Roy Lynch: Bouncing back from Siler City’s pandemic year

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SILER CITY — Big things are coming to Siler City as town management and the board of commissioners work to improve the town’s aesthetic, expand infrastructure and incentivize new commerce.

A year in pandemic forced many of the town’s plans to be postponed sine die, but the town’s proposed budget for fiscal year 2022 revisits opportunities for growth and improvement. Should the current recommendations go into effect, taxes and utilities will hold at their current rates. Town spending, though, is anticipated to grow by 12%.

Between new staff positions, infrastructure upgrades and other town initiatives, the proposed budget calls for $17.67 million in spending, up from $15.74 in fiscal year 2021’s budget. Expenditures are distributed across four town funds. Besides general and enterprise (or water sewer) funds, which most municipalities have, Siler City also maintains a Powell Bill fund and License Plate Agency fund. A complete breakdown of projected spending from within each fund is available on the Town of Siler City website, silercity.org.

The News + Record talked with Siler City Town Manager Roy Lynch to get some more insight into what town leadership hopes to achieve with the proposed budget, and what he thinks is most important for residents to know. The town’s board of commissioners will host a public hearing for the proposed budget on June 21 after which they will vote to adopt the budget or send it back to staff for revisions. The new fiscal year begins on July 1.

Let’s start with taxes and utility rates. Residents will be glad that neither has gone up in the proposed budget for FY21-22. What were some of the biggest considerations in evaluating taxes and rates and how were you able to keep them static despite the town working on some projects?

This year, there were two drivers of the projected increase for the General Fund including revenue from both Ad Valorem Tax and Sales and Use Tax. In addition, ABC revenues are projected to increase 32% pursuant to trending data along with some recovery in Parks and Recreation revenues based on the reopening of facilities and programs. In all, the town recognized a 17% or $1.2 million increase in the General Fund.

One of the biggest considerations was in January 2021, the county went through a tax reappraisal that led the town to recognize an increase in tax base of approximately $81 million. This will provide an additional $437,460 to the ad valorem tax revenue in the General Fund which is needed to sustain some of the requested budget increases that were not funded and carried over from last year’s budget. Another consideration was the Sales and Use Tax which has been outperforming our expected revenues for the current fiscal year. Heading into the current year, we took a conservative approach and reduced revenue based on expectations of what the effects of COVID-19 would be. This coming budget year is a different story. A strong performance due to the recovering economy has guided our approach to a more aggressive projection in this line item estimating a total $2.7 million.

By prioritizing capital requests and various ancillary expenditures, the town was able to present a valuation at the sustained $0.54 per $100 valuation.

Concerning water and sewer utility rates, our revenues have remained resilient throughout the pandemic and notably to the conservative approach we took in budgeting for the current fiscal year. The overall performance year to date demonstrates the need to increase projections and allows the rates to stay constant. We must remain cognizant of the requirements to maintain a level of revenue that supports the necessary maintenance costs associated with operating the system. In doing so, each year we discuss ongoing and future projects along with prospective funding opportunities to evaluate the need for any rate adjustments. Currently our planned utility projects have either been fully funded or we have pending applications for a combination of grant and loan funding.

In your budget presentation to the board, you suggested this fiscal year’s town revenue was better than you and staff might have expected when the pandemic began. Can you elaborate on how you handled the town’s money management through the pandemic and how end-of-year balances ended about on par with last year’s?

To balance the budget and meet required needs for the FY21, we had to set a baseline of the previous fiscal year and hold off on providing personnel with annual compensation study and pay for performance increases, the purchase of replacement fleet and capital equipment, along with non-profit funding. These were some of the substantial costs that were placed on hold due to the constraints of the projected revenue. The board asked staff to reevaluate revenues quarterly as we moved forward throughout the year and bring back any recommendations. Staff continued to monitor monthly expenditures and prioritize needs.

By the end of the first quarter, we started to see the revenues outperforming the projections and continued holding discussions monthly with the board. During this same time frame, the CARES Act funding was factored in and we began to see avenues in which to move forward with providing the items we initially put on hold. Once we realized the revenues were going to sustain the personnel increases, we took the information to the board and they retroactively funded those requests. The CARES Act funding was utilized to pay for some of the capital items, more so in public safety, fire and police, together with other expenses incurred due to the pandemic. Nonprofits were also funded as allowed by the guidance of the Act.

In the proposed budget, eight new town jobs are funded. In budget discussions, 12 were requested. How did you and staff decide which jobs were of highest priority and what factors went into denying some requests (also what were the other four jobs)?

Yes, you are correct, there were 12 positions requested, eight in the General Fund, one in the Powell Bill “Streets” Fund, and three in the Enterprise “Water and Sewer” Fund.

Priority was set by the board to focus on the needs within the Police Department, so that was the primary factor in funding the three Police Officers and one Evidence Technician.

Next, we looked at prior year’s requests and the Planner 1 position was ranked higher as we have seen growth and development throughout our town. We focused on the strengths of our downtown development and the possibility of joining the Main Street Program. Those are the four requested positions in the General Fund.

