HomeMy WebLinkAboutAgenda - 05-08-2008-ORANGE COUNTY BOARD OF COMMISSIONERS
AGENDA
BOCC Budget Work Session
May 8, 2008
7:30 p.m.
Southern Human Services Center
2501 Homestead Rd
Chapel Hill, NC
Preliminary Outlook of Fiscal Year 2008-09 Budget Drivers
7:30 - 7:45 a. Real Property Valuation and Property Tax Revenues
7:45 - 8:00 b. Sales Tax Revenues
8:00 - 8:30 c. Funding Requests from Local Boards of.Education
8:30 - 8:40 d. Funding Request for Orange County Satellite Campus
of Durham Technical Community College
8:40 - 9:30 e. Departmental Requests for New Staff and/or Changes
to Existing Staff
9:30 - 9:45 f. County Employee Salary and Benefit Compensation
Plan
9:45 - g. Other Budget Drivers
10:00
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: May 8, 2008
Action Agenda
Item No.
SUBJECT: Discussion of Fiscal Year 2008-09 Annual Operating Budget
DEPARTMENT: County Manager PUBLIC HEARING: (Y/N) No
Financial Services
ATTACHMENT(S): INFORMATION CONTACT:
Laura Blackmon, (919) 245-2300
Attachment 1. Preliminary Outlook of Fiscal Donna Coffey, (919) 245-2151
Year 2008-09 Budget Drivers
Attachment 2. Per Pupil Appropriations
(General Fund) Historical
Comparison
Attachment 3. Departmental Requests for
New Staff and/or Changes to
Existing Staff
PURPOSE: To give the Board an opportunity to review and discuss preliminary major funding
components of the upcoming 2008-09 fiscal year budget.
BACKGROUND: This work session is designed to meet the County Manager's commitment to
the Board to preview major budget drivers anticipated to influence the upcoming fiscal year's
budget prior to the Recommended Budget being released on May 20, 2008.
~- Real Property Valuation and Property Tax Revenues
Just over sixty-nine percent of the County's General Fund revenue comes from property
taxes. Preliminary projections anticipate the County's real property valuation to be $
11.407 billion for the upcoming fiscal year. After allowing for the $45.8 million valuation
reduction related to Homestead Exemption properties, staff anticipates the net real
property taxable valuation for the upcoming fiscal year to be $11.361 billion. This reflects
a $260 million increase, or 2.3 percent increase, over the current fiscal year budgeted
taxable valuation. Staff projects one cent on the tax rate in the upcoming fiscal year to
generate $1,274,655 compared to $1,247,907 generated in the current fiscal year or a
2.1 percent increase. There is a gap between this percentage increase and the overall
increase of 4.1 percent (based on the most recent Consumer Price Index) in goods and
services experienced by consumers including schools and County operations.
~- Sales Tax Revenues
The Country's economy continues to slow, and in turn, consumers are not increasing
their spending. Based on the April 2008 distribution report, sales tax collections between
July 2007 and February 2008, the County has collected $12.5 million compared to the
target of $13.5 million for this point in the year.
Fiscal year 2008-09 marks the second year of the three year Medicaid Relief/Sales Tax
Swap approved by the General Assembly in summer 2007. Per the legislation, over a
three-year period, the State will take over Medicaid expenditures from counties. On the
other hand, the State will keep proceeds from Article 39 sales tax to offset its new costs
associated with Medicaid expenditures. In addition, the State plans to change a portion
of the sales tax distribution formula from a per capita distribution to a point of sale
distribution; thereby further reducing sales tax amounts that counties with smaller retail
bases receive. The overall result is that while counties across the state will benefit from
Medicaid expenditure reductions, they will also experience sales tax revenue reductions.
Given the economic uncertainty that lies ahead in addition to the lower sales tax
collections caused by the "Swap" and State changes in sales tax distribution, staff
anticipates next year's sales tax revenues will be lower than the currently budgeted $23.2
million. Staff is working with representatives from the NC Association of County
Commissioners to finalize how the legislation will affect the upcoming revenues.
