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HomeMy WebLinkAboutMinutes - 20030522APPROVED 08/19/2003 MINUTES ORANGE COUNTY BOARD OF COMMISSSONERS Budget Presentation and Work Session May 22, 2003 7:30 p.m. The Orange County Board of Commissioners met for a Budget Presentation and Work Session an Thursday, May 22, 2003 p.m. at 7:30 p.m. at the F. Gordon Battle Courtroom in Hillsborough, North Carolina. COUNTY COMMISSIONERS PRESENT: Chair Margaret W. Brown, Moses Carey, Jr., Alice M. Gordon, Stephen Halkiotis and Barry Jacobs COMMISSIONERS ABSENT: COUNTY ATTORNEY PRESENT: Geoffrey Gledhill, Sean Borhanian COUNTY STAFF PRESENT: County Manager John M. Link, Jr., Assistant County Managers Rod Visser and Gwen Harvey and Clerk to the Board Donna S. Baker (All other staff members will be identified appropriately below} NOTE: ALL DOCUMENTS REFERRED TO IN THESE MINUTES ARE IN THE PERMANENT AGENDA FILE IN THE CLERK'S OFFICE. 1. Presentation of Manager's Recommended FY 2003-04 Budget John Link expressed his appreciation to Budget Director Donna Dean, Budget Analysts Paul Laughton and Rooney Mestas, Personnel Director Elaine Holmes, Finance Director Ken Chavious, Assistant County Managers Gwen Harvey and Rod Visser, Director of Purchasing and Central Services Pam Jones, Clerical Assistant in the Budget office Devon Isaacs, and the department heads and the school superintendents for their cooperation. He said that the proposed budget tries to strike a balance between meeting the existing service needs of the County citizens and also pursuing important service initiatives that have been discussed for some years - improved response in technology, emergency medical services, and providing appropriate support for recreation and parks. He made reference to the chart and said that 48.3°~ of the County budget goes towards education. The next highest area is in Human Services at 21.8%. The recommended budget calls for an increase in the tax rate of three cents, going from 83 cents to 86 cents per hundred dollars of valuation. Over one cent goes toward addressing the debt service for the sold bonds from 2001. General Revenue Highlights: Regarding the general revenue, the largest source of revenue is the property tax (65°~} and sales tax (15°~). The Board has petitioned the General Assembly for many years to pursue alternative revenue sources to reduce the reliance on property tax. The tax base has increased by about 4-4.5%, which means it has gone up $400,000,000 to a total of $9.8 billion. He reported that the tax collection percentage would be close to the 98.7% that was achieved last year. This is the top rate in the State. The County's financial picture remains solid. This budget calls for an appropriation of two million dollars from the fund balance to balance the budget, leaving 10% of the general fund for the fund balance next year. Because of the severe budget cuts from the State, the County had to cut $4 million out of the budget last year. The State did allow counties to enact a '/ cent sales tax, and this will generate approximately $3.4 million next year. General Fund Expenditure Highlights: Education: Orange County leads all other counties in the State in per pupil contributions with $4,405 per pupil. The next closest county is Carteret County, with $3,782 per pupil. The increase in the general fund appropriation for education increased by 6.3°~ and totals $63 million. The funding level far education of the Board of County Commissioners is 48.1 °~. He is recommending that the per pupil allocation (operating expenses) be increased from $2,516 to $2,566. The figures from the Department of Public Instruction indicate that Orange County Schools {OCS) is expected to have an additional 309 students and the Chapel Hill-Carrboro City Schools {CHCCS) is expected to have an additional 295 students. He then explained the formula for calculating the recommended current expense funding for the schools. The percentage of total request funded for the CHCCS is 98.24% and far the OCS is 84.9°l0. He explained that the OCS asked for mare funding, proportionally speaking. Another recommendation is to increase the CHCCS district tax by .8 cents, going from 19.2 cents to 20 cents per hundred-dollar valuation. This would generate approximately $12.47 million and would address the start-up costs of Rashkis Elementary School. Human Services: John Link said that the Medicaid increase this year is only $140,000. He has also recommended the continuation of the Human Services Safety Net by recommending an additional $200,000 in the budget for the coming year. Also, the funds from last year would be carried over. Debt Service: The County issued $22.65 million in 2001 voter approved bonds (sold in March 2003) slang with alternative financing. The associated debt service is $1.1 million for 2003-04, which equates to 1.2 cents on the proposed tax rate increase. Public Safety: He commended EMS Director Nick Waters and his staff and the Rescue Squad for the difficult transition whereby the County will assume responsibility for EMS ambulance transportation in the County as of June 30, 2003. The County will make sure that there is 24/7 coverage. Also, the Emergency Communications Study indicates that the County needs improvements in the infrastructure. This is a very important unfunded County capital project. He commended the Sheriff's Department and Emergency Management Services for pursuing grants to help address homeland security. Also, volunteer fire departments will need increases in their tax rates for emergency management transportation because the number of volunteers are declining and they are having to add additional paid staff to make sure all shifts are covered. Employee Pay and Benefits: The staff is pursuing Phase 1 of the Classification and Pay Plan and there is funding for pursuing