Budget Message

May 28, 2010

Honorable Mayor Root and Weaverville Town Council:

I am pleased to present to you the FY 2010-2011 Proposed Budget for the Town of Weaverville. This General Fund Budget totaling $5,859,674 is an increase of 11.3% from the 2009-2010 Budget. Part of the reason for the increase in the General Fund Budget is due to the annexation of the Aiken Road, Stoneybrook, Highlander and Blueberry Hill Sections of Woodland Hills Subdivision. This annexation that will take effect on July 1, 2010 will bring an additional 600 residents into the Town of Weaverville. With the increase in population will appear additional tax revenue, it also means an increase services that must be provided by the Town.

Although the national recession officially ended last year, economic conditions nationally and in North Carolina remain at record low levels. In early 2009, economists had generally expected employment and production to bottom out in the third quarter of calendar year 2009 and begin improving in the fourth quarter, but many economic indicators are running about one quarter behind the levels projected early last year. Industrial production has returned to a barely expansionary level and consumer confidence is showing some optimism about the future, if not the present. As a result, most economic forecasts project that 2010 will be a year in which economic conditions begin to improve nationally over the prior year. Despite the expected improvement in the economy, there are signs that significant growth in municipal revenues is not likely to occur in the coming fiscal year.

The national unemployment rate is at its highest level since the 1980-82 recession, but the percentage of unemployed workers who have been out of work for over half a year is at the highest level (40 percent) since the figure began being kept in 1948. This figure had never been higher than 26 percent prior to this recession. While comparable figures are not provided at the state level, North Carolina data on the duration of insured unemployment suggest that the North Carolina situation is similar to the national one. Because long-term unemployment is so high, and employers remain reluctant to hire until more signs of consumer demand for goods are in place, the overall unemployment rate is not expected to decline more than one percentage point during 2010.

The nature of unemployment in this recession also suggests a slow recovery in employment and retail sales. The recession in North Carolina has hit hardest in the construction and manufacturing sectors. Of the jobs lost in the state since the peak of employment in February 2008, 27 percent have been construction jobs and 35 percent have been manufacturing jobs. In February 2008, these two sectors made up only 19 percent of total employment in North Carolina, yet they have accounted for over 60 percent of the job losses. By comparison, the financial services sector made up 5.1 percent of employment in February 2008, and accounts for 4.6 percent of the jobs lost.

Manufacturing employment in North Carolina has been in decline for over 15 years and never recovered from the last recession. This trend is likely to continue in the long-term, but a short-term improvement is not expected either. Much of North Carolina’s loss in

manufacturing during this recession has been in the furniture and wood-related product industries, which have been in decline for the last ten years. As a result, many of the manufacturing jobs lost during this recession may not return as the economy improves.

Construction jobs will return, but employment growth will be limited until the demand for new residential housing increases enough to justify hiring significant numbers of workers. While the national inventory of new homes has declined due to a near halt in the construction of new homes, the inventory of existing homes for sale remains well above non-recession levels. Until this inventory declines and builders feel that sufficient demand for new homes exists, new home construction should not increase appreciably in most markets.

We provide this fairly dismal picture as a caution against being overly optimistic about revenues as national economic conditions begin to improve. That said, because economic conditions have reached their lowest levels, the decline in most municipal revenues should be coming to an end.

In this Budget, the Town has had to delay long term capital needs and personnel needs. However, the Town employees will continue the Town's tradition of providing high quality, efficient services while maintaining a small town atmosphere. In the past three years, the citizens of Weaverville have seen their tax rates drop from $.43 per $100 of assessed valuation to a rate of $.355 or a 7 ½ cent reduction. This tax reduction amounts to over $1,149,088 in savings to the Weaverville taxpayer. The Proposed Budget will leave the tax rate at $.355 per $100 of assessed valuation.

Specific highlights of the proposed Budget are discussed in detail on the following pages.

Major Budget Issues

This Budget was developed with the goal as established by the Weaverville Town Council to maintain or have the lowest tax rate possible while not cutting the services provided to the citizens of Weaverville. With the annexations that will take effect on July 1, 2010, the Town will receive some additional revenues as a result, the Town will see an in the increase of property valuations located with in the annexed area. However, additional cost will be incurred due to increase Police and Public Works services.

Ad Valorem:

This budget was developed using a tax rate of $0.355 per $100 of evaluations. It is estimated that 1 cent of the tax rate is equal to $68,621. Based upon property evaluation data from the Buncombe County Tax Department, Weaverville can expect an increase in valuation from $654,105,717 (after discoveries) to $715,073,471. Of the amount, $48,588,400 is due to the annexation that will take effect on July 1. 2010.

