Franklin finance director gives budget update; city owes hospitalPublished 11:39am Saturday, March 29, 2014
FRANKLIN—Franklin City Council granted a budget amendment to the Franklin-Southampton County Community Development Office during Monday’s meeting. The consolidated department – which began after the 2013-14 budget was adopted – requested additional money to cover expenses for the rest of the fiscal year, which ends June 30. The amendment asked for $75,529 for Building Inspections and $26,875 for the Planning Department. The request passed 5-1, with Ward 3 Councilman Greg McLemore voting no.
City Manager Randy Martin said the personnel cost for the shared services were not fully included in the original budget. One position was added to building inspections and the other in the planning department. The amendments also include benefits, repairs, travel and supplies.
McLemore’s concern was regarding the original assumption that this consolidation was supposed to save Franklin money.
“If we are reducing expenses,” he asked, “how come there is not enough money in the allocated budget already?”
Melissa Rollins, director of finance, said that the city would later submit a request to Southampton County.
Martin added that the savings would be a net saving, collectively, in that if they had maintained two departments, the two would have spent more in total.
Ward 2 councilman Benny Burgess wondered what the head count was.
Community Development Director Donald Goodwin said right now it is at nine. Franklin originally had five people, and Southampton County had two.
A stormwater department was consolidated into community development, and that added two more people.
“I’d like a clarification,” McLemore said. “I’ve seen the breakdown of population for Southampton County, and its square miles, and the population for Franklin and square miles.
“They have a significantly greater area to cover than we, but yet, the city had five employees prior to bringing on county? And still, it seems, we are still responsible for more payroll than the county, considering we are substantially smaller? They were able to function with two, and we had five.”
Martin said due to the city being urban, and with more commercial development, that it isn’t a completely fair comparison. The city also has to deal with more regulations than the county does.
That said, he added that the city had a net reduction of one staff member before adding stormwater folks.
Rollins added that not all aspects of the department’s budget are 50-50, and some services that the county uses more will be billed more like 80-20 toward the county.
Commissioner of Revenue Brenda Rickman added that the city owes Southampton Memorial Hospital, as it has been overpaying on its business license taxes.
SMH has been overpaying for many years, but it can only recoup the current year plus the three previous years due to state law. In total, the city owes approximately $59,000.
The hospital changed its accounting method, and it is no longer counting bad dept toward revenues.
Rickman said businesses self-report these taxes, and that unless there is a suspicion based off of previous data, they are taken on face value. Ward 1 councilman Barry Cheatham, who is an accountant, added that larger localities have auditors who go out and make sure businesses are paying what they should be paying, but that Franklin doesn’t have that benefit.
Rickman said she would like to have a part-time auditor, as they can go back up to eight years, and in the end, they can pay for themselves.
“I think this was their fault,” McLemore said. “Now we are going to have to take a loss, because we budgeted for revenues collected.
“I think in view of that,” he continued. “They should have to produce the documentation. Also, are we required by law to issue a refund, as opposed to giving them a credit on future taxes?”
Martin said that state law would require them to pay the funds now, and also that Rickman has received the documentation and has validated it.
Rickman added that the hospital has agreed to not take interest, which they could, since it was their error.
The city unanimously voted to give the refund.
Rollins also gave a budget update. Expenses and revenues are tracking accordingly, with the exception of the Community Development Department.
There were highlights in the solid waste fund’s cash balance, as well as the electric fund.
Cash in the solid waste fun at the end of February was $340,434, for an overall increase of approximately $149,000 in the fund’s cash position since July 1.
Revenue in the Electric Fund is roughly 68 percent of the budget and represents eight months of billed revenue at $8.93 million. It’s slightly higher than the same period last year, in which billed revenue of $8.56 million was 65 percent of budget.
Expenses are comparable to the previous year.
The cash balance is once again moving upward. At the end of January, the fund was down to $438,344, while the balance at the end of February was $559,511. The fund is $271,747 higher than it was at February last year.
Rollins said that last month was expected to show some improvement due to debt service payments having an adverse impact on January, which was not the case in February. And also, outstanding fuel assistance payments were credited last month.
The cash balance is still only 4.8 percent of revenue. The minimum cash balance should be at 10 percent of revenue. Cash balances help the city deal with problems as they come up and also with handling new developments without loans.
Due to a particularly cold February, the City of Franklin paid $1.3 million to VMEA, or $300,000 more than January, and approximately $300,000 more than February 2013.