HomeMy WebLinkAboutAgenda - 02-22-2011 - 1r ~
ORANGE COUNTY BOARD OF
• COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: February 22, 2011
Action Agenda
Item No. 1
SUBJECT: FY 2011-12 Budget Work Session
DEPARTMENT: County Manager and Financial PUBLIC HEARING: (Y/N) No
Services
ATTACHMENTS):
Attachment 1. PowerPoint :Current Financial
Status
Attachment 2. January 2011 Monthly INFORMATION CONTACT:
Financial Dashboard
Attachment 3. 2011/2012 Projected Budget Frank Clifton, (919) 245-2306
Funding Issues Clarence Grier, (919) 245-2453
• PURPOSE: For the Board to make decisions regarding development of the FY2011-12
budget.
BACKGROUND:
1) Current Year Fiscal Update
a) Revenues -Overall revenue collections are on target, at this point, in the current
fiscal year.
i) Real Property Taxes -Preliminary reports indicate property tax revenues,
year-to-date, are consistent with past years collection rates. Of the
$123.8 million budgeted for real property taxes, the Tax Administration
Office has collected approximately 98.5% of that amount, or $121.9 million
as of February 18, 2011. This is an increase of $2.1 million over the previous
fiscal year.
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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 slightly below the target for the current fiscal year. As economic
conditions have weakened due to the recession, many people are keeping
their vehicles longer before buying a new vehicle. Additionally, when a new
vehicle is purchased, smaller less expensive cars are being selected. We will
continue to closely monitor the valuation and collection of motor vehicle
property taxes and any potential impact this may have on the current year
and the FY2011-12 budget. We will provide additional information to the
Board as it becomes available.
iii) Sales Taxes -The County has received four months of sales tax receipts
for the current year -July through October 2010. Out of a $14.4 million
budget, the County has received $3.4 million, down $2.7~million due to the
refunds paid. to non-profit organizations earlier than the previous fiscal year.
There are positive signs of the economy recovering. As a result, we do expect
to receive slightly higher sales taxes for the fiscal year than budgeted
iv) Intergovernmental Revenues -Intergovernmental revenues continue to lag
behind the current year's budget due to the timing of reimbursements received
from Federal and State funding sources. We expect these revenues to meet
budget by the end of the fiscal year if there are not any current year budgetary •
impacts at the Federal and State level.
v) Charges for Services, Licenses and Permits are in line with current year
budget and prior year receipts.
b) Expenditures -Overall expenditures are on average below target at this point in
the current fiscal year. Throughout the year, the County Manager has
communicated a number of budget directives that have impacted FY2010-11
expenditures. The list below outlines current year budget directives and guidance
the Manager has issued to date:
• Continuing the County's 6-month hiring freeze on vacant positions
• Increasing fund balance by 2% of budgeted operating expenditures
• Continued delay of non-critical capital expenditures
• Eliminating out of state travel and postponing other travel if possible
Other counties throughout the State have continued similar and more stringent
budget constraints and tightening measures in reaction to the slow economy,
recession and potential budget impacts from Federal and State levels.
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2) FY 2011-12 Budget Activity to Date
The FY2011-12 Budget process will present another year of challenges and
uncertainties. Based on recent news articles and information across our State, the
realities of the continued economic recession have affected governments
Statewide. Some examples at the County level are as follows:
• Forty-nine of One Hundred counties cut their FY2010-11 budgets.
• Sixteen counties increased their tax rates to balance their budget. The
average tax increase was 3.3 cents.
• Twenty-five counties forecasted decreased property valuations
At the State level, the following has been published:
• A projected budget gap ranging from $2.7 billion (Governor) to $4.7 billion.
• The Governor has requested that State Departments prepare budgets with
cuts up to 15%.
With the uncertainties at the State level, we do not know what, if any, influence this
will have on our FY2011-12 Budget.
On the revenue side, there has been little growth in the County's tax base this
fiscal year. We are anticipating a growth in real property of 1 °to. Additionally, we do
not anticipate any substantial growth in the tax base for next fiscal year. Any
normal growth in the real property valuation will continue to be offset by continued
• decreases in motor vehicle valuations, foreclosures and bankruptcies.
