By Emily Ford
eford@salisburypost.com
SALISBURY – Four years after the Great Recession started, the city’s financial ship is beginning to turn, staff told City Council Tuesday.
Finances in most of the city’s funds have improved, and sales tax revenues continue to trend upward, said John Sofley, assistant city manager for finances.
Sofley, Budget Manager Teresa Harris and City Manager Doug Paris reported on finances for the first quarter of the new fiscal year – July, August and September.
The city’s financial picture has improved, but “it’s not time to celebrate,” Paris warned.
Property tax collection in the first quarter reached 63 percent, the highest level since the recession started in fiscal year 2009.
That means more people had cash on hand to pay their property taxes early and qualify for a discount, Paris said.
First-quarter revenue for the city’s $35.5 million general fund was 38 percent, slightly higher than expected. General fund expenditures were lower than anticipated at 22 percent.
“We look to be in very good shape in the general fund,” Harris said.
The $22.4 million water-sewer fund saw revenues of 28 percent in the first quarter, with expenditures at 18 percent.
Transit revenue was 26 percent, with expenditures at 20 percent. Transit fare for this year is estimated to be $118,000, while expenses will be about $1.1 million. The fund is heavily subsidized, like most public transportation systems.
The only fund that did not meet revenue expectations is the new $1.3 million stormwater fund, where first-quarter receipts fell short due to appeals, Harris said.
While property owners appeal their stormwater bill, the city does not collect the fee, she said. Some property owners disagree with the amount of impervious surface they own as calculated by the city.
Fibrant, the city’s new high-speed broadband service, met first-quarter revenue projections of $1.4 million, thanks in part to a budgeted $538,500 loan from the city’s water-sewer reserve fund.
Sofley said the internal loan made up 21 percent of Fibrant’s first-quarter revenue, with the utility generating roughly $300,000 per month on its own.
Fibrant continues to generate enough money to pay the $3 million annual debt service, but until the utility brings in enough to cover operating costs, the fiber-to-the-home network will borrow an estimated $7.5 million from other city funds.
Including internal loans and interest on $35.86 million in bonds, Salisbury will pay close to $70 million for the network.
Fibrant has started paying back internal loans at 1 percent interest, but there is no deadline.
New General Manager Mike Jury has cut nearly $1 million in costs from this year’s Fibrant budget and identified another $1 million in savings next year.
“I’m really excited about that,” Sofley said.
Bringing Fibrant installers, who had been contract workers, in-house as new city employees saved nearly $500,000, Sofley said.
Cutting costs means Fibrant needs fewer subscribers to be solvent, Sofley said.
Fewer people signed up for Fibrant’s Internet, cable TV and phone services during the summer. The network went from 2,000 subscribers in mid-July to 2,120 on Tuesday, an average increase of less than 10 subscribers per week.
Fibrant had maintained a rate of 30 new customers per week for several months last year.
But the rate has picked up again, Sofley said. With an increased emphasis on sales, Fibrant has averaged 25 new customers per week for the past three weeks, he said.
He said he expects that average to increase.
With cost-cutting measures in place, Sofley said he’s “very, very pleased” with Fibrant’s first-quarter performance.
“Moving forward, it puts us in an excellent position not only this year but into next year,” he said.
Mayor Paul Woodson said he’s happy with Fibrant’s financial status.
“There was a big worry for the last few years that Fibrant would be a major revenue loss for the city,” he said.
Instead, Woodson said he expects Fibrant to meet City Council expectations of breaking even in 2014 and turning a profit in 2016.
The economic downturn in 2008 hit the city at “the most critical period,” just as it launched Fibrant, Mayor Pro Tem Susan Kluttz said.
“There is no question that we have been through a difficult time,” she said.At the peak of the recession, the city’s tax base fell 8 percent as a result of Rowan County’s property revaluation. City staff had to close a $2.7 million budget gap.
In 2011, the city eliminated 36 full-time and 11 part-time positions. Most of the positions were already vacant.
The city also offered early retirement and severance packages to employees.
As part of the effort to step up fiscal oversight, the city now holds quarterly budget meetings in each department and completes a return-on-investment analysis for large projects, Sofley said.
City Council now receives a fiscal note for each agenda item that involves an expenditure, detailing how much the item or initiative will cost and where the money will come from.
“We need to maintain and double our resolve,” Sofley said. “We need to finish this job to right the ship.”
While most indications point to an economic recovery, “we all remember how the economy has changed before,” he said.
Councilman Brian Miller, a banker, agreed the city is not out of the woods.
“There could be some additional headwinds ahead of us in the economy for a little while,” he said.
Contact reporter Emily Ford at 704-797-4264.

Also at Tuesday’s meeting, City Council:
• Rezoned five parcels bound by Statesville Boulevard, Wood Avenue, Edgewood Drive and Rose Lane from general residential to residential mixed-use for a new counseling office to be built by Patricia Lyerly. No one opposed the rezoning.
• Appointed Nathan Coyle to the Community Appearance Commission.
• City Council still needs volunteers to serve on the Parks and Recreation Advisory Board and a task force to make recommendations on how best to address nuisance animals in the city.
• Appropriated a $154,500 grant from the N.C. Department of Commerce Grant for Henkel Corporation. The state money goes through local government for appropriation once criteria for an economic incentive grant are met.
• Received an application from David Stewart for a permit to operate a pool hall with eight tables at 1708 E. Innes St. and set a public hearing for Nov. 6.
• Recognize BlockWork as the city’s 2012 Make a Difference Day project.