Council Focus Areas

The Weaverville Town Council conducted a budget workshop on March 11, 2009 and listed five key areas for achieving the Town's vision. Those areas include:

Strategic Goal #1

To provide for the orderly development of the Town of Weaverville, improving upon those conditions that detract from quality urban development while protecting and promoting those characteristics that contribute to or enhance desirable growth;

Objective:

Providing quality services to our citizens:

Clean, safe, efficient water system

Weekly trash pick up, recycling at curbside

Semi-monthly leaf and brush removal

Well-maintained street system

Objective:

Fast and efficient Emergency Services to our citizens when needed:

Maintaining a low crime rate

Nationally recognized Community Policing

Senior Citizen call program

First Responder program to assist EMS

Fire prevention programs

Fire suppression

Objective:

Well-organized and competent staff

Low tax rate

Very high tax collection rates

Nationally recognized financial programming

Well trained and competitive pay and benefits for staff

Objective:

Zoning and Subdivision Protection

Reviewing and approval for new subdivisions

Enforcement of Zoning Ordinance

Strategic Goal #2:

To promote the stability of existing residential neighborhoods while providing for a diversity of housing alternatives to meet the needs of all age and income groups.

Objective:

By the use of our Zoning and Subdivision Ordinance the Town will provide:

Guidance and supervision to area developers in the development of single-family residential homes, Muli-family homes, Townhouses and Condos.

Objective:

To provide for the recreational needs of our citizens:

By funding Lake Louise the Town provides a safe place for our citizens to walk, exercise, fish, watch small children play and swing, picnic.

Senior citizen lunch for our older residents to visit and fellowship during the holiday season.

Development of a new wildlife habitat and Main Street Nature Park in the center of Town.

Objective:

To provide a walkable community.

Funding for sidewalk maintenance.

Objective:

To provide a safe community for our residents.

The Weaverville Police and Fire Departments provide assistance to our residents as necessary without additional cost to the citizens.

Strategic Goal #3:

To promote an economy with an appropriate balance of industry, business and services, developed in harmony with the environment and the Town’s residential character;

Objective:

By the use of our Zoning and Subdivision Ordinance the Town will provide:

Developers with plan review in order to ensure that the guidelines of the Town are met. The Weaverville Board of Adjustments will give final approval on all unified business development in the zoning area.

Maintain an active central business district

Working with Buncombe County Economic Development Commission and Advantage West to reduce our vacant facilities

Strategic Goal #4:

To improve the provision of public facilities and services that will benefit the residents of Weaverville;

Objective:

The Town of Weaverville has constructed the following public facilities in the past several years:

A) Water Treatment Facility

and Distribution lines

B) Municipal Facility

C) Public Works Facility

D) Old Fire Department and Community Center Property

E) Storm Drainage Project

Strategic Goal #5:

To continue to promote the distinct community identity of the Town of Weaverville within the county, the region and the state.

Objective:

To be recognized as a leader in financial development within the region and State by receiving the GFOA Budget Award and CAFER.

To have Town Staff to serve on Statewide policy committees in their fields of expertise; League of Municipality Policy Committee, Board of Directors NCCCMA, ICMA Credentialed Manager, WNC Law Enforcement, Water Distribution Association, State Fire Chiefs Association, North Carolina Association of Rescue Squads, Instructor with the State Fire Marshal Office etc.

Working with the Weaverville Business Association help establish a “brand” for our community.

Recognized by the US Department of Justice as a role model for Community Policing in a small Town.

Serving on local community Board of Directors and Planning agencies.

Working to improve the Town of Weaverville Website to help share the good news about our community.

In developing the FY 2010-2011 proposed budget, the Town Staff and I have used these goals as a guide to strategically allocate the Town's resources among various departmental budgets requests.

Solutions:

Priority #1 Maintain and employ a quality workforce:

The Town Council recognized that maintaining a quality work force is essential to provide a high quality of service to our residents. Our close proximity to the City of Asheville and five other municipalities in Buncombe County dictates that we offer our employees a competitive employment environment. Therefore, this Proposed Budget includes the following:

. Conducting a salary study to help insure we have a completive employment market.

. Health and Dental coverage 100% for employee and 40% family.

. 401 K matches up to 6% of salary

. Local Government Retirement and Disability

. Retirement contributions increase to 6.35% for general employees and 6.82% for police

. Two additional employees in sanitation (due to annexation)

. One additional Police Officer (due to annexation)

Priority #2 Fire Department Apparatus Replacement Needs:

. Debt Service payment for the new fire apparatus ($174,600)

Priority #3 Completion of Water Distribution Projects:

The Town of Weaverville owns and operates our own municipal water system serving the Town and unincorporated areas of North Buncombe. Since the system was created in 1912, the Town has the need to routinely replace and improve the distribution system of the Town. In April of 2000, the Town's Engineers developed and designed a detailed list of water system distribution projects. Since that time, the Town has been budgeting funds to meet the construction needs of the water system.

During the course of the program many waterline improvements have been made and the Town’s distribution system presently in very good condition. Therefore, due to reductions in water revenue (water sales), no distribution system improvements are being budgeted for 2010-2011.

