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HomeMy WebLinkAboutMinutes - 20090512 APPROVED 8/18/2009 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS BUDGT WORK SERSSION May 12, 2009 7:00 p.m. The Orange County Board of Commissioners met for a budget work session on Tuesday, May 12, 2009 at 5:30 p.m. at the Link Government Services Center in Hillsborough, NC. COUNTY COMMISSIONERS PRESENT: Chair Valerie P. Foushee, and Commissioners Alice Gordon, Pam Hemminger, Barry Jacobs, Mike Nelson, Bernadette Pelissier, and Steve Yuhasz COUNTY COMMISSIONERS ABSENT: COUNTY ATTORNEYS PRESENT: COUNTY STAFF PRESENT: County Manager Laura Blackmon, Assistant County Managers Willie Best and Gwen Harvey, and Clerk to the Board Donna S. Baker (All other staff members will be identified appropriately below) Presentation of the County Manager's Recommended FY 2009-10 Annual Operating Budget Laura Blackmon made reference to the budget message that summarizes what is in the budget for this year. The proposed General Fund budget is $177,589,039, which is a decrease of about$5.4 million, or 3%, from the current year original budget of$183,005,580. The chart on page 1-1 shows the differences in school and County appropriations from the current year and the proposed budget. Laura Blackmon reviewed the Budget Message, as shown below: Budget Message To: Orange County Board of Commissioners From: Laura 8.Blackmon,County Manager Subject: Recommended FY 2009-10 Annual Operating Budge Date: May 12,2009 Per North Carolina General Statute 159-11. I submit to you the Recommended FY 200910 Annual Operating Budget for Orange County. The proposed General Fund budget totals *177.589.039. It reflects a decrease of$5.4 million,or 3%,from the current year original budget of$183,005,580. I believe this funding plan meets Board mrecu,00, allows for opening new facilities,addresses many County priorities,and supports employees. Over the last several months Commissioners have heard from many County residents who are finding it increasingly difficult to pay taxes and meet other financial obligations. With that in mind Commissioners directed me to balance the County's operating budget at the revenue neutral tax rate. The Board also directed me to prepare a budget funding local school districts at 48.1% of the County's General Fund. While my recommended funding plan attains both of those goals,balancing the budget within these guidelines was not an easy task. It has required difficult funding decisions regarding services and programs. Budget decreases mean everyone eoxou|o, non-profit agencies and county departments — receives less money next year than they received this year. FY 2008-09 FY 2009-10 Difference County Departments $94'475'580 $92'164,*71 ($2,311'109) Total%of General Fund 51.6% 51.9% Local School Districts $88,530'000 $85'*24,568 ($3'105'432) Total%of General Fund *8.4u 48zm Revenues The County receives revenue from many sources. Major revenues include property and sales taxox, monies from other governments, and fees for services. Early in the budget planning process staff alerted the Board of anticipated revenue reductions in all these areas for the upcoming year. For the most part, decreases are the result of reduced consumer spending, declining construction and housing mameto, and reductions in State monies to support county operations. The State's fiscal condition continues to deteriorate. Each day brings new information for us to consider as we enter the final stages of balancing the County's budget for the upcoming year. As an example, late last week Governor Perdue announced additional funding cuts to include furloughs and reduced pay for teachers and other state employees. Budget Message Assessed Property Valuation and Property Revenue Neutral Tax Rate North Carolina law requires counties revalue real property at least every eight years. In . 1993, the Orange County Board of County Commissioners adopted a policy to revalue property every four years. The goal of revaluation is to align appraised property values with market values. Orange County's most recent revaluation was effective January 1,2009. The County's post- revaluation total assessed valuation, including real, personal, and public utility property and motor vehicles, equals$15,369,119,202. The tax levy for the current year is$128,249,749, and the growth factor since the last reappraisal is 2.8%. Using the formula mandated by state law,the revenue neutral tax rate for Orange County is 85.8 cents. In accordance with State law, revenue neutral rate is defined as a rate that produces the same amount of property tax levy as budgeted in the pre-revaluation year. The current year tax rate is 99.8 cents, The chart below outlines how this rate was calculated. Calculating 2009 Ad Valorem Revenue