In regards to expenditures, departments have continued to experience an increase
in demands for services due to the effects of the current economic recession. We
will continue to maintain fiscal constraint due to the uncertainty of future federal,
state and local revenues.
As we prepare the FY2011-12 budget, the economic outlook continues to remain
the same this year, but there are some optimistic signs of the economy improving.
Although we have seen signs of the economy improving, the positive effects of the
potential turn around in the economy have not been consistent, sufficient, or
stabilized enough to project in the upcoming budget. Going forward, into the new
fiscal year, the outlook is promising and improving, but we need to continue
with caution and fiscal restraint. The continued forecast of limited revenues
mean the County must critically examine and prioritize services offered.
Additionally, the signs of recovery are not readily visible at the local level. Our
counterparts throughout the state continue with similar approaches to monitor
their current budgets white planning their FY2011-12 budgets.
•
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a) County Manager FY2011-12 Budget Preparation Directions to Departments •
In order to meet the Board's FY2011-12 anticipated budget goals and priorities,
it will be necessary to maintain conservative spending levels for the current year.
The County Manager has provided the following direction to department directors
as they prepare their FY 2011-12 budget requests.
• Departments should submit FY2011-12 budget requests that continue
focusing on and reflecting core services only. The dollar amount of their
budget request should generally be the same as their FY2010-11 requests.
• Department Directors are expected to continue to critically review their
departments and propose reductions in, and in some instances elimination of,
non-mandated services and activities. Additionally, the County Manager
expects departments to look at opportunities to outsource services to local
agencies that are duplicated by the County.
b) Board Priorities and Exchanges
In accordance with the Board's guiding principles from recent years, no new
services can be added without exchanging them for current services or increasing
taxes. Additionally, we will continue to prepare the upcoming FY2011-12 budget
without recommending a property tax increase. In upcoming budget work sessions,
staff will provide details about fiscal impacts to the goals and priorities established
at this work session. Any new priorities will require new funding. •
3) BOCC FY 2011-12 Budget Decisions and Guidance
Attachment 3 is a copy of the preliminary known issues in preparing the FY2011-12
budget. Some of the major issues influencing the FY2011-12 budget are as follows:
• Property and Sales Tax growth is expected to remain stagnant with only an
anticipated increase of 1 %.
• Salaries will continue to be budgeted at 100%.
• Increases in salaries, fringe benefits and retiree cost of $1.5 million in FY2011-12.
• Debt service costs will decrease approximately $1.4 million in FY2011-12.
This handout highlights a number of budget drivers that will influence the upcoming
budget.
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RECOMMENDATION(S): The Manager recommends the Board of County
Commissioners:
FINANCIAL IMPACT: Financial impacts are included in the Background section.
1. Receive an update from staff regarding the County's current FY2010-11 fiscal
status.
2. Receive information regarding budget activity to date in preparing the upcoming
FY2011-12 Budget.
3. Make decisions that provide direction to staff in developing the FY2011-12 budget.
(A) Board stance related to increasing the property tax rate.
(B) Board stance on pursuing the optional '/ cent local sales tax in
support of specific programs or services.
(C) Board stance on a deferral, delay or readdressing of proposed
capital projects.
(D) Other discussion/direction at the option of the board.
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U
Rd-Ic~d-,r~u~-l-
Board of County
Commissioners
Budget Work Session
February 22, 2011
Current Economic and
Budgetary Information
from across the State
^ 16 counties increase tax rate -Avg. of 3.3
cents
^ 49 counties cut budgets (again)
(Source: NC Association of County Commissioners)
Summary of Responses to Recession (cont.)
^ 44 counties report hiring freeze
^ 43 counties cut positions
^ 1000+ fewer positions, on top of 2009-10 cuts of 1000
^ 14 counties laid off existing employees
^ 595 county workers lost jobs
(Source: NC Association of County Commissioners)
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/ 1 V
Issues and Recession across the State
Summary of Responses to Recession (cont.)
^ 7 counties implement mandatory furloughs
^ 31 of 100 counties see assessed value above market value
(Unprecedented in 20+ years of calculating market to av
ratio)
^ 2009-10 sales taxes nearly 5% below 2008-09
^ 48 counties rely on fund balance to help offset budget deficit
in 2010
^ 20 counties use fund balance to replace lottery funds
(Source: NC Association of County Commissioners) 5
What Does Our State Legislature
Face?
