City of Lexington to hold public hearing on proposed budget
The proposed City of Lexington Annual Budget for Fiscal Year 2023-24 was submitted by the Interim City Manager, Ralph A. Clark Interim, City Manager on June 1, 2023, and is now on file in the City Clerks Office where it is available for public inspection. A public hearing has been scheduled to be held on June 12, 2023 at 6:00 p.m.
Copies of the complete Annual Budget document, as well as the Budget Message including the following:
THE LOCAL ECONOMY AND BUDGET OUTLOOK Major economic development announcements have occurred in the past two years that will transform job opportunities and tax base in the Lexington industrial corridor along Interstate 85 for decades to come. Samet Corporation voluntarily petitioned for satellite-annexation of 763 acres just southwest of the city limits. Samet Corporation has a proven business model that is sure to produce four to five million square feet of industrial development in the ballpark of $250-500 million in this new NC 85 Center, resulting in significant tax base that will build out over the next two decades.
The City of Lexington also sold the last lots associated with Lexington Business Center, a public-private partnership with Davidson County and Energy United dating back to the mid 1990’s that resulted in the first industrial park home to well over $40 million corporate tax base. In April 2022, Nucor Corporation, a fortune 150 company and the largest steel producer in the United States, announced the location of a new micro mill just east of Lexington on US Highway 64. This $350 million plant will create 200 jobs at an average wage of virtually $100,000, which will be fueled by Lexington Utilities natural gas service extension. In May 2023, the City received notification of a $1.345 million grant award that will offset 50% of the cost to upgrade natural gas to Nucor, enabled by the U.S. Department of Commerce. After fierce competition with two bordering states of South Carolina and Virginia, Siemens Mobility, a global advanced manufacturing company, chose the 200-acre Lexington Industrial Park industrial site for their expansion and East Coast presence and held a major media announcement on March 7, 2023 in Lexington’s historical freight depot.
As a global manufacturer of rail transportation vehicles and control systems, Siemens Mobility will fulfill the growing demand for passenger rail by producing some of the North American market’s most innovative and sustainable passenger trains in Lexington. As the United States’ largest passenger rolling stock manufacturer, this expansion is projected to grow the State of NC’s economy by $1.6 billion, with the initial investment in Lexington at over $220 million and the promise of a minimum of 500 career jobs. Landing this global direct investment is the ultimate successful result of an innovative public-private joint venture between the City of Lexington and Front Street Capital, which started in 2019 by securing 200 acres off Brown Street with a land value of only $2 million at the time. The City also leveraged its partnership with ElectriCities of NC, Inc. to certify the site a Smart Site, deeming it shovel-ready for development. The City and ElectriCities partnership will continue during construction of the Siemens manufacturing facility through exploration of solar generation, as Siemens Mobility holds an EP100 commitment to energy efficiency.
Although equal economic replacement value remains a bit in the distance from the previous decades when Lexington suffered dramatic property tax and utility revenue losses from the closing of furniture and other manufacturing plants, the proposed budget continues to reflect exponential positive signs for the local economy. As a result of economic growth, the property tax base is expected to increase by $16 million or 1%. The delayed results of Census 2020 at a certified iii population of 19,632 boosted City revenues by approximately $509,000 in the current fiscal year 2022-23; most definitely positive momentum, but not the full $1.1 million revenue restoration hoped for that the City of Lexington lost for over a decade from a severe undercount in Census 2010. However, that registered uptick in population will elevate further with the volume of new housing developments underway. With fiscal year 2023-24, the City expects local option sales tax to increase by $1.38 million. Sales tax allocations are positively affected by population gains with the 2020 Census.
The City of Lexington receives several other State-collected local revenues that are partially based on State per capita distribution models that are expected to see growth: those revenues being beer and wine tax and the Powell Bill gasoline tax which supports 23% of the street maintenance budget. Additionally, utility sales tax revenues are expected to show a modest increase over the current year. Interest rates for debt financings are increasing, which will result in higher borrowing costs in the future. Rates of return on working capital have stabilized, but typically lag behind increasing borrowing rates. After several dismal years earning a virtual zero rate of return, investment earnings in the General Fund have skyrocketed due to the rising interest rate climate with $824,000 projected revenue in 2023-24, an increase of $818,000 from the current year.
In a copy of the budget message Clark summarized the budget a collaboration:
“ The City of Lexington’s Annual Budget is the ultimate partnership between City Council, staff, citizens, customers and partners in the Lexington community. The annual budget is often referred to as City Council’s number one policy statement. The City of Lexington is on the verge of being transformed as a community for future generations. The Mayor and City Council are called upon to demonstrate formidable leadership, long-term vision and the political will to make deliberate decisions in the midst of an unprecedented time in our nation’s political and societal history, while transitioning from decades of tenured management to a new City Manager for Lexington, NC…” Clark said. “In conclusion, the budget is hereby formally presented and on file as of June 1, 2023. The public notice for the annual budget public hearing date is duly advertised and set for June 12, 2023 at 6:00 p.m. at City Hall. After holding the public hearing and if there are no changes, I recommend the fiscal year 2023-24 City Annual Budget for adoption by Lexington City Council.”
