Salary, rate increases headline city budget

With increases to the tax, sewer and water rates along with employees salary raises through various funds, the city of Graham is hoping to continue to be able to provide services and enhance and expand existing infrastructure.

Before the third reading and adoption of the budget Thursday, Aug. 29, Graham Mayor Alex Heartfield spoke on prioritizing community needs such as public safety, street repair and improvement and sustaining the water and wastewater infrastructure.

“The proposed 3% increase in the property tax rate, and the approved 9% increase in water and sewer rates, are not only necessary, but essential to preserving and protecting our community. These financial demands on our citizens are not made lightly, and the council recognizes the pressure these types of increases place on residents who are already struggling simply to make ends meet,” Heartfield said. “That said, the fact remains that if we are to continue to provide the services necessary to grow and sustain our community we must generate the necessary financial resources.”

Budget overview

The city has eight major operating funds which are the general fund, water and sewer fund, garbage fund and special purpose funds for the Young County Arena, Graham Municipal Airport, Library of Graham and Hotel Occupancy, or Visit Graham.

Across all city funds a total of $34,851,688 was adopted in the budget, which includes $10,510,100 for major capital projects, $1,409,700 for debt service, $1,117,596 for capital outlay (vehicles, equipment), $14,473,989 for maintenance, operations and contracts and $7,340,283 for salaries and benefits of all employees.

City Manager Eric Garretty said Aug. 15 that the budget prioritizes street repair and rehabilitation and concrete curb and gutter repair with a budgeted amount of $876,000, provides an average cost of living raise of 4% and replaces two aging GPD vehicles which will be leased at a rate of $26,100 per vehicle, per year.

“It (also) provides two additional personnel to the streets department for alleyway maintenance, $60,000 for one full-time employee and the remainder for a part-time employee. It provides a dedicated general fund reserve to meet unexpected budget demands totaling $134,000,” he said. “It provides for the sustainment of our water system through rehabilitation of the city’s water storage tanks with a budgeted amount of $500,000. It initiates the preliminary design and cost estimation process for the rehabilitation of our 44-year-old sewer plant. Those initial engineering costs are estimated at $530,000 in the budget.”

Salary increases

The adopted budget has a 21% increase in salaries and benefits for a total of 110 full-time employees, eight part-time employees and 15 seasonal employees. 

Overtime is something the city is budgeting more for in several departments including the water treatment department and Graham Fire Rescue. 

The city is estimating a 28% increase in overtime in the fire department from the 2023 budget to the 2024 budget and adopted that estimate of $160,000 in its 2025 budget. 

The city adopted a 46.77% increase in overtime for the water treatment department to $68,250 for the upcoming fiscal year, which follows the trend from last year which was approved for $46,500 but is now estimated at $65,000.

Tax rate

The council approved lowering the tax rate from the proposed rate of $0.665 per $100 valuation to $0.655 per $100 valuation, which will remain an increase of 3.14% over the current rate of $0.635 per $100 valuation. 

The tax rate has not been formally adopted yet by the council but was budgeted at the council-amended rate.

The total tax levy from all properties within the city boundaries under the proposed rate would increase by 14.94%, or from $2,792,913 to $3,194,553.

The average homestead taxable value increased 7.69% from 2023 to 2024, moving from $130,375 to $140,407. Taxes on the average home under the new rate would increase from $827 in 2023 to $919 in 2024.

Water, sewer rates

The city water and sewer funds are self-sustaining, meaning they are supported by the fees charged to city customers.

Included in the budget are increased sewer connection charges, water tapping fees and wastewater and water service charges approved by the council Thursday, Aug. 15. The adopted increases will take effect with the billing period beginning Thursday, Oct. 15. City residents will see an increase to payments on water bills in November for usage in October.

The city council ordered a water and sewer rate study and received the final report Thursday, June 20 from Willdan Financial Services. The city was presented two five-year rate plans with increases each year and approved the first scenario.

“Generally, for inside the city customers, the rates of water and sewer charges together will increase about 9%,” Garretty said Aug. 15. “Outside the city rates have been established. The outside the city rates will see a 36% increase from current rates. The reason for this is in the current ordinance is council opted to have a 25% premium on those water customers who reside outside the city.”

The city adopted an increase of 10.98% from water meter charges, moving from $5,035,000 estimated in 2024 to $5,587,956 for the upcoming fiscal year. An increase of 11.15% from sewer service charges was also adopted, moving from the $1,370,000 estimated in 2024 to $1,522,752 for the upcoming fiscal year. 

The adopted budget has an increase of 292.47% in water tapping fees from $17,000 to $58,870 under the new rates. Likewise, the city adopted an increase of 233.33% in sewer tapping fees from $6,000 to $20,000 under the new rates.

From 2022 to 2023, the city manager performed a financial analysis of the city’s rate needs for the water and sewer systems which found the current rates were not sufficient revenue to maintain and sustain both the water and sewer departments.

“The city’s water and sewer systems have experienced significant inflationary quick pressures during the 2017 to 2024 period. The reason that (2017) period is significant is that’s the last time the city has touched the water side of the rates,” Garretty said Aug. 15. “For example, the cost of chemicals for treatment have increased by 20-40% over that seven year period since those rates were last adjusted. It costs us more to produce a gallon of water in 2024 than it did in 2017, that’s the bottom line.”