The 2009-10 budget included:
^ Loss of $1.3 billion in temporary taxes
^ Loss of $1.6 billion federal stimulus dollars
^ Loss of $0.3 billion in non-recurring budget reductions
(Source: NC Association of County Commissioners)
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gislature
Face?
The projected 2011-12 issues:
^ Summary: Static budget gap going into 2011-2012 of
$2.7 recently to $4.3 billion.
^ Governor Perdue's budget passes $93.2 million of costs
for education related expenses to the Counties.
(Source: NC Association of County Commissioners, various
news organizations)
What Do The State Problems Mean to
Local Government?
^ Expect "transformational" government at the State level
^ Everything will be on the table
^ Local Revenue Options -Sales tax, Hold Harmless
^ Cuts (15%) /New Taxes /Tax Reform
^ Potential loss of 10,000+ state jobs
^ Retirement System
(Source: NC Association of County Commissioners) 8
4
GENERAL FUND AND
FINANCIAL OVERVIEW
Top 3 Revenues -General Fund
fi%
Other Revenues include: 8%
-Charges for Services
-Investment earnings
-Licenses and permits
-Miscellaneous
^ Ad Valorem
Taxes
^ Local Option
Sales Tax
^ Inter~dt
Revenues
^ otne<
~o
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Revenues
^ Property Taxes -Little Growth in Tax Base. Only 1
percent in real property estimated for FY2011-2012
^ Sales Taxes - A little growth expected in fiscal years
2011 and 2012 as the economy recovers from the
recession.
^ State Budget & Shared Revenues -Uncertain due to
the fiscal issues at the Federal and State levels.
Currently too uncertain to predict the affect on the
FY2011-12 budget.
Property Tax
^ 75% of the General Fund
^ 99% Historical High Collection Rate
^ 2010-2011
Real Property Collection = $123 million
Vehicles ($8.2 million 2009) est $ 7 million
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Sales Tax
~ Everything Has Changed
Counties Hold Harmless for Medicaid
Article 44 eliminated
Distribution of Article 42 -Point of Delivery
^ Impact
Retail Sales are starting to recover slightly
Budgeted Revenues $1.5 Million less than 2009-
2010
Hold Harmless from State +,$2.6 Million
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Top 3 Expenditures -General Fund
20%
26% ^ Hm~rn
Service
Other Expenses Include:
-Governing and management ~Edi~"'°°°'
-General services
-Community and environment Debt
Serv;ce-
-Public Safety D°b "'a'
-Culture and Recreation 6% ~
service -
County
^ oNer
37%
11%
74
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General Fund Cash Flows for the Fiscal Year Ended
June 30, 2011
ns.. n~is.,..e 7R 5dR_737
Revenue
Ex enditures Cashlncrease
Decrease Cash Balance,
End of the Month
Jul 4,311,002 13,556,672 9,245,670 19,303,067
Au ust 7,528,933 14,521,315 6,992,382) 12,310,685
Se tember 8,635,746 15,402,030 6,766,284 5,544,401
October 14,925,117 13,408,035 1,517,083 7,061,484
November 59,885,397 14,143,720 45,741,677 52,803,161
December 23,892,906 13,094,621 10,798,285 63,601,446
Janua 23,922,332 8,950,239 14,972,093 78,573,538
143,101,433 93,076,632
~s
Fund Balance Percentage
Percentage Of
Fiscal Year Amount GF Expenditures
2007 $ 21,384,544 13.48%
2008 $ 23,803,324 15.09%
2009 $ 18,977,470 11.43%
2010 $ 21,097,621 12.01
2011 $ 23,217,772 12.88% "Projected
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New Funding Issues
^ Net decrease in debt service $1.4 million
^ Increase in retirement rate of .53% $250,000
^ Health Insurance increase $240,000
^ 401K/457 Contribution Reinstatement $615,000
^ Salaries and benefits for positions
budgeted a %2 year in FY2010-11 $430,000
^ Rebuilding Fund Balance $400,000
^ Inflationary costs yet to be determined, but latest CPI is
estimated at 3%
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Existing Funding Issues
^ Capital Investment Plan
Schools
County
^ Rebuilding Fund Balance
^ Operating Budget Growth
$26.5 million
$14.1 million
$400,000
$0
,e
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Spending Strategies
^ Defer CIP funding -County another year
^ Eliminate Vacant Positions
^ Reduce funding to Outside Agencies
~e
Revenue Strategies
^ Increase Fees & Charges for Services
^ Article 46 Sales Tax 1/4 cent -Voter Approval
$2.5 Million
^ Increase Property Tax - 1 cent = $1.5 Million
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Goals & Priorities
2011-12 Board of County Commissioners Goals
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A~~,~-~ a
ORANGE COUNTY
Monthly Financial Dashboard
FISCAL YEAR ENDING June 30, 2011
Reporting Period: Jan 1-31, 2011
OUR CASH AND 1NVES7MENTS ~~+~-~;J, ~ sl ',,Y.