Neutral Tax Rate Personal Tax Rate Property and Public Service Less Assessed Value(all Annual (per$100 property Tax Motor Vehicles FY —t Property Registered Companies Homestead ProPerlY tax Growth assessed Levy Exemption components) Rate value) 2005-06(actual 510,321,040,868$1,322,278,025 $211,531,245(40,113,991.00) $11,814,736,147 0.843 $99,598,226 per audit) 2006-07(actual per audit) 810,936,261,416$1,214,967,577 $218,479,438(39,393,242.00) $12,330,315,189 4.4% 0.903 $111,342,745 2006.07(actual $10936251419$1214,967,577 $218,479,438(39,393,242.00) $12330,315,189 0.903 $111,342746 per audit) 2007-08(actual per audit) $11,183,241,007$1,219,216,812 $218,549,070(39,786,610.00) $12,581,220,279 2.0% 0.950 $119,521,593 2007-08(actual $11,183,241,007$1,219,216,812 $218,549,070(39,786,610.00) $12,581220279 0.950 $119,521,593 per audit) 2008-09(per approved $11,407,167,466$1,264,158,027 $225,105,542(45,754,802.00) 012,850,676,233 2.1% 0.998 $128,249,749 budget) 2009-10 $14,078,862,266$4,144,855,451 $202,594,988.(57,193,502.50) $15,369,119,2021 19,6% 0.834 $128,249,749 Growth Factor Adjustment (average annual growth since 2.8% last revel) Revenue Neutral Tax Rate 0.858 per$100 assessed valuation Real property values increase from $11.4 billion budgeted in FY 2008-09 to$14.1 billion in FY 2009-10,an increase of 23.4%. As projected in earlier revenue estimates,valuations for personal property and motor vehicles decrease significantly next year. These decreases offset increases in real property resulting in an overall increase in total property valuation of 19.6%, Budget Message Recommended Tax Rates Ad Valorem Tax Rate — Revenues generated by the County's ad valorem property tax support day-to-day County and School operations budgeted in the General Fund. The recommended ad valorem mm pmpe�� tax rate next year 85.8 cents per of assessed valuation. This rate is the revenue neutral rate.One cent on the property tax rate should generate$1,505,352 in the upcoming fiscal year. Chapel Hill Carrboro City Schools District Tax — The voter approved Chapel Hill City Schools District Tax provides additional revenue to the school district over and above the County's ad valorem tax. This recommended budget provides for the revenue neutral rate of 18.e4 cents per$100 assessed value. The approved tax rate for the current year is 23 cents per$100 assessed value. Based on this tax rate,the District will receive an estimated $18,721,785 or$1,597 per pupil.One cent on the school special district tax should generate $993,725. Voters in the Orange County School District have not authorized a special district tax to supplement its amount received from the County's General Fund for current expense. Fire District Tax Rates — As outlined in the Fire Districts section of the recommended uvugm, revenue neutral tax rates range from 2.16 cents to 7.85 cents per$100 valuation. Some districts have requested tax rates above the revenue neutral rate. In those instances I have recommended the revenue neutral rate and have notified the districts they will need to present their needs to Commissioners at a work session in June. This approach is consistent with Board direction to me earlier this spring. Revenue Highlights Property Tax Revenue - Property taxes make up $130s mioion, or r00%, of the recommended General Fund revenue base of$177.6 million. This equates to a$2.2 million increase from the current year budget of$138 million and is reflective of natural growth in the tax base. Sales Tax Revenue — Sales tax revenue for FY 2009-10 decreases by $2.1 million. The reason for the decrease is two-fold. The foremost reason relates directly to the General Assembly's Medicaid Relief/Sales Tax Swap legislation approved in 2007. A key component of that legislation provided for the State to "relieve" counties of their longstanding responsibility of paying Medicaid costs. In wm, recognizing the State had no revenue to cover this new financial reop000imoty, the General Assembly decided to use proceeds from Article 44 sales tax to cover the cost. The Board may recall counties have been authorized to collect Article 44 sales tax since the State took Intangibles Taxes from local governments in 2001. In addition, the legislation reverted a small portion of counties' remaining sales taxes to towns in an effort to hold those entities harmless from potential loss of sales taxes because of the legislation. The phased in Medicaid Relief/Sales Tax Swap plan began in 2007 and will be fully implemented by July 1, 2009. Thus, the amount of money budgeted for Article 44 sales tax in FY 2008-09, $1.9 million, will decrease to zero in FY 2009-10. To offset that loss of Budget Message revenue,the County will see Medicaid expenses decrease from$2.3 million budgeted in FY 2008-09 to zero in FY 2009-10. Secondly, fiscal