Durham's Budget Development Plans for FY 2009-2010
Preparing for the Budget Gap
The national economic downturn has now become a global financial crisis. In our community, the situation is being realized through layoffs at various businesses, decreasing retail activity, and a substantial slowdown in the development sector.
Despite the negative outlook, Durham appears to be weathering the storm better than many communities. Nevertheless, the financial crisis requires significant action to balance the slowdown between our available resources and our expenditures.
The two largest sources of revenue to support General Fund operations are property taxes and sales taxes. Based on current economic trends, it appears that residential real estate and personal property tax growth will remain stagnant, sales tax revenue will remain flat, and that overall City revenue growth will remain unchanged for the next fiscal year. As a result, increases in City spending will be further limited for the next several years.
Accordingly, the City Council has directed the Administration to develop a budget that limits increases to what is needed to accommodate population growth and cost factors, clearly identifies funding requirements driven by state and federal mandates, and major City initiatives. The City Council recognizes that given the limitations for the next fiscal year and beyond, the budget may require reductions or eliminations of services and programs.
In light of the current economic crisis, special consideration must be given to the impact of new or increased taxes and fees on the citizens and businesses of our community. At the same time, vital public services must continue to operate to foster a supportive environment for economic recovery and to assist those in need during these difficult times. In order to balance the factors outlined above to meet our projected $24 million - $40 million deficit, the Administration will use the below guidelines while preparing this budget. These guidelines, passed by the City Council at the March 16, 2009 City Council meeting, are as follows: