Monday with some of the other towns that they have not been I would say it's fiscally responsible as we've been They have no coverage. They might have like 15% coverage on their operating expenses when you're supposed to have, what, 25 minimum? So you got people that have not done what we've done, refinanced, put stuff, and put money away and stuff. There's some people that, in that meeting, without naming them, and you were there, are very concerned about what happens in that town if this thing plays the wrong way. Is that fair? Like, we're too small to absorb this. We're gone, so... Go ahead, Connie.

Okay. First of all, thank you and your staff for all the work you've been putting into this. This is not a normal year. So I just want to make sure that I'm correct, and I think I am, but maybe I'm not. Correct me if I'm wrong. It's fair to say to the public that if the reveals that they got this year, if this stands, that we are dropping the rate to revenue neutral. If we do, it's going to be revenue neutral. If the legislature puts a hold on it, everything just stays the same. They shouldn't get worried too much of that 43 cents. That's just what it was before. So it's either going to be possibly dropped to revenue neutral or stay the same. Don't freak out about the numbers.

That's fair. That's fair. But I would, I would, I would, I would emphasize, I would echo the mayor's, um, sediments, uh, that the board has not made a decision that you could say. Usually the manager has proposed rates that other under either of these two scenarios that approach approach revenue neutral, um, estimates.

And I think that's fair and not to get ahead of ourselves. That is the position of Onslow County too. And our discussions with them and discussions they've had there, but I would use the word approach because the issue that they have is I think it's 85% of budgets fixed by law. They have no control over. So they are, um, taking a very aggressive look at expenses would be, um, and to be able to do those things. Cause I know that from talking to them individually, they want to keep it as low as they possibly can, which is helpful to our taxpayers because most people forget that the majority of their property taxes do not come to the town. They go to the county. Mm-hmm you know, it's about a 60, 40 spread right now.

If I could add, yes, I think the mayor alluded to this, but let, let me hit, uh, elevate it. Um, the, the, another bill that's. was working its way through the House, I believe, it's a longer process that would eventually involve, if adopted into law, a constitutional amendment that, if it got through the entire process, would allow the legislature to limit either tax rates or valuations or property value increases. The basic net effect is it would limit what at the local level you can do in terms of adjusting revenues, ad valorem revenues. for whatever purpose, and we don't know what that limit would be. So there is, in the budget message that I'll be transmitting to you, I would expect you'll see it Thursday night or Friday, some little bit of commentary on that, that our proposals don't address that potentiality. The potentiality is that whatever rate that you set let's say it sets and meets your current estimate of goals, priorities, initiatives, service delivery, next year, the year after, something happens that demands a more vigorous and robust salary, or not salary, but tax revenue generation, you could be limited from meeting that.

And just real quick on that, The origination of this is because I think there's four or five counties that they were accusing of basically hammering people for unnecessary expenses for doing all this other stuff and so it's one of those things every any good deed goes you know does get punished in this case the other thing is you said local i believe my reading of that is it's both the county and the local taxes and that that by unless we had a let me use the wrong term rem if we had a referendum at the town let's just say that they capped it at four percent to make up a number The town could say, I want 7%, and the voters could approve it. But it looks like they're trying to kick it down so that there's more control over the tax levies, both at the county and town. You're saying, Wayne, I think that's the way I read it too, right? Yeah.

Okay.

I mean, the reality out there is I call that the kick the can down the road thing because it's going to be one of those things. Who wants ice cream for free? Who wants to have their taxes go down? It depends on how that's worded, but. It's hard to do, and the big objection from the municipals and stuff, not so much the counties, is most people's budget, just like us, public safety is half of the budget. And if you start doing that, there was one thing they wanted to put on there that said, but you can't touch public safety. Well, if you've got 50% of your budget you can't do anything with, you've got a really hard time balancing your budget. That's just a bunch of stuff that's going on The last we heard, the last I heard is they think it's going to get bogged down in the House. The Senate's already kicked their bill over to the House. It doesn't sound like there is enough votes in the House to push through the Senate bill. The Senate bill is the one that just limits them and freezes them. The House bill is the one that says let's have a referendum on it. So that's all I've got. So now you can turn it over to your numbers, guys. You're starting. The thing that both you and Larry have made clear to everybody is if you look at the Advil arm, which is the property tax, what you'll see is the presentation that Larry made. The reason that they're very similar is the 43 and the 33, the 43 is based on the current valuation. The 33 is based on the one we just got. That's why those look the same, correct? With the adjustment that Larry talked about based upon the 3% or whatever it was, inflation number.

I think, I believe though, Noreen correct us, column F, that's using...

The new rate, the new value.

But I think that's, actually I think she, I think we carried forward 43 is using the reappraised value. 47. Okay, Wayne. Okay, I think Wayne's going to...

Which one is it?

There's another, there's a more current one. Because there's, because the dollar, if you look at the line three, the value, the dollar, the revenue jumps wildly. So there's, I think that's using, I think that was an earlier illustration.

Because it doesn't tie back, my point is it doesn't tie back to the number that Connie just threw up there, the difference in those two rates.

But Ricky's the one showing that's up there. Is that it?

Yeah. That's different than the last one.

Yeah. Expand a little bit more, Ricky. Are you doing it or is he doing it?

Ricky's doing it.

So these are the current revenues that we projected, again, for the two different scenarios. This, again, you can see at the very top line there, highlighted in yellow, using a 98% collection rate, which historically, at least in recent years, they've used 96 here. So just highlighting that. There's not a lot of these, there's not a lot of change since the last time that we looked at them. I don't know if you want to go line by line or we just highlight some of these that have the comments.

Before you leave that, here's where I'm lost. So I'm looking, the 2526 is the 1.7 billion, not the 2.4, correct? What I don't understand, though, is at 43 cents, you're getting 4.1, and at 32 cents, you're getting 4.1. So what you're saying is if we have to keep the 43 rate, that's going to reflect the 1.7, not the 2.4, right? Yes. What you're saying is if they do the moratorium...

that's column c if they don't do the moratorium that's column d correct correct all right sorry go ahead yeah just want to make sure um again we've put in some comments there to the right of of anything that just needed to be highlighted or possibly i don't believe these numbers other than the tax rate used are different than last time that we looked at them So I don't know. Yeah, so Ricky, you could just roll down slowly till we get to the bottom of the revenues, which is like line 36. Yeah, so Yeah, so that gives us the total revenues on the projections again the two different tax valuations that we have come up with Okay, um now as we roll down a little bit more we're starting to get into the expense side of this and this is the summary level by department. And we have some notes in here of anything that may have been adjusted probably slightly since last time. The governing body, we did not make any adjustments in there. You can see for administration line, the notes to the far right there, the adjustments that were made were the compensation study and the associated implications of implementing the compensation study. So there is a slight change in that number from the last time that we looked at it.

Before you leave, a couple of questions. I have no problem with putting a hold in there in the $85,000. The $150,000, if the study doesn't go in for six months, is that $300,000 annualized or is that what the annual cost would be?

That's an annualized cost. So it's half that if it's six months. If it was implemented at different phases during the year, yeah.

