HomeMy WebLinkAboutAgenda - 03-05-2009 - 1 ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: March 5, 2009
Action Agenda
Item No. 1
SUBJECT: FY 2009-10 Budget Update
DEPARTMENT: County Manager and Budget PUBLIC HEARING: (YIN) No
ATTACHMENT(S):
Attachment 1. Funding Matrix Sorted by INFORMATION CONTACT:
Mandated and Discretionary Laura Blackmon, (919) 245-2300
Donna Coffey, (919) 245-2151
Attachment 2. Community Service
Departments - FY 2009-10
Departmental Budget
Summaries and Service
Reduction Impact Statements
PURPOSE: For the Board to receive an updated FY 2009-10 fiscal outlook and
comment on proposed changes to and possible elimination of County services.
BACKGROUND:
1) FY 2009-10 Budget Outlook
Recommended Board Action — The County Manager recommends the
Board receive information regarding the County's preliminary fiscal outlook
for FY 2009-10.
Current Federal, State and local government fiscal landscapes are in constant
flux right now. Each day brings news that is not optimistic.
• Revenue Update — There has been a flurry of recent budget reductions
passed on from the State to local governments and school districts. In
addition, staff learned late this week of State plans to balance current and
next year budgets by withholding revenues owed to local governments.
Details of potential withholdings are unfolding as this agenda is being
prepared.
According to information received during a conference call with NC
Association of County Commissioners (NCACC) staff, the State plans to
sequester some portion of current year Public School Building Funds
(PSBF) and Lottery proceeds. In Orange County, PSBF revenue offsets
the cost of debt repayment for school related projects while Lottery
proceeds fund some facility renovation projects in each school district.
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In December 2008, staff requested reimbursement of PSBF monies from
the State totaling $1,095,278. To date, the State has reimbursed
$717,750 of the request leaving $377,528 unpaid. With regard to Lottery
proceeds, the County has requested reimbursement totaling $2,298,202
and received $1,286,000 leaving $1,012,202 unpaid by the State. The
State Budget Office is still working through the withholding details. While
there is a possibility the State will pay the outstanding balances, there
appears to be an even stronger possibility the State will choose not to pay
the amounts due the County. •
During the conference call mentioned earlier, the NCACC advised staff to
budget conservatively and not count on Public School Building Fund
monies in fiscal year 2009-10 and possibly beyond. This loss equates to
$1.4 million revenue reduction in the County's General Fund — the
equivalent of about 1 cent on the tax rate. Other rumored withholdings
include E-911 revenues, beer and wine taxes, and "hold harmless" monies
promised to counties as part of the Medicaid Relief/Sales Tax Swap
approved by the General Assembly two years ago. Again, little is known
about the possible withholdings. However, it is not unprecedented for the
State to keep revenues owed to local governments during difficult financial
times. This has occurred on a number of occasions in past years and has
included permanent withholding of intangibles and inventory taxes and
intermittent Public School Building Fund monies.
In addition to the loss of revenues received from the State, the depressed
economy brings decreases in consumer spending and downturns in
construction. At this time, staff projects the losses in sales taxes,
property transfers, and permit related revenues might range between
$1.5 to $2.5 million for fiscal year 2009-10 — the equivalent of 1 to 2
cents on the tax rate.
Equally important in assessing the fiscal condition are the County's
appropriations.
Appropriation Update - Record numbers of people are experiencing
reductions in work hours and lay-offs. As a result, the County's safety net
departments such as Social Services, Health, and Housing are
experiencing significant increases in requests for services to meet basic
needs of food, housing, utilities, medical care and transportation. These
increased pressures will result in the need for more money to provide our
residents' necessities.
In addition to increased demands for services, new County facilities have
either recently opened or will be coming on line in the upcoming year.
Preliminary cost projections associated with these facilities range from
$2.5 to $3 million.
Since much of the news about potential withholdings is late breaking, staff has
not had adequate time at the publishing of this agenda package to analyze the
full impact of revenue losses and provide as accurate a picture as possible. Staff
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plans to provide the Board with additional fiscal information related to this topic at
March 3 regular meeting. This information will consist of an analysis that
compares the FY 2009-10 projected revenues with current year revenues. The
analysis will also offer a snapshot of funding allocations for County and School
functions. Staff will also provide the Board with a calendar of upcoming budget
work sessions and identify outcomes anticipated from the work sessions.
It is safe to say the County's revenue base for the upcoming fiscal year will be
lower than the current year base. It is also valid to project costs to meet
increased service demands for basic needs will be higher in FY 2009-10 than in
the current year. These factors, coupled with the Board's decision on February
12, 2009 not to increase the tax rate above the revenue neutral rate, lead staff to
assess and prioritize current programs and services.
2) Proposed Service Reductions — Community Services Departments
• Recommended Board Action — The County Manager recommends the
Board comment on proposed service reductions for Community Services
Departments.
In light of the less than optimistic revenue picture anticipated for FY 2009-10, the
County Manager directed department heads to submit funding requests that were
less than their original FY 2008-09 approved budget. 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. In order to meet the 10%
reduction target, the Manager directed department directors to look holistically at
their department and propose reductions in, and in some instances elimination
of, non-mandated services and activities.
During work sessions tonight and March 24, the County Manager and
department heads plan to share their thoughts and proposals for achieving the
appropriation reduction target. Tonight's work session offers an opportunity for
Community Services departments to present their budget highlights and service
proposals. (See Attachment 1 of this agenda abstract). During the March 24
work session, Development Services and Internal Services department directors
will share similar service proposals with the Board.
For the most part, Community Services departments are those departments that
provide direct services to the community at large. This group of departments
includes Social Services, Health, Housing, Child Support Enforcement,
Emergency Services, Aging, Orange Public Transportation (OPT), Animal
Control and Library. The Manager recommends the Board provide direction
• regarding the service proposals presented by each department and make
decisions regarding proposed service delivery changes.
3) Funding Matrix
• Recommended Board Action — The County Manager recommends the
Board identify programs/services/activities for which additional information
is needed.
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During the Board's January 10, 2009 retreat, staff presented a draft Funding
Matrix that identified services and activities performed by County departments. •
The purpose of this tool was to provide the Board with a tool that would allow
Commissioners to make more informed staffing and funding decisions regarding
current and future programs/services/activities offered by Orange County. The
Matrix categorized the services and activities into three categories:
• State/federal mandated programs where County must provide a required level
of service at a required level of funding
• State/federal mandated programs where County must provide a service but
funding level of the program is discretionary
• Discretionary programs where County is not required to provide the service
Department directors finalized their sections of the Matrix in conjunction with
preparation of their FY 2009-10 budget request. Attachment 2 of this agenda abstract
provides the final draft of the Funding Matrix. Tonight's work session offers the first
opportunity since the retreat for Commissioners to discuss the Matrix. Department
heads will attend to respond to questions.
FINANCIAL IMPACT: Financial impacts included in the Background section and
presented during the work session.
RECOMMENDATION(S): The Manager recommends the Board of County •
Commissioners:
1) Receive information regarding the County's preliminary fiscal outlook for FY
2009-10
2) Comment on proposed service reductions for Community Services Departments
3) Identify programs/services/activities for which additional information is needed
•