Durham Budget Retreat - Feb. 13, 2026: Living Wage and Housing
The Durham City Council weighs a rising minimum livable wage, employee pay, and fare-free transit against a projected budget gap, tax base trends, and long-term commitments like housing bonds and Forever Home Durham. Council also reviews new equity data and resident surveys on streets, safety, housing, and access to daily needs to decide which priorities stay on the budget’s chessboard. 55mins
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Original Meeting
Friday, February 13th, 2026
25048.0
Durham City Council Budget Retreat - Friday, February 13, 2026
Video Notes
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Wes Platt
Durham, NC
In This Video
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Director Reardon reviewed the latest property revaluation’s 72% increase in assessed values, explained how the tax rate was reduced to maintain revenue neutrality, and outlined the resulting FY26 budget additions including new staff positions, pay adjustments, and priority investments such as HEART expansion, bus rapid transit, festivals, and parks and trails funding.
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Director Reardon reported that recent investments in employee pay had reduced vacancies and turnover but were causing personnel costs to grow faster than revenues, increasing the share of the general fund devoted to salaries and benefits while occupancy tax revenue to the general fund was set to decline and be eliminated by FY2028.
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Director Reardon noted that a key revenue source had grown from $68.7 million in FY2020 to $102 million but was normalizing, and explained that despite this growth the city faced a projected $9.7 million general fund gap alongside $38.5 million in new budget requests from departments and City Council that would need to be prioritized at a future retreat.
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Mayor Williams and Planning Director Sarah Young discussed how approved developments often built out slowly over 5–10 years, with only a fraction of units completed annually, which helped explain why tax base growth appeared less aggressive and showed signs of plateauing despite ongoing applications.
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Council Member Caballero and Director Reardon discussed the preliminary nature of the projected $9.7 million budget gap, with Reardon noting that most revenues were meeting or exceeding expectations and emphasizing that updated departmental information would further refine both revenue and expenditure estimates.
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City Manager Ferguson and Mayor Williams clarified that the funds in question had been used as general revenue for a range of city services and that while the Durham Next initiative might pursue projects that indirectly offset future city spending, it would not replace specific existing services one‑for‑one.
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Assistant Director Jim Reingruber outlined upcoming work on employee compensation, explaining the difference between market and merit adjustments, previewing a scenario to raise all part‑time workers to Durham’s minimum livable wage, and announcing a more comprehensive compensation and classification study to be implemented by July 2027.
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Assistant Director Reingruber recalled a recent compensation update in which employees received some of the largest market increases to date, the Durham minimum livable wage was set at $19.58 per hour as the starting step, and the general step plan’s progression was widened from 4% to 5% to align merit increases with police and fire pay plans.
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Assistant Director Reingruber detailed how recent compensation changes provided over $28 million in market adjustments plus more than $7 million in merit increases, with frontline employees on the general step plan receiving total raises ranging from about 7.6% to over 20%, including an example of a senior solid waste equipment operator who saw a roughly 16.5% increase.
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Assistant Director Reingruber detailed substantial recent pay increases, noting that non-executive open range and executive employees received sizable market and merit raises while police and fire personnel saw double‑digit market adjustments plus additional merit pay, with only a few top‑tier fire positions excluded from market increases based on study results.
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Assistant Director Reingruber reported that in the prior year Council invested over $4 million in market adjustments and $12.6 million in pay-for-performance, raised the Durham minimum livable wage to $21.90 (deactivating lower steps and moving affected employees to the first active step in their pay grade), and increased part-time employees’ merit raises from 3% to 5%.
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Assistant Director Reingruber described how the Durham minimum livable wage was designed to ramp up from a $15 per hour base and be recalculated annually using HUD fair market rent for a one‑bedroom unit—keeping housing costs at or below 30% of income—and explained how this produced an annual amount for sworn police and fire that was converted into an hourly rate for general employees.
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Assistant Director Reingruber reported that the Durham minimum livable wage was set to rise from $21.90 to $25.09—about a 14% increase—highlighted how annual DMLW growth had accelerated in recent years, and noted that the wage had grown roughly 62% since FY2020, putting significant pressure on the budget and pay structures.
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Assistant Director Reingruber explained that fully applying the 14.6% Durham minimum livable wage increase across all pay plans would cost about $44 million and push many salaries above market, so staff instead needed to adjust structures, deactivate steps, and accept some compression, noting that doing only the minimum required to comply with the ordinance would cost about $1.5 million.
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Mayor Williams and Assistant Director Reingruber discussed how extraordinary post‑COVID inflation and rising housing costs had sharply driven up the Durham minimum livable wage, with Reingruber noting that a four‑year averaging formula helped smooth volatility but that the resulting budget pressures remained challenging.
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City Manager Ferguson cautioned that pay compression created by the current Durham minimum livable wage adjustments would be permanent for affected employees, emphasized that future market increases would not undo it, and stressed the importance of being candid with worker groups about the limited options to avoid ongoing compression.
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Sally outlined how erratic tariff and federal policy changes were driving up consumer costs and creating budget uncertainty for states and localities, and highlighted that federal tax cuts for very high-income households were being paired with equivalent-scale cuts to SNAP, Medicaid, and Affordable Care Act subsidies with significant implications for healthcare in North Carolina.
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Sally summarized estimates that changes to Medicaid eligibility and reporting rules could cause over half a million North Carolinians to lose health coverage by 2034, cut $40 billion in Medicaid funding to the state over 10 years, and require an additional $31 million per year for eligibility determinations.
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Sally detailed how projected Medicaid cuts and new SNAP rules could put financially at-risk rural hospitals and county DSS offices under further strain, increase administrative costs and errors that ripple into school meal and special‑education funding, and compounded these pressures with broader federal actions such as tariffs, funding withdrawals, and immigration enforcement that were already affecting North Carolina’s economy.
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Sally explained that scheduled state income and corporate tax cuts—shifting from a more progressive structure in 2013 to a 2% corporate rate, the lowest among states with such a tax—were reducing North Carolina’s capacity to invest in residents’ well-being and absorb new costs stemming from federal policy changes.
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A speaker reported that only about 6.6% of approved new housing units were subsidized affordable, roughly one-third of Durham households were cost-burdened even before transportation costs, and homelessness had increased since 2020, emphasizing these trends as key considerations for housing and service planning.
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A speaker reported that nearly half of residents lived more than a mile from a grocery store and only about 46% were within a 10‑minute walk of a park, while Mayor Williams suggested building proactive relationships with grocery chains as staff worked to refine more detailed access metrics and identify service gaps across the city and county.
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A speaker urged developing a post-UDO strategy to improve food access and reduce car dependence by using zoning, capital investments, and economic development to bring neighborhood-serving commercial uses closer to residents and evolve Durham from a monocentric downtown model to multiple walkable activity centers.
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Sherry Metcalf reviewed the parallel timeline for adopting a draft strategic plan with the budget, reminded Council how it had previously narrowed priorities into four strategic goals, and explained that built and natural environment items were temporarily broken into subcategories for resident surveys but would be recombined under the same goal for upcoming priority discussions.
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Survey consultant Jason Morado reported that resident satisfaction with Durham had risen notably above prior years and national averages—especially for overall city services and customer service from employees—while identifying street maintenance, police protection, pedestrian facilities, and affordable housing as top priorities.
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Survey consultant Jason Morado reported significant recent increases in resident satisfaction with EMS, police protection, bicycle facilities, public transit, and sidewalks, while noting a five‑point decline in fire prevention programs and a slight ongoing decrease in satisfaction with street conditions.
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