And then just back to a couple of math issues. One is, as I know it right now, in the current one, which we have not agreed to, we've got COLA at 2.9%. And we've got a placeholder for merit at 3.5, which we'll talk about in a minute because that's higher than anybody around us has right now. And all of those increases are in payroll. They're not as a bonus or anything else, correct?

Correct.

So the multiplier on everything that we're seeing, including the 150... that's in there has all the costs associated with somebody being in payroll, not as bonuses, not as, for example, Chief Page had made a comment about he gives a bonus out to his people because they get some certification or something like that. Everything we're seeing here has got, Mark, that's your point that you made to me before, is everything in there becomes a base in payroll and everything has payroll costs associated with it.

Correct. Right now the Merit and the COLA are payroll increases, not like a one-time bonus payout.

And then when we're getting into promotions, right, and I saw it in planning and there's other things that are in the detailed sheets, every one of the promotions is the same thing. So we've put in here, I'm just asking for the, we haven't discussed what this is. So we have... We've got the 6.4% increase in pay. We've got, in addition to that, we've got payroll. Right? I'm sorry, promotions.

If there are any applied to the department.

Right, okay. And in addition to that, we've got the 150 that's in here. So what I'm looking at, and I went back and was looking at the spreadsheets for I'm using the police as an example. We have something called expansion request. That obviously is payroll because that's what your spreadsheet has in it. Right. I guess he can explain that when he comes up. What you've done is you've put everything in here as a payroll adjustment that shows up as an expansion request, as a promotion, or in this study. So everything is going to be hitting payroll.

If it's a salary adjustment, yes.

No, but every one of those is a salary adjustment. Right, right now. Except for the $85,000 to do the study. correct okay i just want to know because that's the that's the multiplier thing that i've talked about that my concern is that merit increases get baked in as cost of living increases okay i'm 100 with promotions i'm 100 with doing a cola to make sure that people are at least even where they were before but as i've talked here before we'll talk about a little bit more is um the more that we build into base to me The way to make more money is to get promoted or take on new responsibilities. And I'm 100% with that. But if merit just becomes another cola, OK? And like, for example, Jacksonville just said they're doing 5%. That's it. I think that's everything. And that's consistent with what I've seen other towns wanting to do. So we'll talk about that later. I just want to make sure when we're looking at these numbers, okay. That it's not, when you see something that says it's $50,000, an expansion request, it's not $50,000. It's $50,000 plus all associated taxes, benefits and everything else, which is probably another 15 to $20,000. So 50 becomes 70 for budget purposes, give or take. Right. Whatever that multiplier is. I mean, I'm looking at it right now and it's $8,000.

Yeah, but in a salary compensation study, and if you implement, you are changing salaries. You're not paying out a bonus.

I'm not talking about that. I'm just talking about right now with the expansion, we've got $150,000 in there to implement that. Right. But in addition to that, we've got the expansion requests that are in here as well.

The expansion requests are the merit and COLA. That's what's on those tabs.

So when it says down here expansion request.

And if there was a promotion.

Promotions I don't have any problem with.

Right.

Okay. But what you're saying to me that if I look at, okay, because I thought there was a separate line for that. So what you're telling me is if I'm looking at, I'm just looking at the police budget for a second. So payroll is $870,000. So six, you're saying that the expansion request is just those two together. So it's the... So that's what I didn't understand. It's not in addition to those two. The expansion request is the reflection of, okay, that's what I didn't understand. I'm fine. I understand it now. That's all I was, because I was looking at it going, well, if we've got 6% and we got that, now we're at 12%, what you're telling me is no, it's embedded in that. So what you're calling expansion request is simply COLA and merit.

If I could also add, though, the $150,000 for implementing the results of the compensation study is an estimate. But I think the number is bigger. So I would say in the budget message that will be transmitted to you, I try to qualify the number. I would guesstimate that multiple year phased implementation, 150 is first step. And so in terms of payroll, aggregate annualized payroll is approximately 3.9 million. I got that right, yeah, $3.9 million. A swag would be about 10% to implement the results of the market study. That's across all compensation lines. That's probably 10%, roughly $400,000. That's a big number to swallow one fiscal year. So I've just put a number 150.

My confusion was... We talked about this last time. I thought we were, when I was looking at the schedules, I didn't realize that expansion request was basically, you know, the 2-9, the 3-5, right? I could have done the calculation. I was like, if we've got, If we've got the 2935 plus the expansion request, promotions are completely different. I have absolutely zero issues with promotions and that kind of stuff. I was just making sure we weren't double counting that type of thing. And we're not. And to Larry's point, I agree with you. Compensation studies go in. I've never run a company or been involved with a company where it happens overnight that we phrase them in. But people know that they're coming. All right.

Excellent. Mr. Mayor, my concern is we're talking about merit and The thing is, if you're talking about promotion, pay for promotion, but the problem is this town does not have a lot of positions for people to be promoted up into. So if we're not rewarding them for merit by recognizing the fact that they've been here for an extended period of time, I think it does our staff a disservice. So I think I'm all for a 3.5 merit because that's what we did last year. Is that correct?

It was up to 5%.

So we've even cut it down to 3.5% for this year, recognizing that the compensation study could change all that drastically. So COLA is just keeping everybody up with inflation. So that's just keeping everybody barely above water i mean we're staying where we're at but i think the merit is where we're actually supporting to say listen we recognize that there isn't always a lot of mobility upward for promotion or increase in salary therefore merit is you have been here we appreciate your continued hard work and that's why we're paying you the extra up to 3.5 percent or however that works with the town

So when I think of merit, the problem is that everybody ends up getting the merit. And you have people that work and go above and beyond, and they're getting the same merit raise as somebody who's just phoning it in.

Well, that's where I agree on that because, I mean, just the simple math. Say you make $10,000 a year and you get a 10% increase. So you got $11,000. Next year you get a 10% increase. Now that's an $1,100 raise. Next year, 10 years. So in my opinion, on the bonus side, if they go above and beyond and they get the qualifications, I think Chief Page had already addressed it. If they do the work, then they get some type of monetary compensation if they go and get the drone compensation. thing, they get some type of $500 bonus. And then that way it doesn't end up accruing 10 years down the road snowballing. to where we can afford to pay the staff.

Yeah. And I really, I really love that. And I, I would expect that maybe some of the other departments have the same thing or hope that they do. Um, where if they are going above and beyond, they are getting certifications or they are doing this, that they can have those, those bonuses. And like, uh, like chief page said, um, You get your drone certification, you're going out and you're doing it, but then you drop off on it for a couple years, well then you don't get it those years. So it's really rewarding good work. The merit? It rewards the good people, but it also rewards those that aren't doing as well. And then that, if you're one of the people that's really trying to go above and beyond and you see the slack ass next, sorry, next to you is getting the same thing, that kind of sticks in your craw a little.