The Accountant position was removed based on the transition to the new software program and will be revisited at the request of the Finance Director.

The Street Maintenance Worker was removed based on the additional maintenance position in the Powell Bill “Streets” Fund.

The Program & Special Events Coordinator was removed due to the current decreased number of programs offered by Parks and Recreation and no immediate need.

The Powell Bill Fund does include a Street Maintenance Worker position that will improve the efficiency and timing of town street maintenance on easements. This position was requested last year.

The Enterprise “Water and Sewer” Fund has two positions that were requested, one additional Treatment Plant Operator at the water plant, which will improve operational staffing levels needed for optimization in preparation for growth, and one additional Utility Maintenance Worker.

The additional Meter Reader position was removed as we look to upgrade our technology in meter reading and move to a system that is more cloud based.

You said in the last board of commissioners meeting that FY22’s goals and objectives are virtually the same as last year’s. What are some of the most important you think residents should know about? 

Each year we continue to focus on placing our resources in areas that maintain the highest standard of fiscal stewardship that will benefit the expectations of the residents. These departmental needs are analyzed annually during the budget process and often vary from year to year. The focus could be equipment, additional upgraded technology or personnel additions.

We have continued to focus on funding that provides for enhanced technology into core operations. Since the onset of the pandemic, we have upgraded our technology at many levels to provide resources for the public to have virtual access to Town Board, Planning Board and various Advisory Board meetings. This virtual upgrade was something we had talked about in prior years and it became a priority in 2020.

Professional development and training are key to the excellent performance of an employee. We must equip them with the latest tools to be successful and this will be reflected in their annual performance evaluations.

The town has some substantial and important projects under way that we’ve reported on before, notably water and sewer infrastructure development and expansion. You’ve worked hard to secure funding from a variety of sources to cover those projects without having to ask more of residents. Can you talk a bit about the process of finding grants and loans, and what are some you’ve secured recently?

Our Grants Administrator works with the department heads and engineers to source the most substantial funding opportunities and we have been successful in securing grants to assist in the funding needs of various projects throughout the town. These not only pertain to the water and sewer infrastructure but also economic development, pedestrian improvements, airport improvements and expansion, along with neighborhood revitalization.

Most recently in 2021, as a part of economic development, the town was awarded a second $300,000 EPA Brownfields grant to clean up and sustain reuse of contaminated properties.

In late 2020, the town was awarded a $750,000 CDBG-NR (Neighborhood Revitalization) grant that will fund renovations to residential properties. This program is in the initial stages.

For the past few years, the police department has continued to receive the VAWA (Violence Against Women Act) through the Department of Justice in the amount of $110,000 to assist with this service.

In 2019, the town secured funding for Phase 1 of the wastewater treatment plant optimization upgrade in the amount of $3 million from Commerce, $2 million dollars from Golden Leaf and $750,000 from Chatham County. Phase 2 of the project will include an expansion of the plant to increase capacity from 4 million gallons per day to 6 million gallons per day. This part of the project is estimated at $17 million. We currently have an application pending with USDA.

We have a water treatment plant upgrade underway in the amount of $4.7 million including the replacement of filters, optimization of production and increased performance that is funded 50/50 grant/loan through NCDEQ. We also received $600,000 from Golden Leaf toward the project.

There are other projects open and in the planning phase in each of these categories. I notably mention the ones above as the most recent and currently under way.

The proposed budget does not at the moment include appropriations for nonprofits. Nonprofit funding has been an important feature in previous years’ budgets, and many have renewed their requests in recent board meetings. What considerations went into the decision not to appropriate funds for nonprofits and might it still be possible to secure some money for them?

Again this year as we worked our way through the budget process and set priorities, we did not have resources to initially fund non-profit requests. As I mentioned during the budget presentation on May 17, we will review the guidelines of the American Rescue Plan funding once received and bring recommendations to the board. I feel there will be an opportunity to fund some of these requests and will be driven by the availability of direct assistance to the community, similar to the CARES Act. The board is committed to assisting those in need through these resources that have the policies and procedures in place to administer the funding.

You expect about $2.41 million from the American Rescue Plan. Can you elaborate briefly on how else you might use those funds?

As I mentioned earlier, I do anticipate recommending the allocation of these funds to directly assist the community through those non-profits that meet the criteria. I plan to recommend the initial $1.2 million be divided between the two major funds, addressing public safety equipment needs in the general fund and infrastructure needs in the water and sewer fund. The projects that we have in process that are not fully funded through grants will be the primary focus of the allocation.

Anything important you want residents to know that we might not have covered in previous questions?

Over the last year, we felt the impact of these unprecedented times, but maintained a continued conservative management of the town’s finances.

As always, the town strives to provide services and meet the expectations of the residents while maintaining reserves for unanticipated community needs. We work toward balancing the budget without appropriating fund balance except in situations where there is a specific project planned and it aligns with the Capital Improvement Plan.

Taking this into consideration, the board of commissioners adopted a Fund Balance Policy most recently to direct staff in the decision-making process and manage recommendations that will ensure the town remains healthy and in a strong position.