Presentation, Meeting Capital Challenges through Multi-Year Financial Planning, presented at Winter 2012 NCLGBA Conference

1. Town of Hillsborough
Emily Bradford, Budget & Management Analyst
ci.hillsborough.nc.us

2. Before the Multi-Year Financial Plan
 Budget ordinance and CIP prepared on a typewriter
(late ’90s!).
 Built forecast from scratch at beginning of budget
season.
 Spending down fund balance and retained earnings.
 18 months from bankruptcy in both funds!
 Proposed budget:
 7-cent tax rate increase
 23.5% water and sewer rate increase

3. Why a Multi-Year Financial Plan?
 Get out of the weeds! More information to process which
forces everyone to focus on the big picture.
 Year 1 – 60%
 Year 2 – 20%
 Year 3 – 20%
 Few surprises because the Board has seen and talked about
it for 3 years.
 Moves focus beyond just the current fiscal year. Want to
know how this year’s decisions will impact years 2 and 3.
 Cuts/deferments are easier on staff. They don’t just
disappear, they can still see them in the plan.
 Plan for how to address needs in the short-term, but also plan for when
item/position comes online.

7. Extended Budget Season
 FY13’s budget didn’t look good:
 Declining/flat revenues
 Nothing left to defer
 Operational expenses already cut to the bone
 10% of General Fund staff eliminated in FY12
 Started budget process 3 months early. Presented
“workbook” to Board in early February rather than May.
 More time to work on the most pivotal issues.

8. Capital Improvement Plan
 10-year plan.
 Capital projects/items >$100K.
 Includes both capital and operational cost estimates.

10. Wastewater Treatment Plant
Upgrade
 $19.2M WWTP upgrade currently under construction.
 $1.46M annual debt service payments, increasing WWTP’s
budget by 2.4 times in FY15.
 Need equivalent of 2,736 new homes using 4,500 gpm
for debt payments to have no impact customers.
 Phase I of UNC Hospital = 233 homes
 Full build out = 1,346
 Efland-Cheeks sewer system disconnecting from
Hillsborough in FY15 – 7.5% reduction in revenue.

11. WWTP (continued)
 Rate Increase Options:
 Massive rate increase in FY15 to cover lost revenue and
debt service payment (>50%)?
 Series of smaller rate increases?
 8.8% annual rate increases from FY12-18.
 Reserve revenues from rate increases to use in early years
of debt repayment to cover the difference until rates are
sufficient.
 Any growth in total water usage likely to be
counteracted by customer conservation due to
increasing rates.

12. Water System Enhancements
 FY13 – 5% water rate increase, with no increases
projected for FY14 & FY15.
 FY16-18 – water rate increases anticipated to fund:
 Construction of phase II of the reservoir.
 Expansion of Water Treatment Plant.

13. Fiscal Radar
 Annual budget gives little advance notice of problems
looming on the horizon.
 Multi-year plant helps avoid surprises.
 Encourages you to look forward and identify, address
and mitigate potential problems while they are still
manageable.
 See how today’s decisions impact the financial condition
of the Town in the future.