Funding Requests from Local Boards of Education
Tonight's work session is the first opportunity the Board has had to discuss school
districts budget requests that were presented by each School Board at the April 22, 2008
joint work session. In summary, Chapel Hill Carrboro City Schools Board of Education is
requesting a total budget increase of $6,829,064 for the upcoming fiscal year while the
Orange County Schools Board of Education is requesting an increase of $1,832,173 for
the same period. Other information the Board may find helpful during tonight's
discussions include:
o Orange County's current year per pupil expenditure equals $3,069
o Based on March 2008 State certified student membership projections, both
districts will have more students next year.
Ghapel Hill Carrboro City Schools -increase of 323 students going from
current budgeted number of 11,382 to 11,705
Orange County Schools -increase of 79 students going from currently
budgeted number of 7,148 to 7,227
o If Commissioners were to fully fund the total budget increase requested by Chapel
Hill Carrboro City Schools from the ad valorem tax, a 8.39 cent tax rate increase
would be required and would result in a per pupil allocation of $3,569.
^ The Chapel Hill Carrboro City Schools increase would result in an
additional $3,853,424 for Orange County Schools.
^ An alternative to increasing the ad valorem tax rate to fund fully the request
is to use some combination of ad valorem and special district taxes.
o If Commissioners were to fully fund the total budget increase requested by Orange
County Schools from the ad valorem tax, a 4.25 cent tax rate increase would be
required and would result in a per pupil allocation of $3,290.
^ The Orange County Schools increase would result in an additional
$3,574,067 for Chapel Hill Carrboro City Schools
^ Given this scenario, the remaining $3,254,997 requested by Chapel Hill
Carrboro City Schools could be funded by increasing the Schools' special
district tax. Staff anticipates one cent on the special district tax to generate
about $808,000.
Attachment 2 of this agenda abstract provides a historical comparison of Orange
County's per pupil appropriations since fiscal year 1983-84.
~- Funding Requests for Orange County Satellite Campus of Durham Technical
Community College (DTCC)
Just last week the community celebrated the long-awaited opening of Orange County's
Satellite Campus of DTCC. The current year budget included funding of $385,644 for
partial year operational costs of the new facility. DTCC's President Dr. Bill Ingram
presented the community college's budget request of $581,601 for next fiscal year to the
County Manager and Budget Director on May 5, 2008.
_~ Other Budget Drivers
In addition to the topics outlined above, there .are a number of other topics that the
Manager would like to cover during tonight's work session. Those topics include:
o Departmental requests for new staff and/or changes to existing staff
o Costs of opening new County facilities
o County employee salary and benefit compensation plan including pay plan and
health insurance options
o County operational funding increases associated with inflation and higher costs
o Options for funding operational capital items
FINANCIAL IMPACT: As outlined on Attachment 1 of this agenda abstract, Preliminary
Outlook of Fiscal Year 2008-09 Budget Drivers, preliminary costs of major budget funding
increases for fiscal year 2008-09 totals $14.9 million or the equivalent of 11.68 cents on the tax
rate.
RECOMMENDATION(S): The Manager recommends that the Board of County Commissioners
review and discuss preliminary major funding components of the upcoming 2008-09 fiscal year
budget.
05/05/2008 Attachment 1
Preliminary Outlook of Fiscal Year 2008-09 Budget Drivers
The list below is intended to give a preliminary outlook of items the County Manager is considering including in the Fiscal Year
2008-09 Recommended Annual Operating Budget. It is important to note that staff is currently finalizing the recommended budget;
while the items provided in this fist are under consideration for funding in f/sca/ year 2008-09, it does not guarantee that
the final recommended Budget will include all items outlined in this chart or that these are the only items under
consideration. The May 8, 2008 work session provides an opportunity for the Board fo provide input and guidance regarding the
items outlined in the chart. The County Manager's Recommended 2008-09 Budget will be finalized and presented to the Board at
their May 20, 2008 regular meeting.
