HomeMy WebLinkAboutAgenda - 01-29-2009 - 1 ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: January 29, 2009
Action Agenda
Item No. 1
SUBJECT: FY 2009-10 Budget Work Session
DEPARTMENT: County Manager and Budget PUBLIC HEARING: (YIN) No
ATTACHMENT(S):
Attachment 1. Minutes of January 10, 2009
OCBOCC Retreat
Attachment 2. Guiding Principles for County INFORMATION CONTACT:
Priorities, FY 2009-10
Attachment 3. Identified Priorities for FY Laura Blackmon, (919) 245-2300
2009-10 Budget Donna Coffey, (919) 245-2151
Attachment 4. FY 200-10 Board Priorities — Willie Best, (919) 245-2300
Action Plans and Fiscal Impact
Statements
Attachment 5. Orange County Department of
Social Services Economic
Impact Report— January 2009
Attachment 6. Items for Board Consideration
in Developing FY 2009-10
Budget Guidelines
Attachment 7. January 14, 2009
Memorandum Re: Response to
NCACC Request for Possible
Economic Stimulus Projects
Attachment 8. January 27, 2009
Memorandum Re: Preliminary
Projects for the Federal
Stimulus Package
PURPOSE: For the Board to clarify its shared vision and desired outcomes for FY
2009-10 priorities and decide on common guidance and direction regarding
development of the FY 2009-10 budget.
BACKGROUND:
During the January 10, 2009 retreat, the Board had an opportunity to work together and
determine its guiding principles and priorities for the upcoming fiscal year. Attachment 1
provides minutes from the retreat. As part of the discussion during the retreat,
Commissioners agreed on guiding principles and priorities for the upcoming 2009-10
fiscal year (Attachments 2 and 3 of this agenda abstract).
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1) FY 2009-10 Board Priorities
• Recommended Board Action — The County, Manager recommends the
Board and staff engage in conversations to clarify and agree upon desired
outcomes for each priority.
a) Clarification of Board Priorities
Attachment 2 provides a list of guiding principles the Board agreed upon during
the January 10 retreat. These principles provide a foundation for the Board's
decision-making process as the County moves forward in planning for the
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upcoming fiscal year. In addition to the guiding principles, Commissioners had
the opportunity to vote on their individual top ten priorities for the Board to
undertake in FY 2009-10. The Board agreed at the retreat to direct staff to
develop work plans and fiscal impact statements for priorities receiving at least
four votes. Fourteen priorities received four or more votes. Attachment 3
reflects, in priority order based on the number of votes, the outcome of the vote.
Tonight's budget work session provides the first opportunity since the Board's
retreat for Commissioners and staff to dialogue about the priorities.
Over the last two weeks staff has developed draft action plans and fiscal impact
statements. Attachment 4 contains the work accomplished to date on these
plans. In the course of developing these preliminary plans, staff has discovered,
in most instances, there is a need for, further clarification from the Board
regarding the expected outcomes. During tonight's work session, the Manager
recommends the Board and staff engage in conversations to clarify and agree (
upon desired outcomes for each priority. This clarification will provide a roadmap
for staff to finalize action plans and fiscal impacts for the Board to discuss at
budget work sessions this spring.
b) Fiscal Impact of Board Priorities
As the County moves into the budget planning process, the County Manager
recommends the Board consider funding for the fourteen new priorities
separately from other budget components reductions. In accordance with the
Board's guiding principles from the retreat, no new services can be added
without exchanging them for current services or increasing taxes. Therefore, as
a first alternative, staff will be asked to consider exchanging current activities or
services for new Board priorities thereby resulting in a net budget impact of zero.
However, should the Board decide not to move forward with staff's proposed
exchanges, funding for the priority would need to come from new monies, i.e.
resulting in a budget and tax increase.
2) Board Guidance Regarding FY 2009-10 Budget
• Recommended Board Action — The County Manager recommends the
Board receive a fiscal update from staff and provide guidance and make
decisions that provide direction with regard to development of the FY 2009-10
budget.
a) 'Update on Current Year Budget
• Revenues — Overall revenue collections are on target with where they should
be at this point in the fiscal year.
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o Real Property Taxes — Preliminary reports from the Collections
department indicate property tax revenues to-date are consistent with
past years' collection rates. Of the $117.9 million budgeted for real
property taxes, the Revenue office has collected about 93% of total
budget or $110 million as of mid-January 2009.
The Revenue Office reports some taxpayers have been slower paying
their bills than in past years, and a few others, mainly large
construction companies and restaurants, have asked for payment
plans. In addition, staff reports seeing a higher percentage of
bankruptcies than in past years — especially in the area of wage
earner, or personal, bankruptcies. To date these factors have not
negatively affected collections, and staff is cautiously optimistic that
collections will continue to be on target for the remainder of the current
year. The encouraging news is that real property tax bills are being
paid. An important benchmark date for real property tax collections is
the first of February, because by that time, taxpayers who have not
paid will have received their second notices and garnishments will
have begun.
o Motor Vehicle Property Taxes — Motor vehicle property tax
collections to-date are on target with where the County should be at
this time of the year. However, as mentioned during the Board's
retreat in early January, one area of concern is motor vehicle
va'uations. As economic conditions continue to worsen, many people
are trading larger, more expensive vehicles for smaller, less expensive
ones. Staff closely monitors these numbers monthly and will provide
additional information to the Board as it becomes available.
o Sales Taxes — To date, the County has received four months of sales
tax receipts for the current year - August through November 2008. Out
of an $18.8 million budget, the County has received $6.3 million or
33.7%. As a point of comparison, after four months, the target
collection point is 33.3%. Sales tax receipts,anticipated in February
and March 2009 will reflect recent holiday sales activity.
o Land Transfer/Construction Related Revenues — These revenues
include Register of Deeds fees along with
Planning/Inspections/Environmental Health permit revenues. There is
an evident slowing trend in this revenue area — particularly in the area
of land/property transfer related revenues. This is indicative of a
slowing housing market.