outlooks anticipate consumer spending will remain slow into FY 2009-10. For this reason the recommended FY 2009-10 budgets estimates sales tax revenues for Articles 39,40 and 42 at$585,000 less than the original FY 2008-09 budget. Charges for Services—Construction and housing markets have fallen victim to our nation's slowing economy. Building and inspection permit requests have decreased significantly over the last two years. In addition,transactions related to buying and selling of homes and land have declined. The impact of this downturn means about$1 million less revenue in FY 2009- 10 for Planning,Environmental Health and Register of Deeds. Intergovernmental Revenue — Included in this revenue category are monies the County expects to receive from state, federal and local governments. The State's fiscal crisis continues and appears to worsen with time. For FY 2009-10, I believe it is best to remain cautious until the General Assembly has adopted the State budget. For this reason my recommended budget does not anticipate receipt of Public School Building Fund monies from the State. This equates to a revenue loss of$1.4 million for the County. For a number of years the County has used these revenues to offset school related debt payments. Repayment of debt is a mandate the County must fulfill. The loss of Public School Building Funds means the County will have to use other revenues to offset debt repayment. Funding Highlights Funding for Local School Districts-The recommended total appropriation to Chapel Hill Carrboro City and Orange County Schools decreases by $3.1 million for next year-from $88.5 million to $85.4 million. While this reduction is not as severe as originally projected earlier this spring, it is still a decrease. Both Boards of Education presented their budget requests to Commissioners in late April 2009. Their presentations made it clear County funding reductions, coupled with State revenue decreases, mean both districts would face program and staffing cuts. • Per pupil funding for the County's two local school districts equals $3,096, a decrease of$104 per student from the current year appropriation of$3,200. • In addition,the recommended budget includes$617,782 to continue Commissioners' • longstanding commitment to providing school health nurses at each school. This funding level reflects a $24,586 increase over the FY 2008-09 funding level — the equivalent of a 4%increase. • The Sheriff plans to continue providing School Resource Officers to support Orange County Schools. The estimated annual value of this Board commitment totals $500,000. Budget Message • Earlier in the budget planning process continued funding of County social workers for Orange County schools was questionable for next year. More recent indications from Congressman David Price's office are optimistic for continued funding. My recommended budget includes$572,000 for this initiative. Additional details regarding recommended funding levels for local school districts and Durham Technical Community College are located in the Education section of the document. County Programs and Services-Commissioners and County management are committed to offering core county services. More Orange County residents than ever before are facing economic challenges such as job losses. Those who are least able to provide for themselves and their families turn to the county for assistance. During difficult financial times it is the County's responsibility to serve as a safety net in assisting residents with food, shelter,and medical services. My recommended budget proposes some changes in the way Orange County does business. Examples of such changes include reduced hours of operation, closed facilities, and reassignment of staff. You will find specific information regarding recommended changes in each department's section of the document. Employee Pay and Compensation-The cost of pay and benefits make up a large portion of the County's operating budget. Human Resources staff analyzed a number of options to achieve savings in this area. My recommended budget proposes the following: • Funding a 4%increase in employee health insurance effective January 1,2010 • Maintaining the Living Wage at$10.12 an hour,as provided by the Board's living wage policy • No cost of living or in-range increases for employees • No furloughs for employees • Implementing specific elements of the Classification,Pay and Benefits Study(Archer Study)recommendations • Implementing a twelve-month hiring freeze for vacant positions • Offering incentives to employees eligible to retire according to the criteria established by the North Carolina Local Government Employees'Retirement System(NCLGERS) • Continuing longevity payments to employees with ten or more years of service with Orange