FY23 FULL BUDGET REPORT ADOPTED

has allowed the Town to stabilize health care costs since joining in 2019. The pool now has 20 members and close to 7,500 covered lives, with additional members anticipated to join July 2022. Rate increases over the past three years have been 6% or less annually at a time when claims have grown significantly more. For FY 2023, health care costs are projected to increase 5%, the same as experienced for FY 2022. Modest changes to the health care plan and employee premiums have been reflected in the plan design to aid in control of pharmacy costs and alignment of costs with employee health coverage membership type. Employees still have an option to receive no-cost health insurance for themselves through the base plan election. All employees may choose between the two levels of coverage with plan and premium costs similar to our benchmark communities. The Town’s basic dental care plan is provided through the North Carolina League of Municipalities and will change to Delta Dental for FY 2023. Delta Dental offers two networks plus two plan options. There is no change to employee premiums proposed. Overall, employer health care cost increases are projected at $138,000 for FY 2023. Any excess of premiums paid beyond costs of medical claims and administrative costs will be maintained in the Health Care Reserve Fund established in FY 2022 and could be used to offset future health care costs increases if reserves are available. The Town’s debt policy was updated in FY 2022 and debt service c osts are managed through the Debt Reserve Fund. The Town’s debt service costs increased by $1,395,000 for FY 2023 to a total current annual debt commitment of $4,809,000. The increased debt service cost is related to the issuance of $16,500,000 ($8,000,000 public safety, $4,300,000 parks and recreation, and $4,200,000 streets, sidewalk and connectivity) in voter approved bonds (first of three planned issuances) and $1,110,000 in two-thirds bonds for public safety in April 2022. The Debt Reserve Fund is supported by an annual allocation of $3,500,000 in addition to the 3-cent tax increment of $1,965,000 and captures retiring debt. This represents 12% of the operating budget dedicated to current and future capital interest. A developed debt affordability strategy in conjunction with effective building, planning and allocation of reserves demonstrates a commitment to the Town’s investment of tax dollars towards desired community infrastructure and amenities. Debt

Fund Balance

The recommended budget includes total general fund balance appropriations of $1,841,400, or 4% of expenditures. Fund balance appropriations support requested non-recurring or one-time expenses, including capital outlay. The unassigned fund balance is projected to be at approximately $10.2 million, or 30% of General Fund expenditures as of June 30, 2022, accounting for anticipated appropriations to FY 2023.

27