Durham City Council Budget Work Session - May 24, 2023

The Durham City Council held a budget work session on Wednesday, May 24, 2023, from 9:00 a.m. to 12:35 p.m., in the City Hall Committee Room. The session covered the FY24 proposed budget, the strategic plan refresh, revenues, pay and benefits, capital improvement projects, and departmental presentations. Key revenue sources, equity investments, and compensation challenges were discussed.

Strategic Plan Update

• Strategy & Performance Manager Shari Metcalfe presented the FY24–FY26 strategic plan, focusing on 41 initiatives (down from 100) across five goals: shared economic prosperity, safer community, connected communities, high-performing organization, and thriving environment. The plan was developed with input from over 500 employees and 876 residents. Initiatives include expanding Youth Works, reducing public safety interactions with familiar neighbors, creating a digital inclusion roadmap, and advancing carbon neutrality through existing plans (e.g., comprehensive plan, carbon neutrality plan). Implementation will involve performance dashboards and citywide strategy and performance (DSAP) meetings.

Revenues

• Interim Budget Director Christina Riordan reviewed general fund revenues. The proposed budget does not include a property tax increase for FY24; the rate remains 55.77 cents per $100 valuation. Property tax growth is projected at 4.25%, generating $5.5 million more to the general fund. Sales tax is projected at $99.9 million (15.1% increase over FY23 budget, but only 3% over expected FY23 actuals). Occupancy tax is increasing 3%. Fund balance is projected at $73.3 million at end of Q3 FY23; the budget proposes using $13.8 million of fund balance, leaving $20.4 million. Uses include $4 million for street maintenance, $600,000 for elections, $500,000 for open space land acquisition, $5.4 million for one-time departmental items, and $3.3 million for one-time CIP projects.

Pay and Benefits

• Human Resources Director Robin Wynn recommended a fully funded pay-for-performance program, a 2% adjustment to all pay plans (step and open range), and an increase in the Durham Minimum Livable Wage (DMLW) from $17.60 to $18.46 (4.9%). The total cost for the 2% adjustment is $4.6 million. Wynn also recommended a comprehensive class and compensation study in FY24, the first since 2019, to address recruitment/retention, market alignment, equity, and career progression. Estimated costs to implement step increases that were paused in FY21 and FY22 would be $16.9 million (recurring). Benefits: health plan premiums increase 3.3% on average (5% for Whole Health Plus, 2% for Whole Health Low), no dental premium changes, and the COVID surcharge removed. Wellness program changes simplify point requirements. Citywide turnover is 14.9% (down from 16.5% peak in Dec 2022), vacancies at 451 (down from 511 high). Council members discussed compression between new hires and experienced staff, particularly for firefighters (e.g., a fire recruit starting at $40,682 vs. a 5-year employee at $45,115). Councilwoman Williams noted concerns about losing trained firefighters to other jurisdictions.

CIP/Equitable and Green Infrastructure

• Deputy City Manager Bertha Johnson and Business Services Analyst Treney Schneider presented the FY24 Capital Improvement Plan (CIP) and Equitable and Green Infrastructure (EGI) program. The CIP uses an equity scoring matrix, with equity as the highest weighting factor. Projects include street resurfacing ($15M to pave 30 lane miles, preserve 90 lane miles), sidewalk repairs ($10M to repair 7,000 linear feet), and bridge asset management program. The EGI program, funded by a half-cent tax approved in 2021, focuses on 19 prioritized neighborhoods. Proposed projects include stormwater regional retrofits, traffic calming assessments, park improvements (LED lights, accessible playgrounds, trails), sidewalk and curb ramp repairs, and placemaking. Examples: Braggtown sidewalks, Lake Park culvert reconstruction, Merrick Moore enhancements, and a connector trail between Red Maple and Lakeview Parks. A mapping tool was demonstrated to show project locations and census data.

Public Works

• Director Marvin Williams reported on the Public Works Department's performance. Metrics: 98% of potholes repaired within 3 days (material/labor costs increasing); sidewalk repairs moving to contract basis; stormwater service requests trending downward due to proactive maintenance; development review exceeding target (3,500+ plans). Budget highlights: ongoing street maintenance ($15M), sidewalk program ($10M), and a new bridge asset management program will require future funding. Councilmember Freeman asked about liability for pothole damage; City Attorney Kim Rehburg explained the city is not strictly liable—notice and reasonable time to respond are factors. Risk management does pay some claims. Federal infrastructure dollars for bridges are difficult to obtain because Durham's bridges are not in critical disrepair.

General Services

• Director Jina Probst presented the General Services Department (123 FTEs, budget $18.5M). Key initiatives: tree planting (1,700 trees planted in FY23, 96% in priority neighborhoods, goal of 1,500 annually), greenhouse gas reduction (on track for 50% reduction by 2030), urban forestry inspection program, Keep Durham Beautiful volunteer hours valued at $30/hour (over 7,000 hours), and building security improvements (physical security specialist, contracted security guards, weapons detection system). The Green Source Advantage solar project (35 MW) with county and schools is expected online by end of 2025. Budget request includes one additional staff for physical security. Council noted the need to balance security with open access.

Parks & Recreation

• Director Wade Walcutt reported on the Parks and Recreation Department. Performance measures: recreational programs and passive park use increasing. The roller skating rink (Wheels) design is underway; a contract for operation will come in the new fiscal year. The department will celebrate its centennial (100 years) with a year-long campaign. Private investment grants of nearly $1 million are leveraged for park projects. CR Wood Park will be transformed with accessible playgrounds. The comprehensive park system plan engagement will launch soon. Pools open June 7th, but Long Meadow Pool will remain closed due to age-related issues; assessment underway. Councilmember Freeman noted the importance of addressing flooding in parks.

Key Outcomes

• No formal votes were taken; the work session was informational. Council members expressed support for staff and the proposed budget, while raising concerns about employee compensation, particularly for public safety and step plan fairness. The city manager noted that the comprehensive pay study will take at least six months, with changes likely in the FY25 budget. The next public hearing on the budget is scheduled for Monday, June 5, 2023. The council will reconvene for a second budget work session on May 25, 2023, and budget adoption is expected in June.