Yeah, let me respond. I don't think that merit increases are to reward longevity. I think that they're here to reward performance. In the business world, the way this works is, and the concern I've got is the same one that Mark came up with, if Rick Grant does a great job in 25, and I get something to reward me for that. If you bake it into my sour, you're assuming that 26 and 27 and 28 and 29, I still performed at the same level. Generally, what I would favor is something that would reward performance. One is you do a cola, and then in terms of what we're showing as merit, have a bonus structure in there that says that Rick did a good job in 25, So what the captain had talked about before, we appreciate that. And also this thing, which is, and I've seen it too many times where everybody gets the same increase. The easiest thing for a manager to do is everybody gets the same raise, okay? And the good people and the bad people get the same raise. And so to me, merit means how I did it and what I merited this year. I think the compensation study two things one is I don't know we're small and I think that in terms of you know we basically have a pyramid structure within our groups you only have you know and I was talking to to something about this the other day I was working with the admiral Coast Guard Admiral up in Boston and he told me it's up and out for them I said why he says because I have a pyramid if I don't move up nobody else can move up I have absolutely no Absolutely nothing with you change the responsibilities you increase their responsibilities you pay them you promote them create other jobs You know those are type of things But when we start baking this thing in What it's gonna do to it It's gonna be unaffordable to us particularly with the stuff going on in Raleigh if this comes back I've done layoffs and stuff like that and our job as a board is to make sure that doesn't happen So I have absolutely no no qualms at all about giving out bonuses to reward performance. No problem with the COLA because I think that if you make 50 grand here and next year, and I'll use Social Security as an example, they only got 2.8%. So that holds them. But merit should be merit performance. If you bake it into the base, then you're basically getting a merit increase on a merit increase on a merit increase, and it becomes a cost of living thing. So anyway... My suggestion would be, I think it's hard for us to just go in and say all merit is going to be a bonus in one step. What I would suggest we do is whatever number we come up, let's just say we want to do, and nobody else has got a merit increase of 3.5%, but I would be okay with saying merit increase at, I'll just make a number up, three, and half of it goes to the bonus and half of it goes into base pay. So you do it both ways. And like I said, I think that one of the things that the chief said that I liked is, and we saw this with my wife's company, one of the concerns you have about, two things about bonuses. One is, it ends up, if everybody knows when bonus day is, and I think in our case, Larry, bonus would be paid on anniversary day just like their pay increase is going in, right? You get that. In the real world, that's when everybody leaves is the day after that because they already got my bonus. The second thing, too, is, As part of this compensation study, again, this is just me and run the numbers and stuff. I'd like to figure out a way. I don't think we have a high participation rate in our 401k right now. Is that correct? Are people actually maxing out matching?

I know we have a lot of participants. I'd have to go back and look at how much each person is participating.

Just to throw something out that I would throw out in the compensation study. is when you look at the compounding effect that Mark was talking about, I wouldn't mind bonus or else having something else that says, forget matching. We're going to put, I'm going to make a number, $1,000 into your 401 account. Because I would tell everybody here what I'm telling my kids. Don't count on Social Security. And frankly, even though you've got a state pension, don't count on that changing. My friends went and threw that up in Boston, where all of a sudden it was 30 and then it became 40, became 42, then became this. Don't count on that. If you put $1,000 in today at 8% and never put another dollar in, it'll be $12,000 to you in 30 years. Your money stays there no matter what changes. If you put $1,000 in for 30 years, it becomes almost $200,000 in your personal account. And to me, that would be something... And again, it's a personal thing to encourage people to put money into their own account and to take responsibility for that because then you've got a little balance sheet that shows how much money you have. So my thought would be to split the two of them. I think it's too much to do it at one time.

Not to belabor the point, but obviously the way the merit system works is it is done by their supervisors, by the... department heads. It's not automatically baked in. So the supervisors that we entrust to run their departments well are responsible for determining whether or not those merits are warranted. So when you say that you have a slack employee getting paid or getting the same merit as the uh non-work or the hard-working employee that's not the way it works in government the way it works in government is the supervisor assigns you've done a great job this year congratulations you're going to get your 3.5 merit if you've been slack then i'm sorry you're not going to get your 3.5 so i think we're making the assumption that the 3.5 goes across the board Again, I'm not trying to belabor the point, but I just want to make sure we understand how it works in government.

That's the way it works in the real world, but the real world is that's not what happens. The real world is the easiest thing for a manager to do is to give everybody the same number because it's less controversial. So what I would say is on this one, We probably at the end of this, maybe we can do it now, to try to get a consensus of what he has to model for us. First off, I'm not saying to take any expenses out of this, particularly given the fact that we are going to be doing a compensation study. What I'm saying though is if we are going to reduce the three and a half, let's just say that you cut it to three to make a number up, half of it was gonna be a bonus and half of it was going to be merit. Then when they model it, half of it will go into a payroll number, right? But that will go into the contingency. I mean, under my structure, more money will go into the contingency fund to be able to fund these things because you're not going to have all the payroll taxes associated with the bonuses, right?

Correct.

So I'm just saying I don't know that we need to make a final decision today because we're going to have a compensation study, right? And I'm not saying to reduce the amount of money that's going into payroll. But I think at this point, it would be if the consensus is to do some kind of split between merit and bonus, we can talk about that. They're going to model it out differently. And all it's going to change is not the money that's down here. You're going to take out the columns that have all the associated expenses with it, and your contingency is going to go up. Isn't that the math? If you take the $150,000 out of there.

In other words, to put a finer point on it, the amount, to the degree money is a bonus, there wouldn't be payment for... Everything I just said, but again, it would lessen the number this year, or the fiscal year, and it wouldn't be the compounding effect to the degree that the bonus number grows and the merit permanent increase shrinks. But I would say the difference is not significant.

Not this year, but it will in the future. What he's saying is, and he's right, but I've done more research on some other things related to what I was talking about, that $1,000 contribution. And if you make that not a matching, you make it as a direct contribution from the town, we don't pay any payroll taxes. And believe it or not, when you take it out when you retire, you don't pay any either. It only comes out as income. You don't pay Social Security on it. You don't pay any of that stuff. And so when you start looking at the benefit to having that money, having us directly put that in, Right? Because the way that it works right now is, unless you're in the, what's the one that's after tax? What's the IRA that's Roth? Unless you do a Roth, And that's why I'd like the compensation to say look at it because when you look at the benefit, when that money comes out, if we as a town put it in, $1,000 to you, took your bonus if you want and just stuck it, not called it a bonus, just called it a contribution in there, the financial impact to the employees is off the charts positive. You don't pay Social Security tax when it comes out. They don't pay pension taxes. They don't pay any, and it doesn't affect all those things. So the numbers, and again, I spent way too much time looking at this, trying to figure out some place to say, if you stay here, you're smart about this thing and don't rely on that stuff get your money you want that to be your money not our money not the state's money and everybody knows how social security and and and all that stuff is funded right now it's a ponzi scheme the money's not there this will be your money put aside so from a consensus standpoint what do you all want my take is we'll pick a number on merit and split it 50 50

looking at the league of municipalities and the proposed municipalities having their merit increases this year, the state average for proposed merit increases this year is 2.4%.

We've got it.

