Just one day after presenting the recommended $51.7 FY 2027 budget, the Henderson City Council scheduled a work session Tuesday at 5 p.m. to begin the process of adopting a final version by the end of June.
Finance Director Joey Fuqua told Council members Monday that this was a “very difficult budget, very sobering.”
The budget represents a 1.6 percent increase over last year’s budget, but Fuqua said he had to go fund balance again this year to create a balanced budget – not for the first time, but for the past several years in a row. The city’s fund balance is its “savings account,” and it is on a downward trend.
“It is imperative that the city secure revenue to offset expenditure and revenue. We cannot continue down this path – there’s got to be a lifesaver,” he said.
The city needs an infusion of cash – and Fuqua looked to promises of development – housing developments like Dabney Village, the prospect of a data center and even sale of three communication towers as ways to help.
Fuqua said although the public opinion varies around the issue of a data center, the potential revenue could be a game-changer.
“From a numbers standpoint, the data center couldn’t get here quicker,” he said, adding that it would create a “revenue stream that is greatly needed by the city.”
In the proposed budget, expenditures exceed revenues by close to $3 million.
Revenues – primarily from property and sales taxes – are estimated at $18,606,400.
Total expenditures are $21,020,728 and close to two-thirds of that amount – $14,649,310 – are for public safety. An additional $6,371,418 are for cultural and public services that include sanitation, streets and recreation programs.
The budget is getting propped up by a $5.5 million earmark from the fund balance – as Fuqua explained it to Council members on Monday, the final amount needed to balance the current budget won’t be known until the final FY 26 audit is released. Fuqua said.
He doesn’t expect all the FY 26 earmarked funds will be used, but until he sees the numbers, he can’t speculate.
The city will be in save mode for the rest of this year and all through FY 27, he said, as one cost-saving measure that will go along with what he called a “flat” budget.
As far as city projects go, Fuqua said “We don’t have the funding available…it’s just too tight right now for FY 27. There’s just not enough funding to do anything major at this point.”
Until the area can attract additional development that will add to the revenue side of things, the city’s financial future appears shaky.
After several years of increasing salaries to attract and retain workers, the city continues to lag behind neighboring communities who can afford to keep raising the salary bar.
Don’t expect to find a lot of frills in this budget’s general fund, either. And by frills, think travel and capital outlay. The city will have to look in other places where there may be more of a “cushion,” he said.
There is some capital outlay in some departments, he said, for purchase of “very much needed items,” like squad cars for the police department.
Fuqua did say that Dabney Village appears to be moving forward, which would bring “a tremendous influx of revenue” to the city. The first phase of construction is set to bring 350 single-family homes starting at $350,000. Developers are marketing in the North Raleigh area to attract homebuyers.
“We have a great deal to look forward to with Dabney Village,” Fuqua said.
But recent announcements that Mars and Carolina Country Snacks are both closing has driven down further the area’s average salary income.
“Closings like these don’t help – the local population depends on industry,” he said.
There’s an offer to purchase the city’s three communication towers for $1 million, which would provide a nice infusion of cash to the general fund, but it’s not an ideal situation.
The towers provide a revenue stream for the city, and normally neither Fuqua nor City Manager Paylor Spruill said they’d think selling the asset would be a good idea, when Council Member Catherine “Kitty” Gill asked for more explanation.
Fuqua said the city has an “absolute need for some liquidity,” and Spruill said he would choose to put out an RFP to see if the city could get a better price.
In a follow-up conversation Monday night with WIZS News, Fuqua said of the possible sale of city assets, “You come to that kind of decision at very distressed times, and we’re there. It’s something that is a quick fix, stop-gap effort and unfortunately, we’re at the point to where something like that is actually on the table for consideration.”
Fuqua said if the trends hold true, the current $5.5 million in fund balance will be more like $3.8 million available for the next year’s budget.
“If we’re going to need another $5 million – and it looks like we probably will, if the trend continues, then we’re not going to be able to balance the budget using fund balance,” he said.
“It’s going to have to be done through further deep cuts.”
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