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Home My WebLink AboutMinutes - 20091027 APPROVED 11/17/2009 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION October 27, 2009 7:00p.m. The Orange County Board of Commissioners met for a budget work session on Tuesday, October 27, 2009 at 7:00 p.m. at the Southern Human Services Center in Chapel Hill, N.C. 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: John Roberts COUNTY STAFF PRESENT: County Manager Frank Clifton and Clerk to the Board Donna S. Baker (All other staff members will be identified appropriately below) 1. Discussion of Capital Project Funding Frank Clifton said that Gary Humphreys would present the projection analysis for capital project funding. Financial Services Director Gary Humphreys presented this PowerPoint presentation. Capital Funding Update 2010-11-2019-20 Topics to be Discussed - Status of funds allocated for unmet project funding - Review of known impacts on 2011-2011 Budget - Review prior capital funding allocation - Funding required to meet existing capital commitments - Listing of projected new financings - Review of debt capacity projections Manager's two year plan adopted by the Board on February 3, 2009 addressed additional capital funding needed. •$5.9 million to be appropriated from the General Fund over 2 years and $580,000 from School Capital Reserve Fund. •$3.5 million General Fund appropriation on March 3, 2009 and $580,000 from School Capital Reserve •Project amendments for over budget projects adopted June 16,2009 •Meetings with the two School Systems have resolved project funding for the School Capital Outlay Fund. •Project ordinance amendments for the School Capital Outlay Fund scheduled for the November 5 Board meeting along with the appropriation of$724,000 of the $2.4 million scheduled to be appropriated in 2009-10. Known Impacts on 2010-2011 Budget 2009-10 Budget Changes 2010-11 Budget Property Taxes $130,571,195 1,306,005 $131,877,200 Sales Tax 16,873,405 (987,405) 15,886,000 Licenses & Permits 288,000 288,000 Intergovernmental 16,724,924 (143,000) 16,581,924 Charges for Services 9,698,897 (65,000) 9,633,897 Investment Earnings 670,000 670,000 Miscellaneous 762,618 762,618 Transfers 2,000,000 100,000 2,100,000 TOTAL REVENUE $177,589,039 210,600 177,799,639 Debt Service Increase (3,746,162) Probation Parole Rent (20,000) Net Reduction in Resources ($3,555,562) Three Contrasting Approaches to Funding Capital for 2010-11 (including debt Service) •Maintain Debt Policy— Debt service no more than 15% of total General Fund Budget. •Fund Capital needs without a Tax Increase •Increase Taxes to cover the net increase in Debt Service The remainder of the presentation had various tables and graphs, which are incorporated by reference. Projected New Financing General Fund Debt Amount Estimated Issuance Prop Inf Mgt System $750,000 2009-10 Phone System 575,000 2009-10 Parks Open Space 2,700,000 2009-10 Carrboro High Arts Wing 4,200,000 2009-10 Stanford Middle Auditorium 3,300,000 2009-10 Efland Sewer Loan* 3,500,000 2009-10 Elementary#11 31,000,000 2011-12 $46,025,000 Hillsborough Commons $17,000,000 2011-12 (purchase price approx. $14.9m) Enterprise Debt Transfer Station $8,000,000 2009-10 *Efland Sewer will become enterprise debt when revenue is adequate to support debt service. Commissioner Nelson arrived at 6:22 PM. Commissioner Pelissier said that this does not paint a pretty picture about the debt service capacity. She asked what is now in the CIP that might require issuance of debt. She would like to see more projections, including some other things that would be anticipated in the next couple of years. She said that if she tried to make a decision about what she sees in this PowerPoint, that it might not be the right decision. Frank Clifton said that the reality is that if the County does not have the debt capacity in its plan, then it will not be able to build projects as planned. He said that the Board of County Commissioners needs to revisit those capital plans. He wants the Board to be able to know what the County can pay for. Even if the public will support a bond issue, the County still has to pay for the bond issue and debt service. He said that the 15% margin is a market rating guide and he would not want the County to stay above the 15% for too long. Commissioner Pelissier said that she would like to see some of the "nice to do" things versus the essential things out beyond 2012. Frank Clifton said that staff can do some of that for the Board. He said that most things will have to be deferred until the revenue streams change or something of that nature. Commissioner Gordon said that she endorsed