OPENPUBLICA · PUBLIC MEETING RECORD
Record of Proceedings

Durham City Council FY2026 Budget Work Session: Day 1 (May 28, 2025)

City Council Work Session — Wednesday, May 28, 2025
BodyDurham, North Carolina
SessionCity Council Work Session
DateWednesday, May 28, 2025
StatusFILED
Video Record
Meeting Thumbnail
⇩ GET FROM SOURCE

STREAMING COPY IN PREPARATION — RECORDING AVAILABLE FROM THE ORIGINAL SOURCE

Transcript — Verbatim
0:00

Council wants more um time and discussion.

0:02

So by the way, just say the 10% since I said the items it's like half an hour roughly per agenda item.

0:08

If we divide it, if we were just to divide them equally and you were just to go at that pace, yes.

0:14

Yes.

0:14

So I do what I've had to say with staff is while uh while the presentation portion of this probably would be complete by one that I've uh staff to make sure they're available beyond one o'clock for conversation.

0:30

So we can go as long as council would like to discuss today.

0:33

That is our plan.

0:35

Um but given the flexible nature of how much or how little time council may want, we you know um it's it's going to be into the afternoon, but then adjourning at your pleasure.

0:46

Do you expect sort of presentation questions later or questions after each one of those?

0:50

Uh I I would prefer uh at the mayor's discretion that we go ahead and have topic relevant conversations after each presentation.

0:58

Uh and if the council can reach some uh consensus or at least uh majority opinion on on budget direction that may come from that, uh we would we would welcome that direction as quickly as possible.

1:10

We've got a room full of ears, everybody's listening to make sure we can capture uh any direction that you receive.

1:16

That makes sense.

1:17

I also will just note on the two days of hearings that there's not a single housing is not on the agenda either today, so I think that's a missing item.

1:24

Um the other thing I think is clearly missing is some conversation about economic development, which we didn't have last year, we don't have this year.

1:30

So this would mean it look like clearly or not, or would be worth the conversation.

1:35

Thank you.

1:39

All right.

1:40

Just one more item on just want to make sure I let my colleagues now have the hard stop at 12 today, but I'll be fully available tomorrow.

1:49

Thank you for more questions.

1:55

Um we are going to probably see some of the two complexity.

2:03

We'll come back to going for discussions.

2:08

Okay.

2:09

Thank you.

2:10

Um, um welcome uh Mayor Williams, members of council.

2:13

Um Christina Reardon, uh budget and management services director, and I am um here today to welcome you to the um first uh budget work session.

2:24

Um I uh get the honor of um starting with the first presentation, which is always our revenues presentation.

2:30

So I will get started on that presentation and then uh we will we will kind of recess as we need to.

2:35

So to start out, um I want to start out talking about um the FY26 budget, and I think that there were probably um three factors, uh big factors that affected this budget, um, and then you will see them in our kind of our agenda throughout the days.

2:53

But um we there is definitely um as we have all talked about revaluation.

2:58

Um we've also had a citywide reorganization, um, and then there's also been some changes in our revenue sources that um I want to talk about as we go through this um presentation today.

3:10

So starting out with um reval, this uh chart that you see here is showing you um assessed value, our property tax growth, our property tax base growth over the last 10 years.

3:23

And I think what is um kind of remarkable about this chart is what you'll see is that um you know um we have had um steady growth um for the last um ten years.

3:33

Um you will notice that in FY20, that was the last time we had a reval.

3:38

Um and then as you can see in FY26, there is a significant jump.

3:43

Um and what that is showing um in that chart, that blue line is our real property growth, and after our reval, our pro our real property, the assessed value has grown 71%.

3:55

The overall growth in property tax is um 62.39%.

4:00

Um so just kind of um wanting to kind of give you a sense of the um the the um the historic nature of this reval.

4:10

That does not mean that um our our property tax is uh income is growing or revenue is growing by that amount.

4:17

This is just the assessed value, which is how we set our property tax rate.

4:25

So that Greg, just at this bottom, the um the cumulative growth.

4:31

Can you describe that?