Phase 2 next year in the budget. There is also money to assist the County Commissioners in pursuing the housing wage initiative ($40,000 in reserve for this effort). New Initiatives: Parks and Recreation -four new positions to operate and maintain new parks; Information Systems -three new positions to improve the County's website and make it more user friendly; Department of Social Services -Income Maintenance Caseworker to address increase in requests for mandated services; Planning and Inspections -Plans Examiner to ensure that homes are constructed in compliance with life safety codes; Library Services -two part-time positions at Northern Human Services Center and Carrboro Cybrary; and EMS -Wireless Communications Coordinator to ensure that emergency calls made from wireless phones can be dispatched appropriately and physical locations can be established. Solid Waste Enterprise Fund: Orange County is the first county in the State to reach a 40°fo level of waste reduction. The County has also implemented a successful Regulated Recyclable Materials Ordinance (RRMO). Also, a recycling drop-off site has been added at Meadowmont and household hazardous waste disposal services has been expanded at a lower cost, and the staff is working on a new C&D landfill acquisition. There are no new programs or services recommended this year. The mixed solid waste-tipping fee remains at $45 per ton. He is recommending that the County make the first installment of reimbursement from the General Fund for the County's 60 acres of the Greene Tract, which is $240,038. He is also recommending that $1 million be appropriated from the fund balance to balance the Solid Waste budget without pursuing an availability fee. However, an availability fee will probably be needed. There is a paradox that the County has reduced the amount of solid waste, and the revenue is going down. The tipping fee has remained the same in order to be competitive. He is asking that the Board begin as soon as possible working on the availability fee, the needs for future facilities, and updating the solid waste plan for submission to the State. On the Horizon: - Develop alternative financing sources for County's Solid Waste Enterprise Fund - Determine best service delivery mix for emergency and non-emergency EMS - Implement the Orange-Person-Chatham Mental Health business and financial plans associated with State mandated reforms of mental health system - Major reworking of the County's comprehensive land use plan - Joint park and recreation facilities He pointed out the times and places for the budget public hearings and work 5e5510ns. Commissioner Halkiotis made reference to public safety and the volunteer fire departments (page 10). He verified that John Link was saying that there has been a decrease in the volunteers, so we need to have paid staff at the fire departments. He asked about the base salary for the paid staff and if there was a benefits package for them. Rod Visser said that he would get back to the Board on the baseline salary. Regarding the benefits, some of the firemen are getting medical benefits. The employees at the fire departments are not County employees. Commissioner Halkiotis said that some day the firemen would want their benefits just like County employees. Commissioner Halkiotis made reference to page 11, new staff far Parks and Recreation. He said that some of the acquired parks have some older houses on them and he asked if there had been any discussion about using the homes to house the staff. John Link said that there has been some discussion about this and they will give a more definitive answer during the work session. Commissioner Halkiotis made reference to page 13, Solid Waste Enterprise Fund, and said that reduction of waste comes with a price. He asked if the staff was still considering cutting back on rural recycling until there is a new revenue stream available. John Link said that this might be an area that the Board may want to focus on in the fall. He said that they have balanced the budget without cutting services at this time. He asked for the staff to get together information from all counties in the State about availability fees and how much they are and any proposals for increases. Commissioner Carey made reference to the Solid Waste Enterprise Fund and asked about the increase in March 2004. Jahn Link said that there will need to be additional revenue by July 15~ and that it could not wait until the next budget cycle. Chair Brown said that the municipalities have some questions about the availability fee and if they could address some things such as recycling more things and keeping pay-as-you-throw. John Link suggested that the Board should first discuss this and then make a decision during the fall work sessions. Commissioner Jacobs asked what is one cent on the tax rate and it was answered $970,000. Commissioner Gordon made reference to page five and the ~l cent sales tax and asked how much of the $1.8 million would be put in for next fiscal year. Jahn Link said that they are putting all of the remainder of that into the budget for next fiscal year. The $1.8 million rolls into the fund balance. Commissioner Gordon verified that we were not going to "fix" any of the cuts that were made last year, but that we were looking forward. The Board of County Commissioners took a break at 8:10 p.m. and reconvened at 8:20 p.m. 2. School Capital Investment Plans f CIP1 for 2003-2013 John Link said that this is a summary review of both CIP requests for the Chapel Hill-Carrboro City Schools (CHCCS} and the Orange County Schools (OCS). He said that the Board of County Commissioners would have a rationing process of school and County projects. The County EMS communication system project is not funded and he thinks that it should be a priority compared to other projects