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Amid tensions, Council adopts $698 million budget, approves compensation study

Suffolk City Council near-unanimously passed a $698 million fiscal year 2022 budget, but not without many being caught off guard by a last-minute proposal to lower the real estate tax rate.

The budget council adopted May 19 by a 7-0 vote, with Roger Fawcett abstaining, is a 7.2% increase from the current budget, pays for 48 new hires, provides a 2.5% cost of living increase for city staff and fully funds the school division’s request of $196.3 million — $65.3 million of which would come from the city. The School Board will hold a virtual special meeting at 5 p.m. May 26 to formally approve its budget, which council did not change.

The budget includes 18 new firefighters for Suffolk Fire & Rescue as it prepares to build the College Drive Fire Station, and seven positions for the city’s Parks and Recreation department for the opening of the Bennett’s Creek Recreation Center.

The budget also calls for an additional 22 positions in several city departments. It also lowers water and sewer rate increases, as the original proposed budget called for an average monthly water and sewer rate increase of $5.20 per month, or 5.4%. City staff, however, made adjustments in revenue and expenses that would lower the average increase to $4.50 per month, or 4.7%, keeping the city in compliance with its financial policies as it relates to the utility fund and its debt covenant.

The budget also increases the Sheriff’s Department budget by $60,535 to pay for a Deputy Sheriff II position. That money came by reducing the amount spent on overtime for Suffolk Fire & Rescue — $56,233 — and cutting $4,302 in its fringe benefits.

Fawcett also proposed lowering the real estate tax rate from $1.11 per $100 of assessed value to $1.10. With reassessment values up 4.2%, the flat rate is an effective rate increase.

Fawcett’s motion was eventually voted down 6-2, with only Councilman Donald Goldberg joining him in support.

Before that vote, Fawcett’s proposal drew the ire of others on council, including Mayor Mike Duman, who said the last-minute motion “blindsided” him.

Fawcett cited $9 million in revenue surpluses coming for the city with about 200 properties that have yet to be assessed, the new Amazon fulfillment center’s tax assessment coming in the next several months and the recently announced $30 million in new federal money coming to the city.
Fawcett said other councilmembers were focused too heavily on the $30 million, instead of the other money coming to the city, and said reducing the real estate tax rate by a penny would not affect any city services. He said there was no way to convince him that the tax rate could not be cut.

“There is substantial money coming before the end of the year,” Fawcett said, “I didn’t have any intentions of putting this on the table until I had seen all this going on,” Fawcett said.

Councilman Tim Johnson said the council has “to be responsible to what a wonderful position our city is in, and what a wonderful position we need to stay in.” He suggested that the extra money be used to make a “serious impact” on big projects.

“If we’ve got $9 million at the end of the year, I say go over here and let’s fix some of this drainage problem we’ve got,” Johnson said. “I’d like to see us use our money more effectively, but I at no point want to put our credit rating at risk.”

Johnson said despite misgivings about the school division’s budget and how it spends its money, the council is responsible for funding schools and it cannot ask for the division to make improvements without the proper resources.

“Six years ago, I would have never done this, because I feel like everybody’s overtaxed too, but I’m at the point right now where I do understand why this money needs to be there,” Johnson said. “In the middle of us putting forth a budget that we’re ready to say, ‘Yes, this is what we’re going to move with,’ this should have been discussed three months ago.”

Councilwoman Shelley Butler Barlow said it would be a disservice to city staff to change the budget at the last minute. She said if more money is coming in, it could be looked at in the next budget to provide more relief to residents.

Finance Director Tealen Hansen said the city has committed to spending all of its CARES Act money, and said the more than $30 million it is receiving from the American Rescue Plan Act can only be used on specific areas. It cannot be spent on general operating expenses not related to the pandemic.

Interim City Attorney William Hutchings Jr., in responding to a question from Vice Mayor Leroy Bennett, said the budget can be amended at any time, but the real estate tax rate cannot be changed during the year.