Balances on January 31, 2011, in whole dollars
CASH li< INVESTMENTS BY FUND
GENERAL FUND
Jan 2011 Jan 2010
Operating $ 78,573,538 $ 79,537,517
TOTAL GENERAL FUND $ 78,573,538 $ 79,537,517
OTHER FUNDS
Jan 2011 Jan 2010
Special Revenue $ 6,333,462 $ 4,521,151
Solid Waste $ 13,396,058 $ 11,096,944
Efland Sewer $ 98,621 $ 109,781
Sportsplex $ 730,754 $ 432,554
County Capital $ 13,166,998 $ 14,706,235
School Capital $ 3,870,653 $ 932,910
TOTAL OTHER FUNDS $ 37,596,546 $ 31,799,575
TOTAL CASH 8 INVESTMENTS COUNTY-WIDE
Jan 2011 Jan 2010
ALL FUNDS $ 116,170,084 $ 111,337,092
Project Budget $ 99,897,363 $ 159,288,367
Revenues Project to Date $ 26,713,904 26.74 149.94%
Expenses Project to Date $ 26,179,883 26.21% 147.80%
OUR CASH FLAWS... - ;
Comparison of FYTD %
GENERAL FUND REVENUES 3 EXPENDITURES Current FYTD % Prior FYTD
Fiscal Year Budget $ 180,315,442 $ 182,914,593
Revenues Fisca! Year to Date $ 143,101,433 79.36 79.44%
Expenses Fiscal Year to Date $ 98,050,499 54.38% 56.75%
SOIID WASTE
Fiscal Year Budget $ 10,480,459 $ 9,382,375
Revenues Fiscal Year to Date $ 7,335,926 70.00% 65.22%
Expenses Fscal Year to Date $ 4,394,237 41,93% 40.70%
EFLAND SEWER FUND
Fiscal Year Budget $ 214,950 $ 213,246
Revenues Fiscal Year to Date $ 73,512 34.20% 25.33%
Expenses Fisca! Year to Date $ 123,782 57.59% 44.97%
SPORTSPLEX
Fiscal Year Budget $ 3,170,940 $ 3,164,735
Revenues Project to Date $ 1,564,169 49.33% 42.73%
Expenses Project to Date $ 1,590,349 50.15% 45.5156
Fiscal Year Budget
Revenues this Month
RevenuesFYTD
SALES 8 USE TAX
Fiscal Year Budget
Revenues this Month
RevenuesFYTD
LICENSES AND PERMITS
Fiscal Year Budget
Revenues this Month
RevenuesFYTD
CHARGES FOR SERVICl
Fiscal Year Budget
Revenues this Month
RevenuesFYTD
Fiscal Year Budget
Revenues this Month
RevenuesFYTD
INVEST, MISC i4 TRAN.
