Chapel Hill Town Council FY 2026 Budget Work Session - March 26, 2025
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Chapel Hill Town Council FY 2026 Budget Work Session - March 26, 2025
The Chapel Hill Town Council held a work session on March 26, 2025, beginning at 6:00 PM, to receive an update on the FY 2026 budget. The meeting focused on performance metrics tied to strategic goals, the development of the base operating budget, and the Town's major financial challenges, including a projected $6.4 million budget gap. Council members raised concerns about the timing and detail of budget materials, emphasized the need for clear priorities, and requested additional data for future discussions. The meeting concluded with a unanimous vote to enter closed session.
Consent Calendar
- There were no consent calendar items on the agenda.
Public Comments & Testimony
- No public comments were made during this work session. The Mayor noted that public comment opportunities would be scheduled for later in the budget process.
Discussion Items
- Budget Process and Timeline: Mayor Anderson highlighted that the Council would adopt the budget in mid-June, with Orange County presenting property revaluation on April 16. Council Member Stegman expressed frustration about receiving budget materials only at the end of Monday and the lack of detailed information, while Mayor Anderson encouraged Council to communicate data needs.
- Strategic Performance Metrics: Interim Town Manager Mary Jane Nirdlinger presented three initial metrics for each of seven priority areas (Environmental Stewardship, Economic and Financial Stewardship, Affordable Housing, Connected Community, Healthy and Inclusive Community, Safe Community, Employee Recruitment and Retention). Council members discussed the importance of making data understandable to the public, providing context, and ensuring metrics reflect values. Some members preferred fewer or more metrics, but consensus leaned toward maintaining at least three per area.
- Base Budget and Budget Gap: Business Management Director Amy Oland explained that the base budget starts with a flat continuation of department budgets, excluding increases. A $6.4 million gap was driven by rising costs (e.g., 6% health insurance increase, 0.75% retirement rate increase), a projected $2.5 million sales tax shortfall, and a decline in building permit fees (from $2.5M projection to $1.6M estimate). The Town can no longer rely on lapsed salaries or fund balance to close the gap.
- Budget "Big Rocks": Oland presented backlogs and funding gaps for vehicles ($13M backlog; need $2.8M/year, currently $1.6M), facilities ($14M backlog), streets ($14.6M backlog), and fire apparatus ($13.3M backlog; need ~$1M/year, currently $250K). Council discussed the need for realistic funding levels, not gold standards, and the cumulative burden on residents.
- Enterprise Funds: Parking Fund has a $1-$1.5M shortfall due to Rosemary deck delays; Transit Fund receives $36.6M annual contribution; Stormwater fund hasn't had fee increase since 2020; Public Housing fund relies on $2.7M federal allocation and tenant rents.
- Federal Funding Risks: Oland highlighted the risk of losing federal funds for housing, community development, traffic, greenways, and police. A $3.5M fund balance could cover housing for 2-3 years, but other programs lack alternatives. Council requested worst-case and moderate scenarios.
- Debt and Capital: The debt fund does not include future borrowing for coal ash removal at 828 MLK, which will be discussed on April 16.
Key Outcomes
- Council unanimously approved a motion (by Stegman, seconded by Berry) to enter closed session as authorized by G.S. 143-318.11(3).
- Staff will return on April 16 with budget scenarios and trade-offs, more detailed departmental cut impacts, and data requested by Council including trend lines, benchmarking, context for numbers, and cumulative burden on residents.
- The Council directed staff to provide a chart showing the Town's efforts to adopt a revenue-neutral tax rate and its impact on residential and commercial entities.
- Council emphasized avoiding overburdening Town employees and communicating unprecedented federal, state, and local changes to the public.
Announcements
- Council Member Miller-Foushee wished "Ramadan Mubarak" and "Eid Mubarak" to those celebrating.
Meeting Transcript
Okay, everybody. Good evening, everyone. Welcome to Chapel Hill Town Council's March 26th work session. We're pleased to have you join us. This evening we have one topic on our agenda. An update and discussion of the 25-26 annual budget. So before we get underway, just want to remind folks that the format of a work session is different from that of our business meetings. Work sessions are an opportunity for the council to dive more deeply into a specific topic or topics as the case may be. And these meetings are more conversational and less formal. We don't vote during work sessions, and the topics come back to a regular business meeting. So my assumption is that others may feel as that the same way, but I have asked our manager if there's a way that we can work in some time for public comment earlier than when it comes for a public hearing. So that is TV. Tonight is council's first in-depth conversation about the budget. Then on April 16th, we have a scheduled presentation from Orange County on the property revaluation. That's another thing we're hearing from a lot of folks about, as I think people got their rebows in the mail. So as did I. So we value public input. We want to hear from you in person, in writing, and I think there may be some opportunities in the public engagement website as well coming up. So we are scheduled to adopt a budget in mid-June. And there'll be many meetings in between. So if you have questions or input from tonight, please email us at Mayor and Council at Town of Chapel Hill.org. Having shared all that, um council members, any announcements. Yes. So I haven't had an opportunity to just welcome in the month of Ramadan. We are almost done with the month of Ramadan, and I just wanted to wish all who are observing the month of Ramadan Ramadan Bar, and we will have Eve coming up. Some folks will be celebrating Eve on either Sunday or Monday. I'll be celebrating it on Sunday. And I just want to congratulate everyone and hope that they had a successful Roman government. And an even bar. Eid Web Bar. Thank you for that. Any other comments? Karen? Before we I wanted to comment, but generally before we start talking about the budget, I just want to express my honestly my frustration with well first that we didn't get the materials till the end of the Monday. So did not really have the opportunity to digest it, but that wasn't as much of a problem because there's not that much there to digest. At the last time we talked about the budget, wanting to see budget tied to council priorities and to see contingency plans, the open chaos in the federal government, not funding, and I feel like it's just really really high level, and I don't know how to talk about it in a way just could be helpful to you all to move it forward. And then what numbers are there? Just people have questions. Where'd that number come from? What's it based on? What's the data behind it? Like it made it really hard to do much with the information that's there. So I'm not really sure how we're gonna help you tonight move it forward. Um I personally have not been in agreement with the push to start talking about the budget really early. Maybe this is too early, and I'd rather have you say that than to have uh you know this kind of fissure price, my first budget, you know, rocks conversation. Um we've all been through budget processes before, and I think we know how a budget is developed, so I just I I feel frustrated that we don't have more content to work with. So thank you for for your hand. Thank you. So understanding that, uh I so council members, you know, as we have our conversation tonight. I know that staff is planning to track interests, and I'll do my best as well.
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