And that's it. A lot of the bigger municipalities and stuff, of course, have a little more to bring it up. And, uh, but the average is 2.4%. Um, I'd like to see it around 2%, because then they get a, say you get your merit increase, and then the 2.9, so that gives you a 5% increase. Mark?

I love what we're saying, but unfortunately, being boots on the ground, technically it's a personal preference. Um, some people need the money. Well, we discussed before it costs a lot of money to live at the beach. Some of these guys are strapped already. Uh, they need to make the rent. They need to buy groceries. Uh, so really, and truly it comes down to their decision. Um, I think that we're trying to look out for their best interest in the long run. I think that we're trying to look out for the best interest of the town, but at the end of the day, um, to me, it's that freedom that they have, whether they want their money to go in one way or another. But I fully support really and truly somewhere between the two and the three.

And then just real quick, don't forget, if they get a bonus, they get it that day. If it's $100 a month, it's a $1,200 bonus you get that day. Otherwise, you get $100 a month.

And that provides that incentive that we're talking about of wanting to do better. Well, not just that, but you have it, right? Right.

Anyway.

And you have it in your pocket.

So when you're talking about that number, you want it to be a straight mirror or do you want it split? I would prefer to see it split. Okay.

No, I think 3.5%, we've come down from 5%. It was 5% in last year's budget, up to 5%. I think if we are dropping it down to 3.5%, I think that's not a good message. I recognize the League of Municipalities is saying 2.4%, but that's the average. Do we want to be average, below average, or above average? And I think as a town... i i prefer being above average and i recognize the compounding impacts but i don't think we should come to a consensus i think 3.5 is a good spot to be at because it's not the five and it's not less than 3.5 but my opinion is 3.5 is a good i know we're getting close to the finish line here and we shouldn't be calling it placeholders but um you know again without one of our board members here i'd like to to have her impact and her way in as well so that we're getting a full vote of the full board Well, as much as we can, being short, but I like the 3.5.

Just keep in mind, all we're doing at this stage is doing a placeholder. We can't wait for Laura to come back. The other thing is what Connie missed a little bit in there, and I think she was trying to explain to it, that's the average. Half of the municipalities are not doing any. They're doing zero. They're only doing – so when she says that's the average, that's the average of the ones that are actually doing merit increases.

half of them are not doing any merit but then again with that average of the people that are doing it and kids responses it's 1.2 to 3.6 and the average is 2.4 so all right so while it looks like i am the miser i i and i recognize that

But I also, and I appreciate all the town staff, and I appreciate everything. However, my responsibility is to the taxpayers. And that's, I'm just gonna leave it there. I think the state, between two and the state average at 2.4 is where I would go with Merritt, and I'd also like it split.

Mark, I mean, he's at, you know, she's two to 2.4. You know, it's a vote. If it's a three-way tie, I get to vote. Otherwise, I don't get to vote.

Well, personally, you know, the 2.4 is average. I think we are above board with the employees that we have and that they deserve more and it is more costly to live in this area and to serve in this area. I mean, not just from... The payroll, but the buying the bread and the gas and everything else, the cost of living here is higher. In my opinion, I said between two and three, so I would be comfortable with two and a half to three, but if we need a number for consensus, I'd go to 2.4.

All right, so 2.4 and then split it in half, is that the consensus? That's for modeling purposes only? Modeling purposes only, 2.4. We're not saying to reduce the expenses amount. Anything left over from this model goes into contingencies. That way, when the pay study goes through, we'll have money in there to do what they recommend. Is that a fair way to do it?

I feel like it's a fair way to do it, and I think Chief Page is setting a good example of having standards as far as what they can do, as well as the fire chief was getting his guys qualified and getting the technical stuff. Thank you.

We keep mentioning our public safety. presentations. The public safety presentations, when they were talking about paying drone operators, paying detectives, paying people for specialties, is more than, it's not a merit thing. Yes, it's training, it's certification, it's things that they're doing. When we talk about the fire department, we're talking about the fire department's presentation is that our fire department personnel are being paid the least of all the different jurisdictions in that 12 or so departments listed as starting salaries. And I think that's where we're We're not looking at the existing situation. You're sitting there saying that our public safety directors are saying, you know, yeah, we agree with you all and that we should only pay for performance, but I think we're losing sight of, I think if you were to ask any director within the town that merit is a good thing. And I know we're belaboring this point, but I think we're also putting words into our public safety based on not necessarily parallel or in line with what their original presentation was.

And just to say one more thing real quick, as far as the starting salary being lower, That's a range. The hiring officer or department head can change that salary. It's like when I went to Western Carolina. They said you better get all you can get now because if you don't negotiate your salary when you come in, you'll only get a raise when the rest of the whole state gets a raise.

Again, we've moved on. We've got a consensus on this, but Mark, I was just going to make the same point. We don't hire anybody at the bottom of that range. All right, we don't. And give me a range. If we do, everybody here has the right to increase that. If the range is 40 to 60, find the best people. We're not hiring at the bottom. All right, so you've got the consensus. Let's keep moving.

Okay, just so we have it, 2.4 for the merit and do it 50-50 split, 50% towards salary, 50% is a one-time payout. Yeah. Okay.

And then COLA stays. COLA stays. And then again, the bucket, when you get that, it's going to go into the contingency in Fund 10. Yeah. So we can use that for payroll or to implement stuff. Because if Larry is correct, when we do that study, if we need to make more adjustments to it, we need to have money in the contingency fund of that to handle those kind of things, correct? Because it's an estimate, Larry. Even the cost of the study is an estimate at this point, correct?

I'll qualify that. It's ballpark. I polled informally three or four firms and used – I polled three or four firms – thank you, sir – firms and developed an understanding that – that 85,000 is on the high end, and I think at that, as you approach that number, we would be able to accomplish a very well robust compensation study, which would, I think, also address, I think what Alderman Kipp was talking around, what I call career ladder, which would flesh it out, not only for our public safety folks, but potentially for some of the other departments as well. And you would be positioned to incentivize pursuit of some of those technical areas, whether it's drone or what have you. All right.

Okay.

Um, just, you know, this makes it a lot easier for me budgeting purposes for two reasons. One is given the uncertainty in Raleigh about everything going on. Um, we need to be in my, my view, very conservative in terms of what we think revenues and expenses are. Um, and I think that's kind of across the board, Larry, from the discussions we've had with other towns in that meeting is that everybody's concerned if you start cutting this thing and then they. I got to use not a nice, I don't want to use a not nice word. They do something that is not in the best interest of towns. Okay. And stick us with a rate with a lower reval and a high and a lower rate. Um, we have to be aware that that could be a real problem for us going forward. So go ahead. Okay.

Okay. So, uh, let's see, we'll go elections. Um, We put that back in.

I encouraged staff to make an allocation. There's some discussions since that initially was added that if the board appointed an individual to fill Alderman Larry's spot, that they would serve until the next municipal election that's regularly scheduled. Our election. Yeah, so that number may come out. Lexi and I were debating it earlier this week on, well, there may be some expenses.