4:32

So the cumulative growth is taking the growth over the last 10 years and kind of you know, um, it's a cumulative growth.

4:39

It's uh it's not every year.

4:41

So that is that is why you see such a large jump.

4:43

But so if you were just to take from FY25 to FY26, it would be um about sixty-two percent.

4:49

But also FY25, so you think it's grown 77% in the last two years.

4:53

Yes.

4:55

Okay, thanks.

4:56

So we've had very strong growth as far as property tax goes.

5:00

And so um at, you know, I just wanted to remind you um what our proposed um tax rate.

5:06

Obviously, you saw this at the managers um when he presented his budget, but this is the tax rate that we have proposed for FY26.

5:14

Um, and just to give you a sense, we have our current rate is 59.62 cents.

5:20

Um, our proposed rate is 43.71 cents.

5:23

That is 15.91 cents below the current rate.

5:28

Um of course, we've talked a lot about and we spent a lot of time at our budget retrieve talking about revenue neutral, which is the um tax, what the tax rate would be if um if we were to try and uh calculate what we would get from um uh the current amount that we're receiving right now, and that is calculated at 38.23 cents.

5:50

So um we are proposing to go above revenue neutral, and I'm gonna spend a little bit of time in this presentation talking about what those changes are, but right here um the rate is 5.48 cents above revenue neutral.

6:03

We are um dividing it among several funds, which is what we um traditionally do with our tax rate.

6:09

Our general fund receives the largest portion of the tax rate, um, followed by debt service, um, our solid waste, which we will be um changing the name of to environmental services, um our transit fund and our dedicated housing.

6:23

So the the the funds that are receiving um a rate above revenue neutral are our general fund um at 2.44 cents, our debt service at 2.51, and our solid waste at 0.53.

Discussion Breakdown — Share of Meeting
Budget Equity Analysis██████████████████18%
Personnel Matters█████████████████17%
Parks and Recreation██████████10%
Community Engagement███████7%
Public Transit███████7%
Public Engagement██████6%
Procedural█████5%
Engineering And Infrastructure████4%
Environmental Protection███3%
Summary of Proceedings

Durham City Council FY2026 Budget Work Session: Day 1 (May 28, 2025)

The Durham City Council held the first of two FY2026 budget work sessions on May 28, 2025, to review the City Manager's proposed budget. Presentations covered revenues, pay and benefits, capital improvements, equitable green infrastructure, transportation and parking, parks and recreation, and the new engagement department. Council members raised concerns about the tax rate increase, part-time wages, and missing agenda items like housing and economic development. No votes were taken; the work session was for discussion and direction.

Revenue Overview

  • Christina Reardon, Budget and Management Services Director, presented three major factors affecting the FY26 budget: property revaluation, citywide reorganization, and revenue source changes.
  • Revaluation drove real property assessed value up 71% and overall property tax base growth by 62.39%. The proposed tax rate is 43.71 cents, 15.91 cents below the current 59.62 cents, but 5.48 cents above the revenue-neutral rate of 38.23 cents. The rate above revenue neutral is allocated to the general fund (2.44 cents), debt service (2.51 cents), and solid waste/environmental services (0.53 cents).
  • Median home value increased from $239,000 to $415,000 (73% growth). Taxes on a median home would rise from $1,423 to $1,814, a $386 increase. The value of one penny of property tax is projected to increase from $4.3 million to $6.9 million.
  • Sales tax gross collections are down 1.3% year-to-date; FY25 is projected to finish $2.7 million below budget. The FY26 proposed sales tax budget is 2% higher than the projected FY25 actual.
  • The budget proposes using $5.3 million in fund balance, including $1 million for election costs. The unassigned fund balance is approaching the city's 16.7% policy floor.
  • The budget adds 42 positions; 20 of the 31 tax-supported positions go to community safety, 6 to parks maintenance, 3 to ERP support, 1 to the city attorney, and 1 to environmental services.
  • Debt service fund rate above revenue neutral (2.51 cents) includes nearly 2 cents for the voter-approved bond and a half cent for additional CIP projects. The BID fund is proposed to stay at 7 cents, which is 2.32 cents above revenue neutral.