that are not funded. Budget Director Donna Dean made a PowerPoint presentation. The total of the CHCCS approved projects that are funded in the CIP and do not require additional funds is $29 million. The school system has requested High School #3, which includes the athletic facilities. Funding has been identified in the CIP, the 2001 bonds, impact fees, and alternative financing. The tatal of this is $28.2 million. The third category is prajects that would require funding beyond the currently programmed pay-as-you-go funds or debt financing. High School #3 is listed again because the school board was requesting an additional $6.3 million for athletic facilities. The CHCCS has also requested Elementary School #10 in 2006-2007 at $13.9 million, Middle School #5 in 2008-2009 at $20.7 million, new central office space in 2008-2009 at $5.8 million, conversion of Lincoln Center to high school space in 2009-2010 at $11.1 million, Elementary School #11 at 2012-2013 at $17.5 million, and renovations to Culbreth and McDougle Middle Schools at $3.2 million. The total additional funding beyond what is currently programmed in the CIP is $78.8 million, bringing the total request in CIP funding to $136.9 million. The total of funded projects for OCS is $24.1 million over the ten-year period. Also identified is Middle School #3 in 2006-2007 at $18.5 million, flooring replacement at $582,000; additional renovations for Hillsborough Elementary at $857,000; HVAC replacements at $213,098; Pathways all weather playground at $68,000; roofing projects at $147,077; and technology at $233,502. The total unfunded requested CIP funding is $2.1 million, bringing the total CIP request to $44.7 million. For Orange County Government, the projects that do not require funding beyond currently programmed pay-as-you-go funds or debt financing total $84.2 million. The projects that are unfunded total $46.8 million and include animal shelter/animal control facility at $2.3 million, County park sites and future development at $28 million, emergency communications and infrastructure at $10 million, emergency management and emergency operating center at $2 million, equipment and record storage at $1 million, Heritage Center at $450,000, and Northern Human Services Center at $3 million. The total County CIP is $131 million. The identified unfunded needs for the County and the two school systems total $127.7 million. Rod Visser said that the Board asked that the staff bring back an explanation of the County's overall debt capacity for the 2003-2013 CIP period. The staff felt that the examination needed to include all outstanding long-term debt that had been incurred prior to 2002-2003, in other words, all of the County's existing debt. He spoke generically about debt capacity. The legal debt capacity for the County would be three- quarters of a billion dollars. The County's total outstanding debt as of this June will be $145 million. The County is nowhere near the legal debt capacity. However, there are self-imposed limitations in the County's Debt Management Policy. The policy adopted in 1998 established this threshold at 15%. Donna Dean explained the chart entitled, County's Annual Debt Service Projections. She pointed out that historically the Board has gone to citizens every three or four years for bonds, and therefore the Board may want to consider this when discussing the debt capacity. Jahn Link said that the Board needs to determine which projects are going to be in the green area above the red line {above the debt capacity) and not be funded. This needs to be decided now and not in 2005-2006. He made reference to the comments by Superintendent Neil Pedersen that the additional funding of $6 million for the third high school would not make a significant difference in the County's total debt service picture. He said that this is true in itself, but the Board needs to decide which $6 million is not going to be funded. Before the Board addresses any of these, he wants everyone to be comfortable with the big picture. Commissioner Jacobs asked if there was a comfort level with the Board as to haw much to subordinate County facilities to school projects. He would like to discuss whether the Board wants to continue the trend of being almost 50-50 with the budget. Commissioner Halkiatis said that, as a Superintendent, he would have said the same thing that Superintendent Pederson said about $6 million not making a big difference in the total debt picture. He said that when he suggested that the CHCCS utilize district tax monies for capital projects the issue of equity came up. He said equity would never became a reality. He said that we have been good to bath school systems but the County has not been generous to itself. Commissioner Carey agreed with Commissioner Jacobs and said that the County is in dire straits and the Board should talk about the threshold. He would like to establish a priority list and then go from there and stop short at the red line {debt capacity). He thinks the subject of equity can be achieved by merging the school districts. He said that we awe it to our citizens not to pit them against each another. Commissioner Gordon said that it will be important to prioritize and that you may be able to find ways to stretch out the money. She said that equity is tough to define sometimes. She spoke about how the CHCCS system was growing faster and the district taxes were paying for opening of new schools. She said that we might need to look at using the district tax to build new schools as well as opening the new schools. She believes that one cent on the district tax would yield $600,000 per year. John Link said that he would advocate strongly for the County's projects. He said that he did propose the switch of the money for Elementary School #10 to High School #3. But, before the Board