That's rounding. Yes, I picked that up. I've got it on my spreadsheet, but it's $5,000, and again, all that would do is move to contingency anyway. Correct. And that's the other thing to keep in mind, that we have the...

flexibility in the budget after it's approved to move things between accounts and everything else we can do budget adjustments which we've done in the past way right right correct okay um as far as the expenses the IT department did not change since last time the planning and zoning you can see the comment there that we added in a planner one, or moved a planner one to planner two level. Do you wanna comment on that?

Just that that's not an absolute, that's for budget purposes. A dollar amount to recognize if there was a promotion, there's dollars in there and it wouldn't necessarily require a budget amendment coming to the board.

Again, I have no problem with, things that relate to promotions, change in responsibility and stuff like that, to me, one is they have to be done immediately, okay? And two, not having any flexibility for the town manager to be able to promote people and change responsibilities I think is not beneficial to the town. Thank you.

Okay. Let's see, down in the public buildings, Basically, the only change there is the discussions with the erosion and the decking repair the erosion we have that underway as we speak So it will get encumbered into this year's yeah, so we took it out of next year's budget and The decking will go into next year because we can't even look at that until the foundation and erosion are corrected. So that was the slight change in the public buildings from last time we viewed it.

Remind us what the big increase was from last year to this year.

Because the roof is done, right?

Yeah.

Yeah, yeah. When I'm talking about erosion and decking, I'm talking about this building.

I'm looking at 473 last year and 767 this year. I just don't recall. Maybe somebody else does what the $300,000 is.

Yeah, the roof was completed. We do have a placeholder for the renovations in Public Works. Okay, that's fine.

Yeah. That's fine. We agree on that. Go ahead.

Okay. insurances generally are the same just as a note we're still have some quotes out or waiting for some responses for the new firehouse the existing and chief you speak up if i speak wrong here the existing one was pretty high so we're also having our wells insurance who carries all of our other buildings and benefits and everything working on a quote with them we just have not gotten that yet retired police that just carries forward.

Would you remind me that you explained that last time that has to do with A bridge? Is that what it is? Separation allowance.

Separation allowance, is that what we're referring to?

17805. I think that only happens for a period, right? It's a bridge between two things?

From date of retirement to, I think, age 62. 62, yeah. And there's some number of qualifying.

That wasn't Bill Younger because he's already 70, right? No.

Yeah, so there's a number of qualifying events that need to transpire, but basically it's from date of retirement to age 62.

Yeah, and I think the gentleman that is on that will drop off this year. It's just later in the year. So he does have budget this year. Thank you. Police department is a slight change. Help me with that one. Is that the bonus structure for the certifications? Okay.

Yeah, Chief.

I'm all over bonuses in a positive way. So what's that one?

So I had built that into the training budget to implement bonuses for the current certificates that we had now. It was removed because we went with the COLA and merit structure pending the compensation study, if that makes sense.

Do you still need it?

I want it.

No, I mean, honestly, that's when I was kind of surprised because that's a structure that Connie was very complimentary of.

It's my understanding, correct me if I'm wrong, the guidance that we received from the board. It just got rolled into everything. No, it didn't get rolled. So the guidance that we received from the board was that the pay plan that I put forth was not going to be implemented in any way, shape or form until the compensation study was completed. And then perhaps it was implemented. So right now the only, the only pay changes that have been, well, it's just that this is a new program.

Yeah, that was gonna be a part of his new proposed tier structure. Right.

So then we'll handle that in the other thing. Okay. On, on budget meeting one, I. Oh, you're right. Presented all that. I remember that. That's fine.

So I would, I would use, I would use the word career ladder. Um, in other words, typically prior experience, what we're, I've seen it as the certifications and other things are wrapped up into advancing from like, uh, uh, patrol officer one to master patrol. And so there's some certification, some training, maybe community engagement, et cetera.

So you have, I thought that you told us you do have money. I'm going to use the drone thing as an example. You do either increase them or give them money if they have certain certifications today, correct? Not currently, no.

You have no authority to do that at all? Correct.

Oh, I thought that was already in.

No, I'm trying to implement that.

I'm okay with putting that back in. I thought we really liked that program. And that, to me, is separate because the compensation study is not going to be done in a month. Right? Right. So if somebody gets drone training today, they get nothing except you thanking them and taking them to lunch?

Maybe I'll take them to lunch. Dutch.

From a policy standpoint, I would say I'm committed or supportive of the concept that Chief Andy has outlined earlier, but I'm also supportive of the either expressed or intended to express similar plan in the fire department, which I don't think is funded or dollars asked for. I would suggest isolating the police department and plugging those numbers in for the police department and ignoring fire.

Now you want both. Guess my point is we're now gonna have because the way we just did this other stuff. We're gonna have a lot more contingency funds Than we had before to cover this and what the fire department has right? And so if you came back to us and said, you know as a town manager work with your staff I want to put something in Subject to the fact that you know, there might be a completely different structure later on but we want to do something now and I'm okay with something like this that is a bonus that's paid that doesn't have a compounding effect for people picking up additional responsibility and stuff, whether it's fire or police. I have zero problem with that.

And while you're on that with fire and police, I don't want to leave out anybody else on town. Public works. If they get continuous education to become a master plumber or whatever. I agree.

I would say the same thing. Even the planning department or any of them, public works, he sends some of his guys to be certified in mosquito spraying or something. But the fire department, every department in town, I'd like to see something about that. But when you first talked about it in the first meeting, I thought, this is marvelous.

So how would you do that?

I mean, you're going to have money in the contingency fund. Do you want to stick something under Fund 10, under...

your discretion to... Well, I think, again, I would say let's use the compensation plan or study to flesh that out. Okay, that's fine. And come up with a structure. Some parts may be implemented faster, like, for example, career ladder, because I think overall dollar amounts will be small as represented by police fire. But the larger piece would be to what degree are our current salaries not competitive? I can't answer that. We have some suggestions from different department heads for some of their professionals how large that number is. I don't know. I think it's large, but I don't know how large.

But as I understand it today, you as a town manager would have the discretion to authorize a bonus for somebody if you thought it was worthwhile. I don't know. I don't think so. You have up to $40,000 on your signature.

And there's contingency.

Yeah, I don't think... We don't put a tag on that.

I understand what the mayor is saying in terms of contracts, but in terms of... I would represent it as a policy statement and or implementation under HR personnel policies to award bonuses for...

uh certification support i don't think that exists this is getting so complicated i think we wait for the compensation study to put it i would urge to let people know this is something the board supports is that fair right i think clearly um recognizing as i said before we don't have a lot of positions for people to get promoted up into but if they are continuing education they have special certifications they perform specific duties with the fire department with i.t with public works um finance I think it's easy enough to say that that is a way to recognize you know some sort of promotion.

What you're hearing is the board supports a concept of having bonuses along the lines we talked about. Mark you want to add something?

Well first of all the presentation that you brought up in the career ladder concept I thought was absolutely marvelous when you when you brought it up but while we had you here I just wanted to make sure that I like Like when I worked with the state, you had a technician one, technician two, technician three. You couldn't move up unless somebody, heaven forbid, died or retired. And the town may be able to answer this. We can only have X amount of officers, ones, X amount of lieutenants, X amount of captains, or is that?