Pay and Benefits

  • The Durham Minimum Livable Wage (DMLW) is proposed to increase 11.8% to $21.90 per hour. The pay-for-performance (merit) program remains at 4%–6% for eligible employees, costing $9.2 million in the general fund and $12.6 million overall.
  • A 1.45% market structure adjustment is proposed for all pay structures. After adjustments, 83 employees below DMLW drop to 47, then to 28 after merit, and the city will manually move those 28 to the first step at or above DMLW. Staff noted only three employees face significant compression in Grade A12, with milder compression in A13.
  • Part-time employees: Eligible (commensurate) part-timers receive a 3% merit increase, 1.45% structure adjustment, and DMLW if applicable. Non-commensurate positions (e.g., gatekeepers, lifeguards, program aids) are not eligible for DMLW. Of 242 non-commensurate part-time employees, an estimated 201 would fall below $21.90 after adjustments. Their average pay is $19.81/hour, and they average 472 hours/year.
  • Councilmembers (Javiera, Freeman, Caballero, and others) expressed strong support for extending the living wage to all part-time employees, requesting detailed data on who these workers are and what it would cost. Councilmember Javiera said the city must not be hypocritical by paying non-commensurate workers below the living wage. The City Manager stated the city could afford to pay all part-time employees the DMLW, but he has fairness concerns about differing job responsibilities; he committed to bringing options to council.
  • Implementation timing: structure adjustment on July 11 paychecks, merit on July 25, reclassifications on August 8, and DMLW adjustments on August 22 retroactive to July 1.
  • Benefits: health care premiums are increasing, but the city still offers a zero-premium employee-only plan. The wellness discount will increase to $40 and spouses must complete one activity. Two new risk management job classifications were added.
  • Council members requested updates on HR policy reviews (probationary period, parental leave eligibility, drug testing) and a cost estimate for raising part-time merit to the 4%–6% range.

Capital Improvement Plan (CIP)

  • JJ Scott presented the FY26 CIP appropriation recommendations. The plan prioritizes existing projects and facility maintenance; projects that did not score well before (e.g., HVAC replacements) are now included.
  • The additional 0.52-cent debt service rate provides $6.9 million, enabling projects such as a new emergency operations center and backup 911 center, fire station 19 replacement ($18 million), and various transportation and park projects.
  • The CIP includes $12 million for lead remediation at landfill parks (previous $5 million plus $7 million requested). Other highlights include the Durham Rail Trail (65% design, construction expected spring 2026), Mangum/Roxboro signalization, and South Ellerbe Creek stormwater work (experiencing bid delays; first phase going to bid soon).
  • A reserve capacity list includes future fire station 21 and other yet-to-be-determined projects. Councilmembers asked for more frequent updates on high-profile projects like the rail trail and Ellerbe Creek.

Equitable Green Infrastructure (EGI)

  • Mary Grace presented the FY26 EGI program. Engagement included six area events, five collaborative events, door-to-door canvassing in which over 1,200 flyers were distributed over 10 days, and approximately 200 city staff volunteer hours.
  • The EGI scoring is 30% environmental impact, with a majority based on community input. The recommended funding is just under $6 million, with top three projects in each focus area, including:
    • East End/Rowena: ADA-compliant bus stop, mid-block crossing, CR Woods Park improvements.
    • East Trinity/Avondale: Bay Hargrove Park shade and rainwater capture, accessible ramps, Madison Street drainage.
    • NC 55 area: Unity Village Park improvements, NC 55 sidewalk gaps.
    • Holloway/North Elizabeth: pedestrian safety upgrades, protected path under railroad.
    • MLK/Fayetteville: Cook Road/MLK safety improvements, Southern Boundaries Park new playground, traffic calming.
  • Council praised the program and requested interactive maps, physical signs, and better visibility of projects.