Councilman Lue Ward said typically people in their respective districts have been told they couldn’t get something because no money was in the budget for it. Now, he said he would start asking.

“After we approve our budget from now on, next two years and four years I’m on, we can always sit back (and say), ‘Well, let’s amend that budget and let’s go get some money for this water,” Ward said. “I just want to get it clear what we’re opening up.”

Councilman LeOtis Williams agreed with Johnson, Butler Barlow and others who did not want to change the budget, but said it is good to know he can propose changes after it is approved. He suggested some of the extra money be used to address water issues in the city’s villages.

Duman said all council members had an opportunity to meet one-on-one with City Manager Al Moor about issues with the budget. He said any amendment to the real estate tax rate would have meant having to pass the school division’s budget separately and then take up the rest of the city budget at another time.

“We have a substantial number of needs in our city,” Duman said, citing schools in “serious need” of being replaced and others that need enhancements. Though he expressed concern with transparency issues about the school division’s budget, he said it is important to make sure that support staff in the division — bus drivers and cafeteria workers and other support staff workers — get paid.

He also called for the city to set aside a reserve fund for capital improvements.

“Could we probably find a million dollars somewhere in a ($237.8 million) operating budget, probably so, but I don’t think that’s the point right now,” Duman said. “The point is we have been through a budget process. We are to the point where we are prepared to vote on that budget.

“The next year coming up, depending on what our revenues actually are, what the assessments are, I can tell you from my standpoint, if assessments increase anywhere near what they were this year, then we should be in a position to actually reduce the tax rate to lessen the burden on our citizens.”

Fawcett suggested that the school division budget be passed separately and then have Moor come back with suggested budget cuts to compensate for a one-cent reduction in the real estate tax rate.

Goldberg later called for the city manager to present an ordinance within 30 days to amend the newly adopted fiscal year 2022 budget to provide for a 3% salary increase for city employees, above the 2.5% cost-of-living increase that’s part of that budget. Fawcett seconded his motion.

Duman said the council did not need to have “a knee-jerk reaction to a lot of misinformation,” and that raises need to be done right.

“We need to not put a Band-Aid on something just to appease individuals at this very moment, “Duman said. “We need to implement a fair and equitable pay scale that we can rely on. A 3% pay increase across the board …  actually exacerbates your compression issues.”

Goldberg said he is willing to go along with a classification and compensation study, but said something needs to be done about Suffolk Fire & Rescue being short by 38 firefighters, with 30 more eligible to retire, and police staffing being down 15%.

Ward suggested that there might have been secret meetings about a tax rate adjustment or a pay increase, because they were issues that had not been brought up before council before. He said he didn’t have issues with salary increases.

The mention of secret meetings got a response from Goldberg.

“Wait, there (are) no secret meetings going on,” Goldberg said.

“That’s because it’s hidden too well,” Ward said in response, adding he had not heard of being allowed to offer amendments to a budget after it had been approved in eight years.

Ward then directed his attention to Fawcett, pointing toward him.

“You’ve always got something to say when I’ve got something to say,” Ward said.

The two then raised their voices and tried to talk over each other, with Fawcett at one point standing up and saying, “You will not address me in that tone.”

“Man, sit your tail down,” Ward said back to Fawcett, saying he was just showing for the camera.

Duman then gaveled both Ward and Fawcett out of order, asking them “to take a chill pill.”

Fawcett, later in the meeting, apologized to Ward and to council.

“I’d like to personally extend my personal apology to each and every one of you on this dais for my outburst tonight,” Fawcett said. “It was less than professional, along with Mr. Ward, I also extend my apology to you.”

The council approved having the city do a classification and compensation study to create a step plan for all city employees by the end of December and determine how any changes would be paid for.

“It’s been quite a night, but I think the end result, I think we accomplished a lot,” Duman said. “We took a few detours to get there.”

The approved city budget can be found at http://bit.ly/SuffolkBudgetFY2022.