So under the current structure, the only way to move up in the police department is to be promoted to a supervisory role. So right now we're limited on how many we can have. When we have a career ladder system, we're not limited. So it's going to depend individually on that person how much experience he or she has.

And I understand that. And my concern was where we were at is if they couldn't advance and move up, they would end up moving out, and then we would be struggling to get somebody to fill that position. I mean, I don't know that the town could afford to have everybody being at the top rate, but I just didn't know what that structure was.

I don't think that's a realistic concern. Nobody stays that long.

Thank you. Before we move on, I mean, the fire chief is there, too. I'm curious if you had any feedback. I'm not trying to put you on the spot, Chief. I don't want to say we're focusing strictly on the police department.

That's okay, but can I just point out something? We're going to get into minutiae, this kind of stuff. I think it can nod or whatever, but if we call you guys up to give you something, we're having a compensation study. I'm assuming it's going to be police and fire. No, I agree.

I'm not saying we invite everybody up, but I'm just saying since we're talking about specific certifications and stuff like that, and the fire department's original proposal was, listen, we're at the bottom of the pay scale starting salary, you know, there were questions raised as well. We don't bring people in at the bottom of the scale, but I'd be curious to hear if that from the chief as far as where we start people at. Do we start people above that? If so, how much?

And I hear what you're saying, but we're really going to stay out of the minutiae because we're going to get into, we had this discussion at the last meeting at the board meetings about where we start people. Everybody sitting out there has the ability to hire people that are not at the bottom of the scale, period. Now. correct you've had that for two years i've said now it may not have been it may not have been communicated to you guys but this board has said for years that i would rather have a high performer at 50 than a low performer at 40. okay maybe that's just the way it works but you all have the authority to bring people in within that range i mean subject to the town manager Get the right people in here, period. And Kai and I have had this discussion on and on. It preceded you guys. I don't know how to make it any clearer than that, that we have no problem with bringing in, paying people more that have more qualifications. While maintaining budget. Absolutely. I didn't know you were that guy, too. Chief, did you want to add anything? I mean, you know, the last person you hired, did you hire him at the bottom?

so the current captain we did not hire him at the bottom but all the ones prior to him were unfortunately um but our system is already set up based off certifications so you come in as a fire i can hire you straight off the street as a firefighter with no emt driver operator once you obtain those certifications you get a pay bump and move up in rank Um, so we're already doing the certification ladder in our department. So we need to build into the police. I think that's what the study will go. Thanks.

That was a good question. Thanks to you.

Okay. Um, to the public works, just a couple of minor changes. Um, Slight adjustments in the gas allowance just because of things going on with the economy. Same thing as far as his department supplies. We did add, this is one where a promotional opportunity was added in to create a senior technician to kind of take on some supervisory roles for helping Chris. Streets went unchanged. Is the sanitation, is that still the in-out? yeah okay because that's the adjustment you made last year right when we're billing wrong yeah yeah this is after the the new count after they put out the new cans and then fixing the rates so this is making that adjustment okay um Fire Department, the biggest change, which we've discussed many times, we took the truck out as like cash payment, put it on like an amortization schedule, the boat was pulled, and then there were some promotions added that are potential promotion this year in, in the fire department.

Before, before you leave that, I had this discussion with Larry a little bit ago. I think that you have, at least in the last meeting, absolutely unanimous agreement based upon a very nice presentation on the fire truck. Does the fire truck come out of the capital account? Where do we budget the fire truck?

Um, right now, It's in the fire department budget. It honestly could sit.

So it's in fund. It's in fund 10.

Yeah. Under the fire department.

Yeah. All right. Why was that? Why would that here's where I'm going with this thing? Just very simply. Right now, we don't know how much it's going to cost. We don't know what the amortization schedule is or anything else. To the extent, and I saw the slides that I think you guys have put together, talking about what funds we set aside and everything else. We don't know. In theory, right now...

I'm sorry, I misspoke. She did move it to 12. I'm looking at the note now.

So here's my point. What's the fund balance in 12 right now?

We're going to get there in a second, but... Where is... Do you have it in front of you?

That's right. We're getting there next. That's fine. Here's the point that I'm trying to make on that. And we have enough fund balance there to buy the truck if we want. I can tell you that right now. I just don't remember what the number is. Here's a concern I get. If we set aside $300,000 and we say it's just for the fire truck, and the LGC looks at that, even though we don't know what the number is, and Carters are making a presentation as to how much money we have for the beach fund... That's going to get calculated against that, even though we don't know what that number is, or if we decide to pay cash for it or whatever, because everything goes into that model. I have no problem with making sure there's enough money in Fund 12. to take care of this. I have a concern that if we start basically saying we want to, and for example, right now, and I think you guys had two schedules. One is a zero interest loan over 10, and the other one is, and it depends how much money we want to put down, everything else, right? What I'm saying is as long as we've got enough money at 12 to cover this, I really am nervous about having something documented as this is going to cost us $300,000 over the next 15 years, and that keeps us from doing – that's several million dollars we can't get for the beach project. And we don't – that's not going to be – Two years, three years? About three for the order, yeah. And bottom line is we have enough. The LGC will not say, oh, you've got enough cash to buy this. They will look at whatever that financing thing is. And the fund balance is what? In 12.

12, about 1.7.

And we'll be putting more in this year because there's a big contingency going into it this year too, correct? What's the contingency on 12? We're about to get there, right? I mean, we're just finishing up 10. Anyway, my whole point is when we go to that, I have no problem with having the fire truck in here as a placeholder for us. I get a little bit nervous about putting things into the budget that show that without a contract that we're going to be spending that kind of money over the next 15 years. So we can talk about when we get to 12. And I know the concern is if you don't set it aside, they won't. The next board may decide not to do it. We're going to be making this decision while this board's still sitting here. So it's more about structure than it is about the numbers.

I would add in terms of my thought on the LGC is they get very concerned with, some of their concerns is what's your debt, what's your ability to service debt, future debt. So to the extent that we're representing cash, This number is basically representing cash going into a restricted account for one, two, three fiscal years. So what I imagine the LGC would see is there's a new restricted account called fire truck or ladder truck. And year one, depending on when the snapshot is made, it's 220 or it's half of that. If you're getting to LGC in February, then

theoretically that it'd be you know seven twelfths of 220 so it's so it's a notice it's still it's right can I make a suggestion why don't we just ask Carter whatever he's comfortable with if he doesn't care about doing it the way we set up here I'm fine with it if he comes back and says that's gonna cost you four million dollars towards your beach fund does that make sense and just tell now my only concern is I know

been at these meetings before, is if we move cash for a fire truck into an account, we can't touch that money. That's my point. If, heaven forbid, the storm comes up, and we're no longer a tourist town, we're a recovering town for three years.

Now we've got to do budget adjustments and everything else, and Mark, that's exactly the point. So if Carter comes back and says... But understand, we're setting this aside. We're actually not spending the money. So I would just suggest if Carter's come back, whatever structure he's comfortable with, that's our financial guy, but that's exactly my point.

