Planned 2020 budget totals $187 million

Raises, water and sewer projects increase spending

FAYETTEVILLE — The city will spend about $19 million more next year to take care of a backlog of water and sewer projects and cover raises for police and firefighters.

Council members spent Saturday discussing what money they could use to pay for new positions and programs in the face of an anticipated deficit in the general fund.

The city will have a $187.5 million budget for next year after the council approves it Tuesday. That’s up nearly 12% from the $168 million budget for this year.

About $16 million of the $19 million increase is because of capital projects, Chief Financial Officer Paul Becker said. Water and sewer projects account for about $14 million of the $16 million, he said.

A backlog of needs at the two wastewater treatment plants and water and sewer line work largely associated with upcoming bond projects makes up the majority of the $14 million, Becker said.

Proposed changes in federal and state standards about a decade ago would have prompted the city to drastically change its wastewater treatment facilities, Council Member Mark Kinion said, who serves as chairman of the council’s water and sewer committee. Since then, the committee has opted to make repairs when necessary but kept the water and sewer fund budget to a minimum, he said.

The city has been granted a permit to operate under current standards for the next three years. Keeping the budget low has made it so the city has the money available to take on a number of projects next year, Kinion said.

Nearly $12 million is allocated for water and sewer line repair and moving,

according to the budget. Many of those will be in association with transportation projects coming from the bond referendum voters approved in April. Another $2.7 million will be put into improvements at the two wastewater treatment buildings. Another $1.3 million will go to plant pumps and equipment. Expenses will go up generally across the board for the water and sewer fund, which is set about $56 million. That accounts for about 30% of the overall budget.

The general fund also accounts for nearly 30% of the budget. About 80% of the general fund is made up of personnel costs, with services, supplies and some maintenance making up the bulk of the rest.

The general fund next year will operate on nearly $48.7 million in revenue and nearly $50 million in expenses, accounting for a $1.2 million deficit.

A deficit was expected to implement a new pay structure for police and firefighters, Becker said. The administration last year committed to giving raises to uniformed employees through a combination of expected growth in sales tax revenue and dipping into reserve.

However, revenue growth this year wasn’t as high as expected. Becker budgeted next year’s growth at 1.5%. About 5% growth is needed to catch up with the deficit within about three years. Sales tax accounts for about 60% of the revenue for the general fund, and is budgeted about $29.4 million for next year, compared with $28.9 million budgeted this year. The projection does not include potential revenue from Internet sales tax.

Becker said the city will need growth in revenue from other areas, such as property taxes, franchise fees for new developments and building permits, to cut into the deficit.

New positions next year will include a development review manager to help take the load off planning staff and a mobility coordinator shared between the city and university to oversee alternative modes of transportation, such as electric scooters. A manager also will be hired to oversee construction of bond projects, paid for out of bond issues, Becker said.

The council discussed using $210,000 from parking revenue to pay for a coordinator who would serve as point person during development of the arts corridor downtown. Becker said the amount will be in the budget and up to the council decide how to use. The same fund, previously budgeted as $250,000, for years has gone to the Walton Arts Center to pay for programming there.

Council Member Sarah Marsh, who sits on the city’s arts committee, said she plans to bring a resolution forward next year to create the position.

The general fund next year will operate on nearly $48.7 million in revenue and nearly $50 million in expenses, accounting for a $1.2 million deficit.