County • Suspending non-mandated 401(k)contributions for non-law enforcement employees Details regarding employee pay and compensation are included in Appendix A of the budget document. Budget Message Additional Reductions -The Board also requested me to look for spending reductions to enable the tax rate to be set below the revenue neutral rate. One cent on the tax rate equals $1,505,352 for next year. I plan to make reduction recommendations using the overarching principle that 51.9%of the County's General Fund revenues would be allocated to County programs and the remaining 48.1% to local school districts. Staff and I are still looking at those opportunities. My plan is to provide those recommendations to you on May 26,2009. I am extremely proud of the Orange County staff - department directors, supervisors, and employees — that is committed to providing excellent service to Orange County residents irregardless of the economic woes afflicting state and local governments in North Carolina. Over the past several months department directors have collaborated with me to compile an overall operating budget that meets the Board's directives. I believe this budget preserves the Board's traditional commitment to education, human services and public safety as Orange County's highest priorities. Staff and I look forward to reviewing the operating budget and related documents with you during upcoming budget work sessions and will strive to provide you with whatever additional information you need to adopt the FY 2009-10 Orange County budget on or before your final meeting this fiscal year on June 16,2009. Donna Coffey went through the budget book. • Summary section with revenue by category and by department) • Page 2-3—appropriations by functions • Page 2-5 thru 2-10- functions by category • Page 2-13 has positions by department • Page 2-16 has the Board priorities from the retreat in January Donna Coffey said that the budget document is a little different in that there is not as much narrative. This document has more information that should be more useful to the Board. There are highlights for what is different from this year, line item details, etc. Laura Blackmon said that next week there will be the formal budget presentation at the regular meeting on May 191h, and then two budget public hearings will follow. Commissioner Nelson asked if any positions were being recommended for elimination and Laura Blackmon said no. Commissioner Nelson asked about furloughs and Laura Blackmon said that they have refined it to a tiered furlough plan. Commissioner Nelson asked Laura Blackmon to get this information to the County Commissioners. Laura Blackmon said that she looked at three holiday furloughs in months with three pay periods. This would only be a nominal savings. Laura Blackmon encouraged the Board to consider some more permanent reductions because next year might be worse. Commissioner Pelissier asked for a brief summary about the per pupil figures and how they looked better than originally thought. Donna Coffey said that the original numbers were early projections from the tax revaluations and she and John Smith got together in April and updated this information. There has also not been a reduction yet in sales tax receipts, which has helped. Commissioner Pelissier asked about the hiring freeze and how many positions are vacant now and if some positions were exempt from this freeze. Laura Blackmon said that the Board directed staff last year to do a three-month hiring freeze. The staff developed a process, which is an automatic three-month delay unless there is a critical position. All positions have been defined as critical and non-critical. Commissioner Pelissier asked about the percentage of the work force that is vacant and Michael McGinnis said 49 positions, which is about 6-7%. Donna Coffey asked if the County Commissioners would like a travel summary sheet and the County Commissioners said yes. Laura Blackmon pointed out that when you reduce travel and training, employees tend to get stale. Commissioner Jacobs asked for clarification on the retirement incentives. He asked if the savings would be $370,000 this year only or every year. Laura Blackmon said that it depends on who retires. It is a long-range savings, but if the position is vacant for a longer period of time then there would be more savings. Donna Coffey said that there may be opportunities for when positions become available to look at opportunities to delete these positions. Commissioner Jacobs made reference to page 14, Appendix A, and said that when the County starts going beyond the revenue neutral rate, he would like to note that, compared to the two school systems, the County employees are coming out pretty unscathed. He said that he would like numbers on employee