1 Fiscal Year 2007-08 Ad Valorem Tax Rate 95.00 cents per $100 valuation
2
s Anticipated Amount One Cent on Fiscal Year 2008- $1,274,655
09 Tax Rate Will Generate
4
Major Budget Drivers for Fiscal Year 2008-09 ts>
Tax Rate Equivalent in Cumulative Tax Rate Needed
Addition to FY 2007-08 to Fund Items Identified in
Proposed Budget Increases Associated With: $ Amount Tax Rate (cents per $100 Column B (FY 2007-08 Tax
valuation) Rate (95 cents per $100
valuation) Plus Increase)
Increased Debt Service $3,016,693 2.37 97.37
Education Funding
Increase Per Pupil Funding From Current Rate of
$3,069 to $3,290 - An Increase of $221 Per Pupil
(Equates to total increase of $3,574,067 for $5,411,158 4.25 101.61
Chapel Hill Carrboro City Schools and increase of
$1,837,091 for Orange County Schools) l'l
Full Year Funding for Durham Technical $581,601 0.46 102.07
Communit Colle e Oran e Count Cam us
Transition Long-Term Temporary Positions to $210,000 0.16 102.23
Permanent Positions
County's Contribution to Greene Tract Repayment $90,000 0.07 102.30
County Employee Compensation Plan
Cost of Living Adjustment (Preliminary
considerations include a 2% Cost of Living $800,024 0.63 102.93
Increase for all County employees, effective July
1, 2008. Each 1 % COLA increase = $400,012)
In-Range Awards Based on Employee
Performance (Preliminary Considerations Provide $220,710 0.17 103.10
for 1 % for Proficient and 3 % for Exceptional)
Health Insurance Rate Increase for Current and
Retired County Employees (Assumes 11 % Annual $363,000 0.28 103.39
Increase and No Change in Existing Plans)
Open New County Facilities (Includes Staffing and
Operating Costs; Does Not Include Debt Service $2,750,000 2.16 105.55
(see row 1 above) and One-Time Capital Costs (see
footndte 2 below
Outside Agencies Funding Recommendations from
Human Services Advisory Committee (Does Not $246,629 0.19 105.74
Include $100,000 Recommendation to fund UNC
Ps chiat
County Operational Funding Increases Associated
with Inflation and Higher Costs (Approximately 5% of $1,200,000 0.94 106.68
total o erational ex enses
Total $14,889,815 11.68
~'~ The Board may wish to consider increasing the School's Special District Tax to allow for additional funding for Chapel Hill
Carrboro City Schools.
~Z~ One alternative for funding capital items is to provide aone-time appropriation from the County's Fund Balance
~3~ Among items for further consideration and discussion (not included in the chart above) include (1) outcome of the County's
classification and pay study; (2) new staff not associated with opening new facilities; and (3) new County programs.
ac.~- rr~e»~- Z.
Per Pupil Appropriation (General Fund)
Historical Comparison
Fiscal Years 1983-84 through 2005-08 reflect Commissioner approved per pupil
appropriations
Fiscal Year Per Pupil
Appropriation Annual $
Increase Annual
Increase
83-84 $603
84-85 $642 $39 6.47%
85-86 $773 $131 20.40%
86-87 $871 $98 12.68%
87-88 $870 ($1) -0.11
88-89 $967 $97 11.15%
89-90 $1,057 $90 9.31
90-91 $1,175 $118 11.16%
91-92 $1,310 $135 11.49%
92-93 $1,310 $0 0.00%
93-94 $1,363 $53 4.05%
94-95 $1,451 $88 6.46%
95-96 $1,571 $120 8.27%
96-97 $1,782 $211 13.43%
97-98 $1,889 $107 6.00%
98-99 $2,040 $151 7.99%
99-00 $2,256 $216 10.59%
00-01 $2,395 $139 6.16%
01-02 $2,437 $42 1.75%
02-03 $2,516 $79 3.24%
03-04 $2,566 $50 1.99%
04-05 $2,623 $57 2.22%
05-06 $2,796 $173 6.60%
06-07 ' $2,957 $161 5.76%
07-08 $3,069 $112 3.79%