This Proposed Budget includes the following:

. Debt Service Payment of the General Obligation Bonds ($235,290)

. Meter Replacement Program ($20,000)

Priority #4 Public Works Construction Projects:

The Town of Weaverville maintains over 17.08 miles of Town owned streets. In an effort to plan for the resurfacing and repairs to the streets, our Public Works Director along with the Town's Engineers have developed a detailed list of street improvements. It is important to our citizens that we have a well maintained street system.

In January 1996, the Town of Weaverville requested that McGill Associates complete a "Storm Drainage System Inventory and Study”. The Purpose of this project was to identify and locate all storm culverts within the Town Limits and evaluate the condition of the structures. As a result of this survey, structures were scheduled for replacement or repair. Failure to replace these structures will result in structures failure and possible road collapse. This could result in damage to the Town's water and sewer lines. All repairs will be made on structures located on Town of Weaverville right of ways. Multi-Objective project goals include floodplain management, public safety, potential for reducing property damage and the protection of vulnerable roadways.

. Street repaving and repairs, sidewalk improvements and storm drainage improvements ($421,000) of these funds, $376,000 are prior year funds that was budgeted but not spent.

. Main Street Sidewalk Replacements

.Construct a new sidewalk on South Main Street at Weaverville Elementary School

.Construct a new sidewalk between N. College Street and Highland Street

.Complete engineering design for sidewalk projects on Pine Street and Hamburg Mt. Road.

Priority #5 Police and Fire Department Equipment Needs:

In order to provide essential emergency public services, our emergency works need to be properly equipped and trained. However due to current budget restrictions addition manpower needs in the Weaverville Fire Department and Police Department have been delayed.

Therefore this Proposed Budget includes the following:

.One additional Police Office and vehicle due to annexation ($53,777)

Replacement of two police units and equipped ($56,400)

Priority #6 Public Works Equipment needs:

As a result of the current budget restrictions, several vehicle/equipment capital needs were delayed:

Replacement of the 1999 GMC trash truck

1997 Vemeer Chipper

2005 Ford Ranger pickup for meter reading

1999 Ford F-350 water service truck

The following are equipment needs in the Street Department, Recreation Department, Sanitation Department, and Water Department.

. Dump Truck replacement of a 2000 Ford F-350 4x4 ($50,700) (This vehicle was deleted from the 2009-2010 Budget for financial reasons)

. Snow Plow ($5,500)

.Salt and Sand Spreader ($5,800)

.Pressure Washer ($5,500)

Governmental Funds

In government, much more than in business, the budget is an integral part of the Town’s accounting system and daily operations. An annual or project budget ordinance, as amended by the governing body, creates a legal limit on spending authorizations. In accordance with North Carolina State Law, the Town’s budget is prepared on the modified accrual basis, and its accounting records also are maintained on that basis. Under modified accrual accounting, revenues are recorded when they are measurable and available. Expenditures are recorded when liability is incurred, except for interest on long-term debt and accrued vacations benefits. The Town of Weaverville has the following types of Governmental Funds:

General Fund

The General Fund Budget for FY 2010-2011 is $5,859,674 or an 11.3% increase from the FY 2009-2010 Budget.

Water Fund

The Water Fund Budget is $1,566,320 or an 11.4% decrease from FY 2009-2010. This budget has been developed with a 5% water rate increase. It should be noted that the recycling fee that is charged on each water bill has been eliminated and is now included in the General Fund.

Debt Service

General Fund

In the General Fund, the Town has the following Debt Service payments:

$147,741 Municipal Building

$ 36,180 Public Works Facility

$340,057 Fire Station Building

$174,600 Fire Trucks

$698,578 General Fund Debt

This General Fund Debt equals a 2.8% reduction or $20,422 savings over the FY 2009-2010 funds and 11.92% of the total FY 2010-2011 General Fund Budget.

Fund Balance Reduction

This budget will reduce the available Fund Balance by $745,414 or a $289,037 increase over the FY 2009-2010 budget.

Water Fund

In the Water Fund, the Town has the following Debt Service payments:

$235,290 General Obligation Bond (Ivy River GO Bonds)

Conclusion

The FY 2010-2011 Proposed Budget maintains the Town’s tax rate of $.355 per $100 of valuation. We project that one cent of the tax rate equal approximately $68,621. The increase of the tax rate also increases the amount of tax received from Division of Motor Vehicles and the Sales Tax since both of these revenues are tax rate based.

The Town staff has presented you a balanced budget that maintains our existing level of high quality services necessary to meet Council’s established goals.

The preparation of this report would not have been possible without the dedicated efforts of the employees of the Town of Weaverville and the support of the members of the Town of Weaverville Town Council.

_________________________ __________________

Michael JaVan Morgan Jim McMillan

Town Manager/Budget Director Finance Officer