discounts, longevity pay, personal leave, and what these things cost Orange County. He asked if 11 paid holidays were standard and it was answered yes. Commissioner Gordon made reference to the budget of$177 million and said that she thought it was going to be cut to $174.3 million. Donna Coffey said that the earlier numbers were based on the revenue projections before the final valuations were calculated. She said that it does not look like there will be significant decreases in revenue, so the projections are not as dire. Commissioner Gordon asked if it was possible to lower taxes more since the revenue picture is not as dire. Laura Blackmon said that the projections are based on 86 cents, which should not be an increase for residents. Commissioner Gordon said that she would be interested in having information on the average change in taxes if the value of the property went up. Commissioner Gordon said that when the County Commissioners went through the cuts, the departments came up with 10% cuts, and that was about$2 million. She asked for an overview of what cuts were made on the personnel side to save the rest of the money that needed to be saved. Laura Blackmon made reference to page 1-5 and the highlights about pay and compensation: - 4% increase in employee health insurance - Maintaining the Living Wage at$10.12 an hour - No cost-of-living or in-range increases - No furloughs - Implementing specific elements of the Classification, Pay and Benefits Study recommendations - Implementing a 12-month hiring freeze for vacant positions - Offering incentives to employees eligible to retire - Continuing longevity payments to employees with 10 or more years of service with Orange County - Suspending non-mandated 401(k) contributions for non-law enforcement employees Commissioner Gordon asked what the savings would be for implementing these changes and Donna Coffey said $900,000. Commissioner Yuhasz said that his recollection from the presentation of tax rates was that with 86 cents, approximately 86% of taxpayers would be paying some additional taxes. He asked if this has changed and Donna Coffey said that she does not think it has changed significantly. Commissioner Yuhasz verified that there are no recommendations for expenditures from the Fund Balance of the General Fund. Commissioner Yuhasz made reference to page 2-3 and the appropriations for Social Services - $20 million for some years, then $24 million last year, and now it is below$20 million. He asked about the bump and what caused this. Donna Coffey said that this has to do with the renovations of Hillsborough Commons and 50% of the bump will be reimbursed back to the County from the State. Commissioner Jacobs made reference to the $500,000 hold harmless money from the State and he asked that this be put in a chart because it may not be available. Commissioner Nelson recommended that the Manager divide up the departments that the County Commissioners will be discussing on June 4th and June 9th Commissioner Gordon asked that the entire agendas be listed for the budget work sessions on June 4th and June 9th Commissioner Yuhasz suggested not bringing all of the social services to one of the work sessions. He would like to split them up. Commissioner Jacobs asked that the staff try to recruit volunteers and schedule more departments than the Board might get to instead of getting done early. Commissioner Nelson asked for more information on which library programs were to be expanded with the move from the old to the new library. Commissioner Pelissier asked if funding would be lost if the main library is not open at least 40 hours a week. The current proposal is 50 hours a week. She asked if the main library could be open only 40 hours a week to allow the other branches to be open. Library Services Director Lucinda Munger said that a full service main library includes services to children and adults and is usually open the longest. An average main library is open between 60-64 hours a week. According to state regulations, the library has to be open to the public for 40 hours a week in order to receive state aid and to receive the databases that are supplied by the State, called NC Live. Commissioner Pelissier asked if there was something other than the 50-hour proposal and Lucinda Munger said that a lot of this is driven by the floor plan itself with multiple floors and service desks. Lucinda Munger said that there are still costs whether the library is open or not, such as rent on copiers, internet service, phone service, materials ordering, periodicals, etc. Laura Blackmon said that even closing the two branch libraries still does not give the library the necessary four FTE positions. Commissioner Yuhasz said that the savings must be more than $37,000 for closing the two