Town Council to allocate excess funds in budget

During the 2015 fiscal year, the town of Chapel Hill exceeded its target fund balance by 2 percent, netting the town $1.128 million of excess funds that the council will have to decide where to appropriate, according to the town’s financial update from Jan. 25.

During the 2014 fiscal year, the council voted to equally appropriate the target fund balance toward improving sewers along Rogers Road and prefunding Other Postemployment Benefits, which is paying out commitments such as healthcare plans to employees and retired employees of the town.

Rogers Road, which has been the center of an environmental debate for years, served as Orange County’s landfill for more than 40 years.

The landfill, which was closed in 2013, left Rogers Road and the surrounding area degraded and partially contaminated.

By prefunding, or paying ahead of schedule, Other Postemployment Benefits payouts, the Town Council would be anticipating higher health care costs in the future and avoiding liability by advancing the pay schedule for such plans.

Kenneth Pennoyer, director of business management for Chapel Hill, said he will propose in the upcoming meeting that the council continue in its equal appropriation of the funds toward the Rogers Road improvements, as well as prefunding Other Postemployment Benefits.

Pennoyer said the prefunding of Other Postemployment Benefits was considered due to high health care inflation, which translates into high liability for the town.

“I think that splitting the excess fund balance and continuing to support both actions is a good idea,” Pennoyer said.

Chapel Hill Town Council member Nancy Oates said each of the members of the council has his or her own idea for where the target fund balance should be appropriated. Personally, Oates said she supports the prefunding of Other Postemployment Benefits, due to the liability that not prefunding presents to the town.

“I don’t like having (Other Postemployment Benefits) hanging over our head,” Oates said.

“Others on the council are just fine with paying as we go.”

The excess, nearly 2 percent more than what was expected for the 2015 year, was gained from various sources. Dwane Brinson, director of the Orange County tax office, said the excess is an indicator of the local economy.

“These excesses really depend on the state of the economy with regard to taxes,” Brinson said.

Pennoyer said the excess comes from the basic principle of revenue exceeding expenditures for the fiscal year. He said the excess funds were the result of an increase in sales tax, as well as vacant government positions that money was allotted toward.

The Chapel Hill Town Council was expected to hear this matter in a Jan. 25 meeting, but did not due to inclement weather. The meeting has since been rescheduled for Feb. 8. A decision can be expected by June.

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