As a point of reference, of the $1.8 million budgeted for Register of
Deeds fees, the County has collected about $625,000 or about 35% of
total budget after the first six months of the fiscal year. In the area of
construction related revenues such as building permits and
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inspections, the County has received about $375,000 or 45% of the
total $830,000 budgeted at mid-year.
Expenditures — Overall expenditures are on target with where they should be
at this point in the fiscal year. In September 2008, the County Manager put
into place a number of budget directives for the current fiscal year. The intent
of this precautionary measure action was to ensure that at year-end County
expenditures did not exceed anticipated revenue collections. The list below
outlines current year budget directives and guidance the Manager has issued
to date:
• Continuing the County's 3-month hiring delay
• Reserving 2% of budgeted operating expenditures
O Postponing vehicle and equipment purchases
• Delaying other capital expenditures
• No out of state travel
O Postponing other travel if possible
® Reducing fuel consumption by at least 10 percent
Other counties throughout the State have also implemented similar measures
in reaction to the slowing economy.
Since September, the economy has continued to spiral downward and
increasing layoffs have begun to impact demand for services such as food ('
stamps and utility assistance payments. The Department of Social Services
reports significant increases in requests for services. Attachment 5 is an
Economic Impact Report prepared by DSS Director Nancy Coston. The
Manager recommends the Board take time during this portion of tonight's
work session to talk with Ms. Coston about the report.
b) FY 2009-10 Preliminary Outlook
In light of current and anticipated economic conditions, staff plans to exercise
conservatism and caution in developing revenue projections for FY 2009-10. It is
very likely that overall revenues will not increase and in some instances, the
County will probably experience decreases in some revenues such as sales
taxes and motor vehicle property taxes.
During the September 9, 2008 work session, staff shared a very preliminary
budget driver list for FY 2009-10. At that time, the projected difference between
anticipated revenues and expenditures for the upcoming fiscal year was $9.5
million. Examples of increased appropriations anticipated for next fiscal year
include debt service ($2.7 million), opening new County facilities ($2.5 million)
and funding new students at the current year per pupil rate of $3,200 ($1.3
million). As a point of reference, preliminary staff projections indicate one cent
on the tax rate for FY 2009-10 will generate between $1.3 and $1.4 million.
County departments have already started formulating their budget requests for
next fiscal year. As the initial step, the Manager has directed County
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departments to prepare funding plans that allow for a 10 percent reduction in
non-permanent personnel areas and, provides no equipment or vehicle
purchases. In order to meet these guidelines, staff will be exploring alternative
means of delivering some County services, and in most instances, consideration
will be given to exchanging some currently offered lower priority services for
other higher priority ones. Staff will explore opportunities to reassign money and
staff. As those plans are considered, staff plans to ask the Board, in future
budget work sessions, to act on recommended service delivery alternatives in
order to avoid reduction or elimination of activities, services and programs the
Board may not wish to eliminate.
Orange County has always valued its employees. The Board affirmed this
commitment in its Guiding Principles by stating, "The County's workforce is a
valuable asset which should be protected." As departments look at ways to
meet funding targets for FY 2009-10, the ultimate goal will be to retain the current
workforce. This may mean some employees continue in their current jobs while
others may be required to work in different capacities — regardless of the
assignment. The Manager's highest priority in the upcoming budget process will
be to retain employees and avoid reductions in force.
Staff highlighted historical trends in Orange County's revenues and
appropriations at the Board's January 10 retreat. During that conversation, staff
engaged the Board in a preliminary conversation about a number of budget
drivers, including a target tax rate and funding for schools, that would affect the
upcoming budget for FY 2009-10. Attachment 6 is a copy of the handout
provided to the Board at the retreat. This handout highlights a number of
questions and budget drivers that would impact the upcoming budget. At the
retreat, Commissioners were asked to give thought to the questions posed on
Attachment 6 and be prepared to make decisions, at tonight's work session, that
will guide how staff proceeds with the upcoming budget year. The County
Manager recommends the Board decide on its common guidance and direction
regarding the FY 2009-10 budget by using Attachment 6 as a point of reference.
3) Federal Economic Stimulus
o Recommended Board Action — The County Manager recommends the
Board review Attachments 7 and 8 and provide direction to staff regarding
priority projects for anticipated Federal Economic Stimulus monies.
Early in January 2009, Rebecca Troutman of the North Carolina Association of
County Commissioners requested a list of possible shovel ready projects to prepare
Governor Beverly Perdue for a meeting with President Obama's Economic
Development Team. Attachment 7 includes a list of the projects provided in
response to Ms. Troutman's request. More recently, a staff work group met and
developed a more comprehensive list of potential projects that may be eligible for
Stimulus funding. Summaries of those projects are included in Attachment 8. The
Manager recommends the Board offer direction regarding staff proposed projects or
other priority projects Commissioners may be interested in submitting for Stimulus
funding. Following tonight's discussion, staff will prepare a final list of potential
Stimulus projects for approval at the February 17 regular Board meeting.
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FINANCIAL IMPACT: Financial impacts are included in the Background section.
RECOMMENDATION(S): The Manager recommends the Board of County
Commissioners:
1. Clarify its shared vision and desired outcome for each priority
2. Decide on common guidance and direction regarding development of the FY
2009-10 budget