I would offer clarification. If the board puts money into a restricted account, the manager can't touch it. The board can touch any restricted account, except for what's restricted by statute.

That's why I was concerned about the restricted by statute.

Okay, thanks.

I'm for the fire truck. I thought that was a great presentation at the last meeting, especially because I was going to beat him up as to why we don't have anything documented.

Nice job, Chief.

All right, Ricky, could you pull up Fund 12? Let me switch to...

Boy, he did pull it, literally. Make it bigger. Okay, now slide over. You can see the fire truck sitting there. It's in this fund.

Slide down to the bottom.

If you will, slide down to the bottom. Stop. See, look, we're putting another $715,000 for future projects. That's undetermined. And that's on top of the $200,000 for the fire truck. So in theory, you've got about a million bucks going into that as a, I'm going to call it a bad word, contingency. That's already in there. So that's kind of what I was looking at, guys, is the money's in there. And the fund balance is one whatever. And we've already paid for the firehouse. We've already got the other fire truck. and except for police cars and stuff, the next big one we're gonna have is gonna be the fire truck, I believe.

Mayor and Board, although we've represented roughly $700,000 for future capital improvements, the day after you adopt this proposed budget, if that's what you adopted, you could move $700,000 to Fund 30.

Exactly. The only restrictions I'm aware about is occupancy tax has to go to the beach. We can move parking, and we can move sales tax, right? Because we had that issue before you guys got here about We didn't have money to do one thing, but all we had to do is move a little bit of money from one account to the other. So that that's the flexibility that we were doing. And Wayne, you guys were involved in a lot of budget adjustments and things last year. And that's kind of standard. So, but anyway, that was my concern is if we're sitting right now, we literally have enough money. If we had to, if the chief came in today and said, somebody defaulted on their fire truck and I've got the same one. And by mistake, they, they paid a North top. So fire department on the side of it, Okay, we'd probably jump on it, right? And remember, Connie, what we did on the beach project, on the dune project, we have the cash, right? And we did it, not knowing if we get FEMA, and we got FEMA. So what I'm saying is I think when you see the account balances, we're still well over $30 million. So we can move money around if we have to, Mark, to your point. Nice job. Thank you.

I'm fine with this one.

Yeah, so I guess on this one, just the only clarification I want to get, you're asking us to pull the fire truck line item out?

What I'm asking you to do is check with Doug Carter and find out how he wants to phrase that. You're going to keep money in there for it. The question is, is it going to be under future capital improvements or projects or a specific one? And I think the concern is if we, like it says right now, so you're looking at 1.8 financed at 4% for 10 years is a placement. We don't know. I mean, the last we got was zero 10 years, right? So now you're at 180, not 218. We'll just have to see. I would just wait. Whatever Carter tells you to put in there, as long as... I'm looking at everything through the lens of depending on how much third-party money we can get to the beach project. And we've talked to Chris and Fran about this. The idea is... My view, and I think the board's view, is we want to make sure we do one, two, and three. And if we have to do it with our own money, how do we make that an engineered beach? How do we get everybody to sand? How do we get all that stuff done that we don't have to scale this thing down to make sure it's got? And I used to say that every dollar we spend someplace else is money we're taking away from the beach. After public safety, the beach is the biggest problem we've got. And I don't want people up in one not to get sand because, oh, we'll take care of three and two. We're not going to do one. So right now, and Connie and I talked to Chris about this up in Raleigh, is my best guess is Carter can put some financing and stuff in us. We can do the full thing if we get some other funding. We're going to talk to Lazar again about that. But worst case, we ought to be able to do a full-throated project in one, two, and three. So that's my focus is I don't want to take a dollar out of there we don't have to do.

Just a quick question, Mr. Mayor. What's our schedule as far as Carter giving us input on where to put the fire truck and where to...

I think that he'll... You can call him on that one. That's something you can just ask him. But I think the protocol here is once we get a... Larry, are you going to send him something with the budget that you disclose? Is that where it starts with him? Can we start with him then?

Yeah. I mean, I'd rather see that before we finalize the budget, the whole model that Doug is going to propose comes, he needs. either a proposed or adopted budget to create it. So right now he's waiting for us.

And obviously let's do the proposed.

We get an idea, right?

I'm just guessing this time of year, he's very busy. So I wanna make sure that we're in line to get it in a timely manner so that we're not putting the, the town manager in any sort of behind the eight ball as far as scheduling and, and. I'd like to hear from Carter an analysis of all of this and how it mixes in with the bigger vision as we move forward with our strategic plan after all of this.

But actually, something I'm glad you brought this up is a real simple one is we don't want to approve a budget and then have him model it and say, you should have done it this way, you should have done it this way. If he's got the proposed budget and we still have that flexibility and he comes back and says, move the chess piece here instead of there, I'd rather know that at the front end. Wayne, do you think that works?

Uh, yeah, I mean, we can touch base with Doug, but yeah, he needed, he needs a budget of some sort to create his model.

What, what, what we understood from, from, uh, Mr. Doug Carter was that, uh, he was, he, he, he didn't see where he could add value modeling every variation. that he needed to have kind of decision. He wanted to see decisions of this is how the board's going to approach allocating resources in large, not so much at the $10,000 level, but at the million-dollar level.

And then he'll give us options within that, but I think it's a very good point. We better get something done before we do a final budget because the whole idea is not to do a final budget until we know. All right. Thanks. Thanks, Wayne. 12 looks good.

Okay, so 12, that's pretty basic. Fund 30, please, Ricky. Let me do the same.

And Wayne, if you wouldn't mind. Can we go back to the last slide real quick?

12? Yeah. Okay.

Real quick on these. If you wouldn't mind, I'm looking at the email that you had sent last week. If we could get the updated ones after the conclusion of this meeting. Yes. Thank you.

I saw the bypass project and it's going to 100,000. I see it's not there now, so I'm good with that.

Okay. So we're going over to 30?

All right. You mean fun 30. Oh, no, no, no.

Fun 30. I'm sorry. Um, okay. The beach fund, uh, basically I, I, there's not a lot that has changed in here since the last times we have proposed it. That's why there's no notes.

Oh, um, just, just real quick. And you already know the answer. The get out of the expenses real quick. Can you slide down? That's the last payment, right? The sob.

Yes. The 1.8 million. I was gonna say that, that is, that is that final payment in its, uh,

It'll be done this year. And we've already made the, we had one payment. So this is it.

Yeah, it'll be done.

There's nothing left this year either, right?

No, not this year. Yeah, this year's done, and then that payment hits in December. That's unbelievable.

That's unbelievable. Connie?

This is so much different than when we first got on the board.

And also, look at the board. Look at the future projects fund number, the 3-1. See it?

And this is where the benefit of readjusting those allocations with the you know, the surplus to bring it here to the beach fund.

We didn't have a target, but we just, you know, understood the board's consent, uh, general direction that, you know, focus on allocating resources to, uh, shoreline. So, I mean, that's what we've tried to do.