what Commissioner Pelissier said to know what is included in the CIP in the longer term. She said that one thing is that there is a need fora middle school in 2013-14 in CHCCS. Another thing is moving dental clinics to a permanent location in the Southern Human Services Center, and upfitting that building. Commissioner Hemminger asked about the fund balance and it was answered 10.5%. Commissioner Yuhasz said that when he looks at the chart of projected new finance, the largest numbers come from financing new schools. He said that the County Commissioners need to go back to the school systems and say that there is a problem financing schools that cost$31 million. He said that the school systems need to look at ways to reduce these costs. Commissioner Jacobs asked that the Board get some information on how a Chapel Hill Special Use Permit works if a project is initiated within a five-year period. There is a process going on now for Elementary#11. He would like to know so that an opportunity is not missed. Commissioner Jacobs made reference to the debt management policy and said that the policy was adopted in 1988 and it says that, "the County will strive to maintain its annual debt service costs at a level no greater than 15% of General Fund Expenditures." It does not say that this is the limit. He said that the documents say that it is a limit, but it is not a cap. Commissioner Pelissier said that there is a big difference between a policy and the credit rating. Frank Clifton said that he will get some background information on this. Gary Humphreys said that 15% is the average. Commissioner Pelissier said that the policy needs to explain this and make reference to this. Commissioner Pelissier asked about the budget growth rate in the last few years before the economy went down. Gary Humphreys said that the budget growth rate has been 7%, but this has not been done for a couple of years. Commissioner Jacobs said that he is not advocating anything but identifying what the actual policy and then make some decisions. He said that he remembers talking about the growth rate that should be adopted. He said that the Board talked at one time about going over the 15% one year and then showing it was an aberration so that it would not affect the bond rating. He said that the policy should have these stipulations. Commissioner Yuhasz pointed out that a lot of the growth over the y ears has been from an increase in taxes and the County cannot continue to do this. Commissioner Gordon asked about the $14.9 million for Hillsborough Commons and how they arrived at this figure. She noted that this amount was for 10 acres whereas previously the value on the county tax rolls was $6.5 million for 11 acres. She asked whether the property was worth $14.9 million now. Frank Clifton said that he would research this. He said that if the County has the intention of purchasing this property, it may need to be renegotiated for a different purchase price. Commissioner Nelson said that what this Board did best last year was to decide not to have a tax increase. He suggested communicating that to other entities now. He also does not want to raise taxes this year. He said that this recession has forced the County to change the way that it does business in a positive way. Chair Foushee said that she supports this 100%. Commissioner Yuhasz agreed and said that last year should be a trend and this should be communicated to anyone that is preparing a budget. Commissioner Pelissier also agreed. She said that last year there was a matrix of essential services that are mandated. She said that the Board did not truly examine some of the priorities and she wants to do that this year. Commissioner Nelson agreed. Frank Clifton said that anything related to the budget will not be easy this year. He gave credit to department heads for not filling a lot of the vacancies. 2. CLOSED SESSION A motion was made by Commissioner Hemminger, seconded by Commissioner Nelson to adjourn into closed session at 8:13 PM for the purpose of: to consider the qualifications, competence, performance, character, fitness, conditions of appointment, or conditions of initial employment of an individual public officer or employee or prospective public officer or employee" NCGS § 143-318.11(a)(6)". VOTE: UNANIMOUS RECONVENE INTO OPEN SESSION A motion was made by Commissioner Nelson, seconded by Commissioner Pelissier to reconvene into open session at 8:40 p.m. VOTE: UNANIMOUS 3. ADJOURNMENT A motion was made by Commissioner Nelson, seconded by Commissioner Pelissier to adjourn the meeting at 8:40 p.m. VOTE: UNANIMOUS Valerie Foushee, Chair Donna S. Baker, CMC Clerk to the Board