Before City of Durham officials even draft the upcoming fiscal year’s budget, it’s already shaping up to be a challenging process.
Federal and state funding for local government is uncertain, with the Trump administration cutting money for social support programs and North Carolina legislators unable to reach agreement on a state budget. The costs of doing business change with inflation and new, unpredictable tariffs. More than $50 million in American Rescue Plan Act funds the city received from the federal government in 2021 to help offset economic impacts of the pandemic is set to expire at the end of this year. And the city is facing what could be a major hike in personnel costs in the fiscal year that begins this summer.
On March 16, the Durham city council will host its first public hearing for the 2026-2027 fiscal year budget process at its regular council meeting. The public hearing will give residents an opportunity to express their hopes, dreams, and concerns about the upcoming budget. City council members and city staff have already held two retreats to discuss budget priorities and limitations.
“We don’t really have the same ability to dream big,” said city councilor Carl Rist. “We just don’t have quite as much room as we’ve had in the past several years to keep thinking about expanding things. It’s more like we’re keeping the house in order, but it’s still a budget we can all be proud of.”
A major point of tension is striking a balance between maintaining or increasing services and raising personnel wages without overburdening residents with property tax bills.
In 2019, Durham city council adopted the Durham Minimum Livable Wage (DMLW) ordinance, which uses a detailed formula to prescribe an appropriate salary threshold for most city employees based on housing costs. The wage rate has grown modestly each year, typically no more than a dollar. For the current fiscal year, the rate was set at $21.90.
But as the cost of living rises, the city is staring down a spike in personnel costs next fiscal year as the livable wage grows close to $25 per hour, a per-year increase roughly four times higher than normal.
“We’re at war with our own values,” said Mayor Leonardo Williams. “While it’s a strong statement of values for us, there are so many things that we can’t control right now. We can’t control the markets. We can’t control the president taking us to war and causing everything to inflate. And so what’s happening is all of the components or areas that we cannot control are running us into a bit of a quagmire.”
The City of Durham employs around 2,862 full-time positions. Only a fraction of employees—roughly 200—make below the $25 per hour threshold, but city staff are concerned that raising the floor will cause compression, which occurs when there is little difference in wages between an organization’s lowest-paid workers and more experienced or senior staff. That means raising wages for the relatively small number of employees at the bottom of the payscale could result in having to raise pay for a lot of other workers—or losing staff morale.
Senior staff, many of whom spent years building their résumés by getting graduate degrees and certifications, and working to gain valuable experience, are partly incentivized by the salary that comes with the job. New hires or more junior staff getting pay bumps that move their salaries close to, or above, senior staff feels like a disservice, Williams said.
Employee wages were a major point of contention after salary freezes following the COVID-19 pandemic; the 2023 city council election was largely a referendum on whether solid waste workers, who went on strike with support from a swath of residents, would receive pay increases. Worker wages have continued to grow, which has meant fewer public calls from staff and the community for better pay.
But that could come to a head this year. It’s hard to say how much all of this would cost the city because officials still need to decide whose pay to increase and by how much next fiscal year. At the bottom end, simply getting the 204 employees up to the new livable wage is estimated to cost $1.5 million. Adjusting everyone else’s pay accordingly would add another $44 million, though to be clear, the city is not considering that significant of an across-the-board increase, according to Durham Budget Director Christina Riordan.
“In just two years, we went from a nice, pretty, clean, shiny new step plan to something that looks like it got hit by a meteor,” Jim Reingruber, assistant director of Human Resources said at the February 13 budget retreat meeting, “and honestly, we’re glad to be at a point where it’s time to do another pay study and figure out how we want to move forward in a smart and sustainable way.”
During the retreat, Riordan said that since 2023, personnel costs have grown 35%, outpacing revenue which grew only 22%, meaning staff salaries are also becoming a larger share of the budget overall.
Along with its population, Durham’s budget has grown. Since 2020, the budget has swelled about 51.1%, from $477.8 million to $722.1 million last year. City staff has also grown by 211 total positions in the same timeframe.
Last year, a countywide property revaluation increased assessed property values in Durham County by 72% on average; for comparison, the last revaluation in 2020 raised assessed values by only 21%. The surge in values increased revenue—roughly $54 million (8%) over FY2025—which helped fund popular services like fare-free public buses and HEART expansion, as well as 42 new staff positions, Riordan said.
Another property tax increase, on top of the additional tax burden from the 2024 bond referendum, would be a hard sell to the public. But sales tax, another important revenue stream, has stagnated in the last few years. Early projections put the city at a $10 million dollar deficit, taking into account new budget requests from city departments and city council.
“While you are seeing your state and federal government failing you on the regular,” city councilor Javiera Caballero said during last year’s budget vote, “please know that your local government is trying really hard to meet the needs of this community with a much more constrained pool of resources.”
Comment on this story at [email protected].