Council - Special Meeting

Bye. Thank you.

Good afternoon and welcome to the town of Surf City. This is a special meeting. At this time, I'm going to call the meeting to order. And before we adopt the agenda, I'm going to ask for a motion to excuse Trudy Solomon. She is out tonight due to an unexpected family emergency. So if so, do I have a motion to excuse Trudy from the meeting?

Yes, Mayor. I'll make that motion to excuse Trudy from the meeting tonight.

I'll second.

A motion and a second. All in favor, say aye. Aye. All opposed, same sign. Motion carries. At this time, do I have a motion to adopt the agenda?

Mayor?

I'll make a motion to adopt the agenda.

A motion. Do I have a second?

I'll second.

All those in favor, say aye. Aye. All those opposed, same sign. Motion carries. The one and only item on the agenda tonight is the budget ordinance for fiscal year 2026 and 2027. And Kyle Brewer will present.

Thank you, Madam Mayor. Good evening, council. Good evening, members of the audience and those that are watching and, of course, staff. This evening is a culmination of a lot of moving parts affecting the fiscal year 26-27 budget. Since presentation of the proposed FY26-27 budget, the North Carolina General Assembly enacted Senate Bill 889, which is Session Law 2026-8, suspending implementation of the 26 property revaluations in both Pender and Onslow County. This action requires the town to revert to taxable values established under the previously adopted schedules of values and recalculate anticipated property tax revenues and the associated tax rate. In response, the town council delayed adoption of the fiscal year 26-27 budget to allow staff to revise revenue projections and ensure the proposed budget accurately reflects the legislative changes and their impact on the town's financial plan. I'm pleased to present the proposed fiscal year 2627 budget for the town of surf city for your review and consideration. A balanced budget must be adopted by the end of the fiscal year, which is today, June 30th, 2026, putting us in a unique position to have to wait till the last minute to get this adopted. The proposed fiscal year 26-27 budget is balanced and totals $40,583,789. Appropriations are allocated among the following funds. General fund, $19,953,381. Capital improvement fund, $1,268,750. Accommodations tax fund, $3,006,609. The water enterprise fund, $4,146,251. Sewer enterprise fund, $6,704,226. Stormwater fund, enterprise fund at $541,157, and beach nourishment fund at $4,963,415. The town's capital improvement plan is also presented as part of the budget adoption process. Property taxes remain the town's largest revenue source, estimated at approximately $10,502,254, representing about 52% of the general fund revenues. Based on information provided by Pender and Onslow counties, the town is utilizing a total tax base of $2,240,122,467. The recommended tax rate is 47.5 cents per $100 of assessed valuation, a reduction of 5.5 cents from the current rate. Based on a 98.7% collection rate, this would generate approximately $10,502,254 in property tax revenue. Each one cent change in the tax rate yields approximately $221,100. Since presentation of the proposed budget taking into account revenues generated from taxable values. The town had reached back out to both Pender and Onslow County with the understanding that growth in the tax base, new homes, remodels, renovations should be included in the total taxable value. And that was what was able, what afforded us to be able to reduce that tax rate another penny down to 47 and a half cents. The total value increase was estimated at about $67,332,713 with a bulk portion of that difference coming from Pender County's portion at about $62 million and Onslaught County portion at about $5 million in taxable value. The second largest general fund revenue source is local sales tax, estimated at 3.6 million. Water and sewer operations are projected to generate $10,850,477 across the enterprise funds. In summary, the recommended budget reflects a disciplined financial strategy that balances services delivery, infrastructure investment, and long-term planning. I appreciate the mayor, town council, department heads, finance director, and staff for their continued commitment to responsible fiscal management. And again, based on the scenarios presented, a tax rate of 47.5 cents is recommended. Before you tonight is the budget ordinance for fiscal year 2026-2027. This lays out the appropriations based on fund type. Also discusses typical processes that are afforded to the town manager and finance director generally to move money within departmental codes. Any adjustments between departments requires a budget ordinance amendment in which this board would have to approve. It also authorizes the town manager to expend funds in consultation with the mayor and mayor pro tem if there is an emergency and those funds can come from any source. and the council will be notified as soon as possible of that expenditure. So before you is the budget ordinance. Within that also comes the CIP, the fee schedule for the upcoming fiscal year, the proposed salary, grades, and pay plan for the upcoming year. And at this point, I will be more than happy to try to answer any questions. Our finance director, Ms. Moore, is here to answer any questions as well.

Thank you, Kyle.

Thank you.

Does anyone have any questions?

I don't have a question, but if you allow me just a minute or two to make a couple of observations, I would like that. I do appreciate the fact that we've been able to reduce the tax rate below revenue neutral. It shows about almost a 50% rollback of the tax increase of 30% last year. I think that's a success, although I believe it's a partial success. i know we have talked about uh the issue of do we fund the fire truck first installment payment the lgc has opined that we can do this though i don't believe their opinion says we have to do it i believe we're putting cart before horse and i would have preferred and i know we've talked about it and it won't likely won't happen to not have budgeted that the other thing was the island rollback program Some of you may have seen Senate Bill 484 that was passed on the same day that the assessment pause was also passed or signed by the um by the governor 484 puts significantly stronger guardrails on how a common accommodation taxes are used this came out of a piece of legislation that was repurposed for that after caretook county went to court and the supreme court said they could use occupancy taxes for a variety of expenses including uh fire and uh other public safety expenditures which is what they were doing they were sued by local management companies realtors and groups like that to constrain the use of occupants taxes Supreme Court said no they can and then the legislature said no you can't the good news for us is that we are operating under a local act which is exempt my understanding was from the attorney exempts us from the parameters expressed in 484 So we're operating under session law 1983-908. And if that glazes anyone's eyes, you can look it up. It's kind of cool. But it gives us very broad latitude in how we can use it. And it specifically calls out solid waste. as one of those things that we can do the only uh criterion that they use is that it has to be something other than what is they can perceive to be a normal service now the island rollback is exclusively for the island and it is to the benefit of the safety and aesthetics of the island to attract tourism in my opinion that fits the model perfectly unfortunately we weren't able to reach a conclusion however i've been assured by our town manager and by the attorney that this will come up for discussion again. And we'll look at ways of being creative about it. So there are two parts of the budget that I just I'm sorry, but I don't agree with. I think the rest of it looks reasonable and decent. So that's those are my two cents.

Thank you. Anyone else? I just want to say that after the last meeting, our attorney did contact the LGC to make sure that we were absolutely conforming, and we are conforming with the LGC as far as the fire truck was put in question. We will, again, I'm sure, bring up the rollback, as Andy said. We don't have any other comments based on What was presented tonight, a tax rate of 0.75 is recommended for approval.

47 and a half. 0.47 and a half, yes. 0.47 and a half cents.

0.475.

You just want to make sure we were listening.

Yes, you are listening. So do I have a motion to accept as presented?

Mayor, I'll make a motion to accept the budget ordinance 2627 as presented.

I have a motion. Do we have a second?

I'll second.

Any further discussion? All those in favor, say aye. Aye. All those opposed, same sign.

Aye.

Motion carries. Do I have a motion to adjourn?

Mayor, I'd like a motion to adjourn.

those in favor say aye aye all those opposed same sign we are adjourned

Thank you. Thank you.