branches. Commissioner Gordon asked clarifying questions about the savings and Laura Blackmon said that they would be utilities, maintenance, leasing, personnel, etc. Commissioner Yuhasz said that to keep the other two libraries open, $250,000 would be needed. Commissioner Nelson said that one of the key priorities of the budget was to look at the services and programs that may no longer be needed. He said that this one cut does not fall in there anymore and he will not be able to vote for a budget that closes the libraries. He said that this is a good exercise for budget cuts, but the closing of the libraries is not one of them for him. He said that the County Commissioners need to step beyond the turf issues. Commissioner Yuhasz said that the library issue has raised a lot of concerns in the community and if the libraries are going to be kept open, the Board needs to discuss the burden. Commissioner Jacobs asked Lucinda Munger to do some priority cutting for when the County Commissioners meet with the department directors. Commissioner Gordon asked about the recommendation for closing dental offices at Carr Mill Mall. Laura Blackmon said that it would be more expensive to move out of Carr Mill Mall and make room in the Whitted Building. The County will continue to stay in Carr Mill Mall until the lease expires in 2011. Chair Foushee asked about the potential savings related to employees and positions. Particularly, she asked about Solid Waste and the potential proposal for changing how the convenience centers operate, and making people work every Saturday. She would like to know how vacations would be facilitated. A representative from Solid Waste said that there will be some temporary funds remaining and collectors can staff the convenience centers if an employee is gone. Chair Foushee wants to be careful not to over-burden these employees. Commissioner Jacobs said that he does not like the proposal to close convenience centers on Sundays. He would like to see the breakdown of users every day, for morning and evening. Commissioner Yuhasz said that people use the SWCC on Sundays. Solid Waste Director Gayle Wilson said that if Sunday were added back in it costs about$34,400. Commissioner Jacobs asked that significant anomalies for particular days or particular locations be identified in the break down. He also asked for information about the leases on the SWCC. Chair Foushee asked about the E911 Contingency Plan and for an explanation of Attachment 6. Donna Coffey distributed a revised sheet. Emergency Services Director Frank Montes de Oca said that E911 is the side that the State funds from surcharges on cell phone bills. There are three positions that are funded through that— E911 Database Manager, E911 Cellular Phone Coordinator, and the GIS Mapper. The other side of Communications includes the Telecommunicators. The State has been suggesting that the E911 funds might be used elsewhere. The staff has been putting together a contingency plan on what would happen if this occurs. He reviewed the options: First Option Will be written as a contract for services, which is acceptable by the State for use of E911 funds. This contract will hopefully cover all three of the salaries, although the term "salary" cannot be used. Current indications from all available sources in the State lead ES staff to believe all salaries will be covered 100%, but may be reduced to between 50 to 75%. Second Option Would be to review other support/administrative staff to reallocate and/or combine duties. This may include reassigning personnel to undertake vacant positions within Communications support allowing those funds to be reallocated for E911 support shortfalls. Third Option Will use vacant positions within other sections of the Emergency Services department to cover what the State will not cover. Those positions may include an EMT and a vacant deputy director position. While this option is not preferable due to the significant need of support within EMS, the situation may dictate this option to maintain adequate coverage within E911/Communications. In summary, Emergency Services intends to realign job tasks within the department and/or identify replacement funding to retain existing E911 system support personnel. Chair Foushee asked if the staff had been informed of this and Colonel Montes de Oca said yes, and they are having a hard time with it for now. Chair Foushee said that she spoke with Senator Kinnaird about Senate Bill 521 and diversification of use of 911 funds. She said that Senator Kinnaird said that this is still in limbo and it is in committee. Adjournment A motion was made by Commissioner Jacobs, seconded by Commissioner Hemminger to adjourn the meeting at 9:19 p.m. VOTE: UNANIMOUS Valerie Foushee, Chair Donna S. Baker, CMC Clerk to the Board