Town of Murphy Financial & Budget Information
2020 - 2021 Budget Message
To: Mayor Rick Ramsey and the Murphy Town Council Date: May 19, 2020 The Town of Murphy will continue to provide quality services to our citizens and customers, despite expected decreases in revenue due to the COVID 19-Pandemic. Due to the uncertainty surrounding COVID-19, it is recommended to delay all capital outlay not deemed critical until December. This will allow management to better evaluate the true impacts of the pandemic on the town’s revenue. The proposed budget plans for a twenty (20) percent decrease ($107,000) in sales tax revenue. The general fund proposal is reduced by $44,790 from the amended 2019-2020 fiscal year budget. The utility fund proposal shows an increase of $94,530 from the amended 2019-2020 budget, as a result of new debt service requirements, the need to address certain critical projects, and the sewer EMS station project.
Administration and Personnel
A cost of living increase is not recommended. The town’s health, property and liability, and workers’ compensation insurance will remain the same. Several water and sewer employees obtained state certifications last fall, and this budget proposes wage increases varying from two (2) to five (5) percent, contingent upon the certifications obtained, annual performance evaluations, and the certification’s relationship to their respective positions. The cost of the increases will not surpass $20,000 annually, and represent an investment into our water and sewer system.
The state machinery act mandates counties conduct revaluation of properties at least once every eight (8) years. In 2012-2013, the last time a revaluation occurred in Cherokee County, the town’s tax rate increased from $.33 cents per $100 of valuation to $.42 cents per $100 of valuation in response to the Great Recession; this represented a tax increase of four (4) cents above the revenue neutral rate. The revenue neutral tax rate for the upcoming fiscal year is $.3408 per $100 of valuation. It is likely the town’s portion of the local sales tax distribution will decrease as a result of COVID-19, while other adverse impacts are difficult to evaluate at this time. Management is predicting the town’s property tax collection rate will most likely decrease.
Consequently, management is recommending a reduction in the property tax rate to $.38 cents per $100 of valuation. The fiscal policy change will help the town offset the reduction in sales taxes as well as account for increased operational expenses incurred since 2012-2013. The tax rate is expected to generate an additional $110,000 in revenue, protecting the town from using fund balance to pay for operational expenses. It is possible that Powell Bill distributions could decrease to municipalities, as the state looks to address its own revenue shortfall. This will place more pressure on the town’s tax base to fund street and sidewalk maintenance. Moreover, the town’s sanitation fund is not supported by additional fees, unlike many towns similar in size to Murphy.
The Council can only set the tax rate once annually. The Council can reassess the tax rate for the 2021-2022 fiscal year, when management will possess more information and data to better gauge the town’s financial outlook post COVID-19. A long term goal for management is to provide the town with 24/7 coverage at our fire department. The respective tax rate will make this goal feasible in future budget years.Capital Outlay - Utility Maintenance
McDonald’s to No Name Deli
It was revealed by NCDOT crews that a 500 ft. section of the town’s sanitary sewer system between McDonald’s and No Name Deli deteriorated substantially. Plans were made to resolve this problem in February, but due to uncertainty pertaining to the pandemic, management opted to delay the repair until the next fiscal year. The cost of this repair is $35,000. The project will provide new water/sewer lines from this intersection to the end of the highway widening, a significant improvement for the town.Ramsey Hollow Pump station Rebuild
Utility maintenance responded to a failure at this lift station Thanksgiving weekend, making minor repairs to restore sewer service. Plans to rebuild this lift station for the long term will cost $12,000.Ice Plant Spare Pump
A spare pump at the Ice Plant lift station, which serves customers in the Peachtree community and U.S. 64, will ensure the town has two pumps operating 24-7 at this station. The cost of the pump is $10,000.Distribution Tanks
To better fund depreciation associated with our water distribution tanks and enhance water quality, the budget continues a program designed as a pay-as-you-go approach to maintaining our five tanks. The cost of the tank maintenance is $40,000.Utility Truck
The town purchased a track-hoe last July, and a new Dodge 5500 Diesel will serve to haul the equipment. The existing Chevy 3500 will continue to operate in our maintenance department. The town will look to finance the truck for three (3) years at $12,000 annually, and zero percent interest.