puts an additional $6 million to the high school that it makes sure that the communications center, the Northern Human Services Center and the animal shelter are funded in a timely way. He said that if he had to make a decision tonight, he would say to stick with the standards {$28-29 million). Commissioner Gordon said that the CHCCS request is $4 million above the standards. The funding proposal that the County staff came up with was not the maximum for the 1,000-student high school. Jahn Link said that he was speaking about the additional $6 million that they would have to borrow related to the debt service. Commissioner Jacobs asked far more clarification about the request about the size of the high school and if it was expandable. Superintendent Pedersen said that the 182,000 square feet is for 1,000 students, but the school board would not relinquish the possibility that there would be expansion. Commissioner Halkiotis asked if the site allowed far an ultimate expansion for 1,500 students and Superintendent Pederson said yes. Commissioner Halkiotis asked about the design for expansion and if the core facilities could be expanded. Superintendent Pedersen said that the core facilities are fora 1,000-student high school and it would not be feasible to expand the core facilities but to expand the classroom capacity. He said that there is not a plan to expand at this time. Commissioner Halkiotis made reference to the building of East Chapel Hill High and that it came in over the budgeted amount and that the County Commissioners found out three years later that the Town of Chapel Hill had put some mandates on the building. He said that he has some legitimate confusion and he wants to know what the plans are. He said that the Manager has been too generous with the school systems at the expense of County programs. The County continues to rent buildings far same of its programs. Commissioner Gordon asked the Chair of the CHCCS Board Valerie Foushee about planning the core facilities for 1,500 students. Valerie Foushee said that the projections did not indicate a high school for 1,500 and the money was not there. She said that they were happy to know that the parcels that they were to purchase could allow for expansion. Commissioner Gordan asked if they could design it sa that it is more easily expandable. Valerie Foushee said that in this process she would assume that they would do this because there are not many parcels of land available. Commissioner Jacobs asked about the unfunded project for the Lincoln Center to be converted to high school space for 300-500 students for 2009-10. He said that this is an additional 1,300-1,500 students, but the projections through the year 2012-2013 do not have the school system needing high school space beyond a 1,000-student high school. Steve Scroggs said that this was why they dropped this down to unfunded. They had it opening in 2009-10 because they did not want to lose the Lincoln Center as a possibility. Also, in the past, the projections have fallen short of what actually happened. Commissioner Jacobs said that he would like to propose a 700-student high school that could be expanded to 1,000 students and would allow the Lincoln Center to be completed later on in the ten-year period. This would also keep the cost within the standards. He would like to keep the Lincoln Center as a mare active part of our educational facilities. Chair Brown said that the budget for the third high school has always been a certain amount and she asked why the school board decided to dispense with the budget parameters and go over it by millions of dollars. Valerie Foushee said that it is driven by the land costs and the site preparation costs and it is out of their control. Superintendent Pedersen said that there was a provision that if the cost exceeded the amount from the County that CHCCS would need to look at their existing CIP revenue stream. Chair Brown made reference to the memo of April 13t" written by Superintendent Pederson that specifically stated that CHCCS was designing far a 1,500-student high school. She thought that one of the main points was to make sure that it was a 1,500- or a 1,000-student high school that could be expanded because it was so important to stay within the SAPFO numbers. She thought this was a main consideration. She asked what happened. Superintendent Pedersen said that they have not been at 1,500 since February. Then they went through several options but they did not have the budget or the enrollment figures far 1,500 students. Commissioner Jacobs asked about the square footage for the Central Office and Steve Scroggs answered 40,000 square feet. Commissioner Halkiotis pointed out that 40,000 square feet is equal to what Durham Tech wants for a satellite campus. Chair Brown would like the schools to prioritize their capital requirements and also the County. She said that she is astonished by how many County projects have been put off far sa many years and have came dawn to almost an emergency. She said that the communication system for EMS is one of the highest priorities. Commissioner Halkiotis asked from both school systems a listing of all buildings' square footages and all space owned by both school systems. Chair Brown said that all of the capital projections for schools would change significantly with a merger of the two school systems. Commissioner Halkiotis asked to include the County buildings in the square footage requests along with the school systems. Commissioner Jacobs suggested inviting the school board members back to a work session to answer some questions. The work session for the schools' CIP is June 10t". A motion was made by Commissioner Carey, seconded by Commissioner Gordon to adjourn the meeting at 9:40 p.m. VOTE: UNANIMOUS Margaret Brawn, Chair Donna S. Baker Clerk to the Board