#Davidson Budget 2017 - Will taxpayers ever see relief from Mi-Connection?

Davidson Commissioners meet this coming Tuesday for a packed work session agenda.

Conflicts of interest has been a hot topic here recently at aShortChronicle.  Commissioner Jenest has asked to be recused from votes twice in recent months regarding his involvement in the West Branch Project.

A review of that topic by soon-to-be-former Town Attorney Rick Kline will be covered in the 4pm "pre-meeting". The town put out an RFP for Kline's replacement back in February with responses due in early March. Per the Town Clerk last week, 6 responses were received, but there is no time frame for a decision.

Let's hope when they eventually do decide on a new municipal attorney, they will find someone without their own conflict of interest issues to advise the town.  In his private real estate law practise Kline has regularly advised major developers in town over the years - a situation that often raises eyebrows.

Having him advise Commissioners on the subject always has more than a hint of irony to it.

In the main meeting which starts at 6pm, Commissioners will have two discussions on major financial topics.

First, they'll hear a presentation from their "Bond Counsel", law firm Parker Poe.  This will cover the General Obligation  (GO) bond process.

Interestingly, the agenda item mentions covering "education vs advocacy".  Government officials (elected or staff) are not allowed to advocate for voter approval of GO bonds. It is actually illegal for them to do so.  They can only educate.   When GO bonds were discussed by the town's bankers back.in March, they had to be reminded of that fact.   At the time Mayor Woods made a comment that typically a non profit does the advocacy to get around that law.

Once the Commissioners get through their bond coaching session, they'll take the first in depth public look at the next budget.

The most interesting thing that jumps out is the town commitment to Mi-Connection.   The town still has the $1 million per year that has been there for the past few years.  However, this year it appears the town will no longer be setting aside any money to fund its unfunded additional obligation to Mooresville on its Mi-Connection debt.

Under the current agreement, Davidson pays up to $1m per year toward its 30% portion of the cable company subsidy.  Mooresville covers the rest.  To date Mooresville has covered a little over $1.7m for Davidson.  At the same time, Davidson has been setting aside money each year to pay back Mooresville at some point in the future.  That account is now up to $1m.

In this current fiscal year (FY2016) Davidson dropped that payment from $300,000 a year to $100,000.  In FY2017 it will go to $0.

Effectively, over 2 budget cycles Commissioners will have freed up $300,000 in general fund revenue from Mi-Connection.  Yet, none of that will be returned to the taxpayers who have been subsidizing Mi-Connection.

Instead, Commissioners will have spent it and will be going to voters to ask for more in the form of more debt and more taxes.

Click HERE for the whole agenda this coming Tuesday.

Davidson 2014 Budget Hearing This Tuesday

Davidson Staff and Commissioners have been working to put together a budget for the next fiscal year which starts in July.  By law municipal budgets must be approved by the end of June, and to meet that date the Town scheduled a public hearing for this Tuesday, 5/14.

Here's a link to the proposed budget if you are interested in some light reading.

Some of this year's highlights:

• How much does Davidson owe to Mooresville after the renegotiated interlocal agreement for Mi-Connection which caps Davidson's payments and ownership of the company?  Answer:  At the end of this current fiscal year, Davidson will have $574,121 on the Mooresville credit card for what the Town owes but has not paid for Mi-Connection subsidies.  This accounts for money Davidson had "overpaid" in previous years due to the retroactive nature of the updated interlocal signed last year.  Under next year's proposed budget this debt to Mooresville will go up to a total $1,278,268.  Against these debts, Davidson has socked away $600,000 in it's capital project account.  This debt will continue to grow until Davidson's portion of the annual subsidy drops below $1,000,000.  This year it will be over $1,700,000.

• Will Davidson's Fund Balance be comparable to other towns its size under this budget? Answer: Davidson will remain below the average fund balance for municipalities our size - 39% vs a 49% average.  That's a result of a conscious decision by the Board to spend rather than save. When the Mi-Connection interlocal was renegotiated and Davidson freed up $1,000,000 in cash flow last year. the Town Staff initially indicated the money would be socked away to raise Fund Balance up to the 49% level and get Davidson in line with our peers financially. (See "EFFECT ON DAVIDSON BUDGET" in the linked article from DavdisonNews.net.)  The Town Board thought otherwise.  Davidson elected officials chose to use all of the available cash on more spending - approving a Capital Improvement Plan with many millions in spending over the next 5 years.  The Town fund balance will likely go down some when Davidson gets the final numbers on the County revaluation fiasco.  That may result in the Town paying up to a few hundred thousand dollars over the next couple of years for the overpayments since 2011.  

• Will Davidson's Town Board meetings be televised under this budget?  Answer:  It appears not.  However, meetings may have audio recordings made available. There's simply not enough money left to video meetings - something that would truly help engage the public and give people who can't attend a better sense of what goes on at these meetings.  While the Town can't find the technological resources to enhance government interaction with the citizens in this way, it has found dollars for resources targeted at visitors.  The budget includes $26k for 3 digital information kiosks at South Main, Downtown, and Circles areas.

• What's the good news out of this year's budget? Answer: No property tax increase.  Remember, it's an election year.

Capital Improvement Plan Preview...this one could sting a little.

Tuesday evening, Davidson Commissioners will dig into the proposed Capital Improvement Plan now that Mi-Connection will require less annual subsidy.

Here are some highlights from the docs posted on the agenda (errors corrected):

• Over $10 million of projects including $2.5 million for the Potts Rd connector ($500k in Town money $2m in Federal dollars) and $2.9 million for a new fire station.

• About $1.5 million more is on the Town wishlist for smaller items.

• Most of the proposed spending is front-loaded to be spent by 2015.  That's well before the Town will know if there is any real and lasting improvment with Mi-Connection.

• Staffing proposals could add hundreds of thousands in recurring expenses to the Town budget.

Taxpayers watch out.  This one could leave a mark.

Correction: The Town is looking at $10 million in new projects, not $8 million.

Davidson Eyes Spending Money From Mi-C New Agreement

Last night, the Davidson Town Board began a series of discussions on how to spend the money freed up by the renegotiated interlocal agreement with Mooresville on Mi-Connection. 

Here's a prediction.  Lower taxes or fees will not be on the agenda. 

Instead, the Town appears to be ready to start spending again (at least for a while) as if the Mi-C problem has been solved.  Unfortunately, that's not at all the case. 

The new Mi-C agreement caps Davidson's annual payment on the subsidy at $1,000,000.  However, it does not absolve Davidson of the Town's debt in any way.  Any amount Davidson would owe above $1m becomes an interest free loan owed to Mooresville.  That debt will increase every year Davidson Commissioners choose to spend this money on anything other than socking it away to pay back that debt later.  This makes these spending decisions the equivalent of putting them on the Town credit card.