Management will provide a list of needed in-house projects the Council can elect to pursue this summer and fall. Before COVID-19 disrupted our economy, the Council agreed to split the sewer portion of the Cherokee County EMS Station project with the county. The cost of the project is projected to be $200,000 for the town. The need to reevaluate this project may emerge if operating charges continue to decline sharply.Capital Outlay – Water Plant
A new raw water turbidity meter, a back-up streaming current meter, and changing the raw water site modem from a telephone to radio is requested. The upgrades will cost $21,250.Capital Outlay – Sewer Plant
Management is working on a plan to clean out the SBR digesters and replace the diffusors simultaneously. Due to the pandemic, the town cannot get an accurate quote for the work. Capital outlay is budgeted at $40,000. Plans to address the diffusers in the 2019-2020 fiscal year were delayed for operational and budgetary reasons.Capital Outlay – Police
The town’s grant application for patrol laptops and police body cameras are still under review by the Governor’s Crime Commission Board. The pandemic may cause further delay of the grant awards, which are usually allocated to departments every fall. The grant application would provide $24,480 in equipment for our police department, with no required match.Capital Outlay – Fire
The Town of Murphy Fire Department is in the final stages of evaluating bids for a new mini-pumper. While approving the bid contract will occur soon, the payment and arrival of the apparatus will occur in the 2021-2022 fiscal year.Capital Outlay – Recreation
Cherokee County Recreation requested $10,200 for the construction of a storage shed. The request is funded in the proposed budget.Project Funds
Regal Street CBDG Water and Sewer Project
The project will officially end in August with the installation of a manual bar screen installed at the Cherokee County Detention Center. Through April 2020 the town has expended $1.8 million on the project, which was paid in full with CBDG monies. The cost of the bar screen installation is $49,217.Piney Knob Phase 2
The second phase of the project ended May 1, with over six (6) miles of new biking/hiking trails constructed on the Town of Murphy’s old watershed property. The project was paid for with a $100,000 grant and private donations. Tax dollars did not subsidize the project.Hiwassee River Sewer Repair Project
The town lacks 370 feet from full completion of the new sewer line. The Council approved the budget for the project last fall, with funding from a state loan and an Appalachian Regional Commission Grant. Debt payments for the project are due on May 2021. One pay application was paid on the project, with two more pending. To date, $141,052 has been expended for the project. The project will end all of the sanitary sewer issues the town has experienced with this location during the past several years.Debt Service
All debt payments are budgeted as required by law.General Fund:
The town in 2008 entered into a lease agreement with Murphy Power Board for exterior street lights. The agreement requires annual payments of $15,807, which will be paid off in 2023. A contract for the extension of the street lights along Hiawassee Street will be finalized this summer, but the monthly payments are expected to decrease.
In 2007 the town borrowed $1,900,000 from USDA to pay for a new fire station. The investment requires forty (40) annual payments of $99,600. The loan will be paid off in 2047.Water and Sewer Fund
The town accepted two loans in 2009 to pay for pump station improvements at Cherokee Hills and what is now Erlanger Hospital. Annual payments are $32,920 total, and both zero interest loans will be paid off in 2032.
The town will pay $30,519.00 in principal and $6,594 in interest for the Hiwassee River Sewer Repair Project.Powell Bill
The Powell Bill fund is budgeted at $56,000. The town moved forward on a project to extend the sidewalk from Ivie Funeral Home to Murphy Car Quest off Peachtree Street in 2018. A capital purchase for a used tractor to maintain our street right-of-ways caused the town to delay the project once again. This budget recommends the completion of this project, which is estimated to cost $20,000.
Water and Sewer Rates
It is recommended for the town to decrease our base rate from 4,000 gallons to 3,000 gallons for water and sewer. This will make the town’s water and sewer rates more equitable. Currently, a residential/commercial customer using 3999 gallons of water per month pays the same amount as a customer using 100 gallons per month. Among the 541 utilities that participated in the latest UNC-Chapel Hill’s Environmental Finance survey, less than ten (10) had base rates of 4,000 gallons or higher. Moreover, a business or residence that uses less than 3,000 gallons of water/sewer monthly will not see an increase in their utility bill. It is also recommended to eliminate the lowest sewer volumetric charge and provide a uniform rate for all sewer usage surpassing 3,000 gallons per month.
Due to ongoing maintenance issues associated with the Golf Course water system, management is recommending establishing a separate rate for this particular district. The reasoning is to ensure existing users throughout our system do not subsidize a sub-section of customers, and for the cost of service to be better reflected in the district’s respective rate.
Depth surcharges for water/sewer taps are additional changes proposed to the town’s fee structure. It is recommended for the town to conduct another rate study this fall, which will coincide with the establishment of a water/sewer committee. A complete copy of the Town of Murphy’s rate/fee schedule is attached.Conclusion
The proposed budget is a conservative approach to mounting uncertainty. The budget proposal places the town in a better position financially if our local economy declines, particularly for a prolonged period of time. Management must emphasize that administration practices tight spending policies to control discretionary spending in normal economic conditions. These policies will become even more important in 2020-2021. As always, the town attempts to overestimate spending and underestimate revenue. This is reflected in the appropriation of fund balance in the general and utility funds. The town should not need to dip into reserves unless an emergency occurs, or the economic decline is more severe than expected. As a reminder, staffing has never recovered to pre-Great Recession levels, and two (2) part time positions were eliminated in 2018. Unlike many local governments, the town has no operational excess to cut.
We will continue to operate as efficiently and effectively as we can moving forward. The town’s service delivery, with the proposed budget, will not be adversely impacted in 2020-2021. More importantly, the changes recommended will place the town in a better position financially post COVID-19.
Chad B. Simons Town Manager
|Current and past financial documents for public viewing. Click on the flle to view PDF document.|
|2020 2021||Budget message Town of Murphy|
|2019 2020||Budget message Town of Murphy|
|2019 2020||Budget Ordinance|
|2019||Town of Murphy Financial Audit|
|2018||Town of Murphy Financial Audit|
|2018 2019||Water Rates|
|2018 2019||Budget Ordinance|
|2017||Town of Murphy Financial Audit|
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