Transportation, Transit, and Parking

  • Transportation Director Sean (presenter) highlighted FY25 successes: a $12 million USDOT grant for Holloway Street, August 2024 service expansion (new crosstown Route 6, restructured Routes 1/4/9), record ridership of 650,000 trips in October 2024, Durham Station groundbreaking, and transit signal priority at 13 intersections.
  • FY26 budget continues fare-free GoDurham and Access through June 2026 and funds service expansions: 10-minute frequency on Holloway, a new crosstown route to NCCU, and 15-minute frequency in North Durham. It also supports advancing the Central Durham BRT project, including three new positions funded by the Durham County Transit Plan.
  • Transit fund: the proposed 2.4-cent property tax rate is the revenue-neutral rate. The fund balance will support the FY26 deficit but will be depleted by FY27, requiring a higher tax rate or other changes to continue fare-free service.
  • Parking fund has a projected $2.25 million deficit in FY26 with no rate increase. The discount parking program increased permits from 23 to 63, and ParkMobile is implemented. But with minimal revenue growth, the fund depends on appropriations and potential repurposing of parking assets.
  • Council discussion: many members voiced support for maintaining fare-free transit, acknowledging it is a core equity investment. Concerns were raised about the long-term funding gap and the need to diversify revenues. Staff noted that employer bulk fare contributions of about $300,000 per year are no longer received, but outreach to employers and regional partners is planned.

Parks and Recreation

  • Director Wade Walker presented the half-penny fund. The proposed full half penny (rather than revenue neutral) increases park funding by $1.3 million. The breakdown is 53% personnel and 47% supplies/contracts. Six new positions would be added: three for small construction, one for maintenance, and trail crews.
  • One-time funding is proposed to expand events such as Bimbay, the senior holiday dance, concerts, and movies. The senior holiday dance sold 700 tickets in 2.5 days last year.
  • CIP highlights include CR Woods playground (accessible, inclusive), Merrick-Moore phase two, and ongoing court maintenance (Elmira tennis courts, Rock Quarry tennis courts, Merrick-Moore basketball courts).
  • Landfill parks: $12 million total is available for testing and remediation at four former incinerator park sites (plus Northgate). State DEQ is conducting tests; results are expected in June. Council asked about reopening portions of parks and future funding needs.
  • Councilmembers praised the accessibility and community-focused design of new playgrounds and noted the importance of parks in new developments. Councilmember Riss asked about the master plan; Director Walker explained how the plan connects to departmental goals.

New Engagement Department

  • Deputy City Manager Bertha Windish presented the new Department of Community Engagement, merging teams from NIS, Equity and Inclusion, Budget and Management Services, Communications, Technology Solutions, Planning, and the City Manager's Office. The goal is to centralize engagement, eliminate duplication, and create a clearinghouse for community input.
  • The reorganization funds a full-time ADA coordinator and a full-time language access position from identified efficiencies, without requesting new funding. The department will be located at Golden Belt, and a director will be recruited (target August).
  • The first project will be bringing community conversations in-house. Councilmembers were highly supportive, seeing this as a long-needed improvement to coordinate engagement and rebuild community trust.

Council Discussion and Closing Remarks

  • Councilmember Riss noted that housing and economic development were missing from the work session agenda and should be included. The Mayor echoed that housing is a critical omission.
  • Councilmembers discussed the proposed tax increase, the low-income homeowner relief program (administered with the county), and the need to expand eligibility and outreach due to revaluation and economic uncertainty.
  • Councilmember Freeman stressed the importance of providing part-time workers (often women of color and teachers working summer camps) with a living wage, and urged the city to live up to its values.
  • Councilmember Middleton raised concerns about public safety, violence prevention, and the need for practical strategies alongside philosophical commitments. He also noted revenue diversification and expanding the tax base as key to avoiding tax increases.
  • The City Manager acknowledged the council's feedback, reiterated that staff will bring options on part-time wages and HR policies, and confirmed the second work session would be held the next day at 9:00 a.m.