Fiscal Year Budget
Revenues this Month
RevenuesFYTD
SOLID WASTE REVENL
Fiscal Year Budget
Revenues this Month
Fiscal Year Budget
Revenues this Month
RevenuesFYTD
TAX
IONS AT A GLANCE...:
Comparison of FY %
Current I Prior
FY % FY %
$ 131,975,738 S 130,431,195
22,189,931 16.81 % 18.30
126,900,946 96.15% 96.1 b~
$ 14,463,000 S 16,873,405
- 0.00% i 0.70
3,422,338 23.66% 36.09%
$ 1,188,624 $ 1,127,624
46,285 3.89% 4.68%
574,020 48.29% 52.60%
$ 8,274,586 $ 8,339,763
432,371 5.23% 6.80%
4,098,591 49.53% 52.33°10
$ 18,311,766 $ 16,537,4231
1,164,771 6.36% 6.82
7,568,027 41.33% 44.0890
$ 2,688,343 $ 2,246,1781
90,056 3.35% 34.87%
2,093,631 77.88% 64.11%
$ 10,480,459 $ 9,382,375
918,883 8.77% 9.79
7;335,926 70.00% 78.19%
$ 3,170,940 $ 3,164,735
73,245 2.31 % 2.31 %
1,564,169 49.33% 49.42%
AT A
GENERAL FUND Fiscal Year
FUNCTIONS 2011 Budget
Governing and Management $ 13,477,450
General Services 7,061,938
Community and Environment 6,005,322
Human Services 33,214,767
Education 64,667,512
Public Safety 19,494,131
Culture and Recreation 1,956,999
Capital Outlay 311,590
Debt Service:
Principal 18,778,388
interest 9,854,057
Fiscal Year Budget
YTD ~ of Annual Budget Expended
SOLID WASTE
Environmental Support
Landfill Operations
Recycling
>n of Monthly Expenses
YTD Expenses
Current FY Prior FY
$ 7,145,041 $ 6,364,404
3,656,242 6,296,837
3.202,221 3,463,349
17, 647, 256 18, 721, 044
36,942,973 36,657,699
10,746,796 9,551,882
1,082,671 1,159,818
358,577 48,798
7,480,643 9,576,378
7,197,962 6,814,080
2,590,117 3,666,330
$ 98.050,499 $ 102,320,619
$ 180,315,442 $ 182,914,593
54.38% 56.75%
$ 1,590,423 $ 441,059 $ 386,270
3,677,519 1,758,325 1,794,577
3,385,084 1,267,597 1,633,100
1,827,433 927,256 4,395
$ 10,480,459 $ 4,394.237 $ 3,818,342
Fiscal Year Budget $ 10,480,459 $ 9,382,375
YTD% of Annval Budget Expended 41.9390 40.70%
SPORTSPLEX
Expenses $ 3,170,940 $ 1.590,349 $ 1,440,247
$ 3,170.940 $ 1,590,349 $ 1,440,247
Fiscal Year Budget $ 3,170,940 S 3,170,940
YTD% of Annual Budget Expended 50.15% 45.42%
Attachment 3
General Fund
2011/2012 Projected Budget Funding Issues
No Property Tax Increase
2011 /2012
Revenues $ 175,313,920
Expected adjustments
$
230,000
1
Property Tax Growth ........................................................................ $ ,
500,000
Sales Tax growth ............................................................................... $ 600)
(6
Licenses and permits change in collections .................................. ,
Charges for Services -Increased EMS Fees ................................... $ 250,000
Charges for Services -Average collection rate ............................. $ (46,000)
Intergovernmental -Expected loss of revenues ............................. $ (245,000)
Investment Income - No Material change ........................................ $ -
Miscellaneous Income - No Material change .................................. $ -
Fund Balance Applied - No expected use ....................................... $ -
Total expected adjustments to revenues $ 1,682,400
Total preliminary revenues $ 176,996,320
Expenditures $ 175,313,920
Adjustments
$
400
200
Health Insurance Increase ................................................................ ,
Retirement contribution rate increase ............................................. $ 211,500
401(k) /457 Plan Contribution reinstatement ................................... $ 555,000
Budget for Employees 112 in 2010-11 .............................................. $ 400,000
Energy Costs Increase ...................................................................... $ 75,000
Library, EMS, Employee Bonus, and Contingency ......................... $ 605,495
State added misdemeanant cost to Counties ................................. $ 60,000
Education adjustment 48.1% .............................:.............................. $ 809,235
Rebuild Fund Balance ....................................................................... $ 400,000
New debt service ............................................................................... $ 1,133,500
Old Debt Service coming off ............................................................ $ (2,522,730)
Change in intergovernmental expenses .......................................... $ (245,000) .
Total expected adjustments to expenditures $ 1,682,400
Total Expenditures $ 176,996,320
Budget Over/Short $ -
Potential Property Tax Rate Impact
to Balance Budget - Cents