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HomeMy WebLinkAboutAgenda - 02-12-2009 - 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: February 12, 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. Guiding Principles for County Priorities, FY 2009-10 Attachment 2. Identified Priorities for FY INFORMATION CONTACT: 2009-10 Attachment 3. Items for Board Consideration Laura Blackmon, (919) 245-2300 in Developing FY 2009-10 Donna Coffey, (919) 245-2151 Budget Attachment 4. January 27, 2009 Willie Best, (919) 245-2300 Memorandum: Preliminary Projects for the Federal Stimulus Package Attachment 5. Stimulus Package Submissions from Schools PURPOSE: For the Board to make decisions regarding development of the FY 2009-10 budget. BACKGROUND: 1) Current Year Fiscal Update * Recommended Board Action — The County Manager recommends the Board receive an update from staff regarding the County's current FY 2008-09 fiscal status. a) Revenues — Overall revenue collections are on target with where they should be at this point in the fiscal year. i) 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 2 Revenue Office has collected about 98% of total budget or $115.4 million as of February 9, 2009. The encouraging news is that real property tax bills are being paid. Delinquent notices have been mailed and public advertisements of delinquencies are scheduled for print in newspapers this month. Garnishment of wages will begin soon. ii) 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. As mentioned during the Board's retreat in early January, one area to highlight is motor vehicle valuations. As economic conditions continue to worsen, many people are trading larger, more expensive vehicles for smaller, less expensive ones. This may become a more prominent factor in preparing the FY 2009-10 budget. Staff closely monitors these numbers monthly and will provide additional information to the Board as it becomes available. iii) 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. The State has not published the February report as of the printing of this agenda. Staff anticipates these numbers will be available to report at the February 12 work session. iv) 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 $672,000 or just over 37% of total budget through February 9, 2009. In the area of construction related revenues such as building permits and inspections, the County has received about $496,000 of the total $1.2 million budgeted (through February 9, 2009). b) 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: O Continuing the County's 3-month hiring delay O Reserving 2% of budgeted operating expenditures 3 * Postponing vehicle and equipment purchases • Delaying other capital expenditures 0 No out of state travel O Postponing other travel if possible O Reducing fuel consumption by at least 10 percent Other counties throughout the State have also implemented similar measures in reaction to the slowing economy. 2) FY 2009-10 Budget Activity to Date • • Recommended Board Action — The County Manager recommends the Board receive information regarding staff activity to-date in preparing for the upcoming 2009-10 FY. Development of the FY 2009-10 budget promises to be quite a challenge. On the revenue side there appears to be little or no growth in the County's overall revenue base between this year and next. This is because natural growth in real property valuation will be offset by decreases in motor vehicle valuations and sales tax receipts. In addition, during the Board's retreat Commissioners expressed their desire to avoid a tax rate increase in the upcoming fiscal year. All of this equates to flat or potentially reduced revenues to support the County's services in the upcoming fiscal year. On the expenditure side, departments across the board are experiencing increased demands. Job losses and reduced income for many of our residents equate to substantial increases in requests for core services provided by Community Services departments. In addition, our state and nation face fiscal uncertainty. As their purse strings tighten, they pass increased costs/funding reductions on to local governments. Moving into the new fiscal year, the fiscal outlook is anything but promising. Limited revenues mean the County must examine and prioritize services offered. This is similar to approaches our counterparts across the state and nation are currently undertaking. a) County Manager FY 2009-10 Budget Preparation Directions to Departments In order to meet the Board's FY 2009-10 budget goals, it will be necessary to decrease current year spending levels. To that end, the County Manager has provided the following direction to department directors as they prepare their FY 2009-10 budget requests. • e The County Manager has directed departments to submit FY 2009-10 • budget requests reflecting a budget reduction of 10%. The dollar amount of the decrease is equivalent to 10% of the sum of the department's overtime, non-permanent (i.e. temporary) and operations line items. 4 • In keeping with one of the Board's January 20 adopted guiding principles (Attachment 1) — the County workforce is a valuable asset which should be protected — the County Manager has exempted permanent personnel related line items from the 10% formula. e In order to meet the 10% reduction target, the Manager expects department directors to look holistically at their department and propose reductions in, and in some instances elimination of, non-mandated services and activities. O As the first option, the Manager has directed departments to absorb costs associated with opening new facilities within their budget proposal for FY 2009-10. • This will likely mean substantial changes in current service delivery. ® For each service reduction and elimination, department directors must submit a Service Reduction Impact Statement. The Manager plans to share these statements with Commissioners during budget work sessions in March 2009. • The Manager has also directed departments not to submit requests for capital items in FY 2009-10. • b) Mandated and Non-Mandated Services During the early January retreat, staff shared a funding matrix identifying mandated and non-mandated services with the Board. Identifying mandated and non-mandated services and activities is a good first step. The majority of activities and services offered by the County are non-mandated. It is important to note, non-mandated does not mean the activities and services are not important — it simply means Commissioners have discretion over what level of service they wish to fund. As part of March 2009 budget work session materials, Commissioners will receive a final version of the Matrix to use as a decision making tool in discussing service delivery alternatives for the upcoming fiscal year. c) Board Priorities and Exchanges In addition to developing guiding principles at the retreat, Commissioners approved priorities for the County to pursue in FY 2009-10. Attachment 2 reflects, in priority order based on the number of votes, the approved priorities. At the January 29, 2009 work session, Commissioners and staff had the opportunity to discuss and clarify draft action plans and fiscal impact statements related to each of the Board's FY 2009-10 priorities. The County Manager recommended 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. To that end, the Manager has directed department directors to propose exchanging current activities or services for new Board priorities thereby resulting in a net budget impact of zero. As part of the upcoming March 2009 budget work sessions, staff plans to share final action plans and fiscal impact statements with the Board for approval. 5 3) BOCC FY 2009-10 Budget Decisions and Guidance ® Recommended Board Action — The County.Manager recommends the Board make decisions that provide direction to staff in developing the FY 2009-10 budget. • 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 3 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. The County Manager recommends Commissioners make decisions at tonight's work session to guide in developing the upcoming budget. 4) Federal Economic Stimulus 0 Recommended Board Action - The County Manager recommends the Board review the stimulus projects for the County and the two school districts (Attachments 4 and 5) and provide direction to staff regarding priority projects for anticipated Federal Economic Stimulus monies. Attachment 4 offers a list of potential County projects that may be eligible for Stimulus funding while Attachment 5 offers potential School projects for Stimulus funding. 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. FINANCIAL IMPACT: Financial impacts are included in the Background section. RECOMMENDATION(S): The Manager recommends the Board of County Commissioners: 1. Receive an update from staff regarding the County's current FY 2008-09 fiscal status 2. Receive information regarding staff activity to-date in preparing for the upcoming 2009-10 FY • 3. Make decisions that provide direction to staff in developing the FY 2009-10 budget. 4. Provide direction to staff regarding priority County and School projects for anticipated Federal Economic Stimulus monies.