So Wayne, here's a math question for you. If I had 3.1 and 1.8. I get pretty close to $5 million, don't I, the following year once we make that last payment. That's a pretty healthy beach fund, and I believe that's the number that Chris Gibson kept throwing out as to what we would need to maintain the beaches. That's a little different than the money we've put in the beaches before, I would say, right? that's a very healthy fund and that doesn't even include the money FEMA gives us the 11 million that's even better right so nice job and actually that makes me feel so good about the cleaning up and like I say after talking to some of these other towns they can't do any projects I mean money so this is largely unchanged and then last time so if there's questions we're happy to entertain them but

So what we basically, I would kind of sum it up, the basic change, if you will, or guidance was kind of focused on the merit COLA concept. It's noted. The other was, we'll check with Mr. Carter on, you know, is there a better way or preferred way to represent the fire truck or not represent the fire truck? But not take it out.

because like like the mayor said if the chief all of a sudden identifies a deal that he can't pass up we need to be he needs to be able to jump on

So we'll, we'll from, from, uh, at the moment the mayor, uh, adjourns this meeting, uh, we'll be racing to finalize the numbers and make the documents look my words pretty for, um, for, so that they can be printed. We'll create, uh, some, uh, handbooks, if you will, to file in the clerk's office for public access and also do, um, uh, then scan and so forth and transmit to the board. So you have. the documents that we're representing publicly in advance of the public hearing, which, again, is currently scheduled for the third. We haven't announced it yet, so last chance of saying, no, Larry, let's go with the third.

She gave us a piece of paper that just had dates on it, Alexi, that I can't find that. Not the thing in there. Remember it just had dates? I can't find that. So if anybody can find that, send it to us. It was like our timeline.

Right, just a timeline. Go back. There's a piece of paper she handed us. Quick reference, if you go to the weekly manager's report, at the top I've got those key dates. June 3rd, June 24th. Not all the budget dates that I've been mentioning, but again, we plan to transmit to you and to the press Thursday, the 21st, budget stuff. I'll walk around and just show you the template that we're planning on using for the notice. uh 21st the third is the is your regular meeting date which will be a public hearing date right and the 24th tentatively is i think we've made it we've added to the regular meeting list uh the 24th is your um planned date to adopt the budget That can change, and we would advise you whether or not it needs to change based on what the legislature's doing.

Right, and also we talked about between those two dates, we might have a plug-in date if we want to make changes to it before the public hearing, or before we made a final. And then just keep in mind that this is called Throw Larry Under the Bus. What he's going to be publishing, because he actually used this term with me, is just blame it on the interim manager if people don't like it.

It's all right.

Normally, to be honest with you, I would probably be knocking $2,000 out of here or $5,000 out of here. We have a conservative budget. I trust the people that are there, Larry and his team, that we'll spend it like it's our own. But with the crazy stuff that's going on in Raleigh right now, and Kip, it's a point that you brought up before, is if we get hung with a lower tax rate and then they freeze this thing, we've got about a $2 million plus gap, which we could probably fill, but boy, well, that'll affect everything we want to do in the town. Like I said, the panic that we're seeing in some of the other towns is pretty amazing.

I hate to bring up the subject we may have gone on the board that I didn't see or don't recall seeing was the crosswalks, how much money was delegated to that.

Chris, you correct me if I speak wrong here. So the crosswalks, look, there's two different ways to look at it. There is crosswalk maintenance money in the budgets for Chris. Are you talking about the new?

The large number of $285,000 or something? Is that zero now or is that still $285,000? Go ahead. Sure. Good morning. Hey, good morning. That is under 10, 534 striping. Or no, I'm sorry, 560. 10, 560, 34 striping in the streets budget.

And the total? Proposed total is $250,000. Okay.

My concern with that is I got some information sent to me back. Everybody knows that Splash has the flashing lights. Yes, sir. After looking at some of the guidelines they sent for beach towns on the NCDOT information, the reason Splash has the flashing lights is it's a 45 zone. If it's 35 mile or less, you're not required to have the flashing lights, according to the guidelines that I just reviewed a few days ago. So I don't have a problem with keeping the money budgeted there, but we're gonna work together with NCDOT to make sure that we spend the smallest amount of money out of that 285,000 that we've got.

But it's also, I don't know if Chris got copied on that, the stuff we got from DOT, have you seen the email that came from the JMPO people?

I have not.

It doesn't put any of those restrictions on it. It basically says you can, even in a 45, you can paint them in and you don't need anything but a little bit of sign. So we've got to make sure he's got that because when I first saw that, I was not happy.

Like with Doug Carter, I don't want us to spend $250,000 when we spend $50,000.

This board won't be doing it. I can tell you right now there's no consensus on the board to spend $35,000. Let's back up. DOT never requested these for safety reasons. We went out and asked them for a list. We put them, he took them out to them and they're certain once they approved. Their feedback to him is different than the feedback that you just got from, she happened to be the Jacksonville person, but it's information coming back from DOT that all they talked about was, You can paint them. There's no lights. We're talking about the $10,000 version of this thing, not the $35,000 version. I just want the taxpayers to know. We'll make sure you get a copy of that.

I just want the citizens and the taxpayers to know that we haven't just dropped the ball and we're just going to throw money at this thing to solve the problem. We're going to find out what the cheapest, most safest way to get forward is.

I was just looking at it. I think, Larry, you've got it too. I won't pull it up. Anyway. I was very unhappy that Jacksonville was stepping into this, but he or she is the one that heads up Jumpo. They actually reached out to DOT, and DOT came back and said, the three we're talking about don't require any of the stuff at Villa. Okay, which is different than what DOT was telling you, but Jump Post, the one that reached out to whoever the traffic person was, and all they talked about was striking it? Okay.

I would say we're committed to approaching this in the least expensive manner. We'll get closer to what that cost is as we... go through the encroachment agreement process. And I would hope we could do the striping and rock and roll and go on.

I just noticed there's a huge safety factor for those watching and those in the crowd that we want this done at all. I mean, personally, you know, it's one of the safest things we need to have done and should have been done, in my opinion, over a decade ago. But that's neither here nor there.

But just keep in mind, when DOT looked at this for the speed limit stuff, they did not come back with any recommendations about putting crosswalks in. And when Stoney was here, and this preceded you guys, I loved one of the quotes he had. The more you put in, the more people ignore them. If you put them too close. And the other thing I found out, I believe, from somebody in the police department when this came up was we had people talking about they're flagging people down the road to cross. Apparently, you can get cited for flagging people down and stopping traffic in the middle of the road. So... And that's not safe either. And I think it's a prioritization, but we'll make sure you get a copy of what they sent. Cause I went all the way down the end.

I'm like, wait a minute. Division three has come back. Mr. Cox and clarified those flashers were a highly recommended items.

So not required, not required.

So I already anticipated that, but Mr. Van Cleef, the project engineer will be coming out and he's going to do a side-by-side with me.

And we want to thank you for all your efforts pushing this and being a working supervisor. It's not easy to do all the paperwork. So thank you, Chris.

Thank you.

Do I hear a motion to adjourn?

Motion to adjourn.

I don't hear a second, so I guess we'll just hang around. I think Mark thinks there's pizza showing up.

All right, I'll second. Thanks.

All in favor? Aye.