Key Outcomes

  • No formal votes were taken; the work session was informational and deliberative.
  • Staff will provide detailed data on non-commensurate part-time employees (job titles, demographics, hours, pay) and cost options for bringing all part-time workers to the DMLW.
  • Staff will evaluate expanding or restructuring part-time merit increases and bring options.
  • Staff will update the council on HR policy reviews, including probationary period, parental leave eligibility, and drug testing policies.
  • The council directed staff to provide regular updates on high-profile CIP projects, including the Durham Rail Trail and South Ellerbe Creek.
  • The council expressed support for maintaining fare-free transit and directed staff to continue exploring sustainable funding sources for FY27 and beyond.
  • Staff will continue developing the new Engagement Department and recruit a director, with community conversations to be conducted in-house.
  • The second budget work session is scheduled for May 29, 2025, at 9:00 a.m.

Meeting Transcript

Council wants more um time and discussion. So by the way, just say the 10% since I said the items it's like half an hour roughly per agenda item. If we divide it, if we were just to divide them equally and you were just to go at that pace, yes. Yes. So I do what I've had to say with staff is while uh while the presentation portion of this probably would be complete by one that I've uh staff to make sure they're available beyond one o'clock for conversation. So we can go as long as council would like to discuss today. That is our plan. Um but given the flexible nature of how much or how little time council may want, we you know um it's it's going to be into the afternoon, but then adjourning at your pleasure. Do you expect sort of presentation questions later or questions after each one of those? Uh I I would prefer uh at the mayor's discretion that we go ahead and have topic relevant conversations after each presentation. Uh and if the council can reach some uh consensus or at least uh majority opinion on on budget direction that may come from that, uh we would we would welcome that direction as quickly as possible. We've got a room full of ears, everybody's listening to make sure we can capture uh any direction that you receive. That makes sense. I also will just note on the two days of hearings that there's not a single housing is not on the agenda either today, so I think that's a missing item. Um the other thing I think is clearly missing is some conversation about economic development, which we didn't have last year, we don't have this year. So this would mean it look like clearly or not, or would be worth the conversation. Thank you. All right. Just one more item on just want to make sure I let my colleagues now have the hard stop at 12 today, but I'll be fully available tomorrow. Thank you for more questions. Um we are going to probably see some of the two complexity. We'll come back to going for discussions. Okay. Thank you. Um, um welcome uh Mayor Williams, members of council. Um Christina Reardon, uh budget and management services director, and I am um here today to welcome you to the um first uh budget work session. Um I uh get the honor of um starting with the first presentation, which is always our revenues presentation. So I will get started on that presentation and then uh we will we will kind of recess as we need to. So to start out, um I want to start out talking about um the FY26 budget, and I think that there were probably um three factors, uh big factors that affected this budget, um, and then you will see them in our kind of our agenda throughout the days. But um we there is definitely um as we have all talked about revaluation. Um we've also had a citywide reorganization, um, and then there's also been some changes in our revenue sources that um I want to talk about as we go through this um presentation today. So starting out with um reval, this uh chart that you see here is showing you um assessed value, our property tax growth, our property tax base growth over the last 10 years. And I think what is um kind of remarkable about this chart is what you'll see is that um you know um we have had um steady growth um for the last um ten years. Um you will notice that in FY20, that was the last time we had a reval. Um and then as you can see in FY26, there is a significant jump. Um and what that is showing um in that chart, that blue line is our real property growth, and after our reval, our pro our real property, the assessed value has grown 71%. The overall growth in property tax is um 62.39%. Um so just kind of um wanting to kind of give you a sense of the um the the um the historic nature of this reval. That does not mean that um our our property tax is uh income is growing or revenue is growing by that amount. This is just the assessed value, which is how we set our property tax rate. So that Greg, just at this bottom, the um the cumulative growth. Can you describe that? So the cumulative growth is taking the growth over the last 10 years and kind of you know, um, it's a cumulative growth. It's uh it's not every year. So that is that is why you see such a large jump. But so if you were just to take from FY25 to FY26, it would be um about sixty-two percent. But also FY25, so you think it's grown 77% in the last two years. Yes. Okay, thanks. So we've had very strong growth as far as property tax goes.

SUMMARIZED BY OPENPUBLICA AI
TRANSCRIPT VIA PUBLIC VIDEO
openpublica.com