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2000-06-14 Special Meeting NEW HANOVER COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING ON BUDGET, JUNE 14,2000 BOOK 27 PAGE 1031 ASSEMBLY The New Hanover County Board of Connnissioners held a Special Meeting on Wednesday, June 14,2000, at 6:00 p.m. in the Assembly Room of the New Hanover County Courthouse, 24 North Third Street, Wilmington, North Carolina. Members present were: Connnissioner Buzz Birzenieks; Connnissioner Ted Davis, Jr.; Connnissioner Charles R. Howell; Vice-Chairman Robert G. Greer; Chairman William A. Caster; County Manager, Allen O'Neal; and Clerk to the Board, Lucie F. Harrell. Staff Members present were: Assistant County Manager, Dave Weaver; Assistant County Manager, Patricia Melvin; Budget Director, Cam Griffin; Budget Analyst II, Norma Troutman; and Budget Analyst I, Toni Shields. Chairman Caster called the Special Session to order and welcomed everyone present. He reported that the purpose of the meeting was to discuss funding requests for County Departments and outside agencies. He informed the public that a Public Hearing was held on the Recommended FY 2000-2001 Budget on June 5,2000, to receive public comments and stated the final budget will be adopted on June 19,2000. INVOCA TION AND PLEDGE OF ALLEGIANCE Clerk to the Board, Lucie F. Harrell, gave the invocation. Connnissioner Birzenieks led the audience in the Pledge of Allegiance to the Flag. APPROVAL OF LICENSED PRACTICAL NURSE II POSITION AS REQUESTED BY THE NEW HANOVER COUNTY HEALTH DEPARTMENT Discussion was held on the request by the Board of Health to hire a Computer Support Specialist position and Licensed Practical Nurse II position for the Jail. Connnissioner Birzenieks requested Vice-Chairman Greer to comment on the two positions, since he is the Connnissioners' representative on the Board of Health. Vice-Chairman Greer spoke on receiving a call from the Chairman of the Board of Health, William Steuer, who would like for the Board to reconsider the Computer Support Specialist position. He stated that he felt the Licensed Practical Nurse II position for the Jail was badly needed, and he requested County Manager O'Neal to comment on this position. County Manager O'Neal advised that it was becoming more difficult to recruit persons to fill the Nurse II position because of the working environment. The Nurse II position does save money for the County because better health care is provided to inmates which prevents trips to the hospital and the emergency room. He stated if the budget had not been so tight, both positions would have been recommended because the Computer Support Specialist position would have reduced the heavy workload of the Information Technology Department. Commissioner Birzenieks commented on there being sufficient justification to hire the Licensed Practical Nurse II position and he asked if this could be a revenue neutral position. County Manager O'Neal explained that this adjustment could be made as a wash in the budget without additional money budgeted as an expenditure, but if a certain amount is spent for J ail health services at the end of the year and the figure is over budget, the money will have to be replaced. Motion: Vice-Chairman Greer MOVED, SECONDED by Connnissioner Birzenieks, to approve the Licensed Practical Nurse II position for the Jail based on the position being revenue neutral. Upon vote, the MOTION CARRIED UNANIMOUSL Y. Further discussion was held on the Computer Support Specialist position. Connnissioner Birzenieks asked if this position would save money. NEW HANOVER COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING ON BUDGET, JUNE 14,2000 BOOK 27 PAGE 1032 County Manager O'Neal explained that the Computer Support Specialist position would not be revenue neutral, but it would assist the Information Technology Department in better handling the current workload. DISCUSSION OF FUNDING FOR OUTSIDE AGENCIES Budget Director Griffin commented on funding for outside agencies discussed at the Work Session on May 25, 2000, and she presented a list of changes that seemed to be the consensus of the Board. The following discussions and actions were taken. Approval of Additional Funding for Elderhaus and Coastal Horizons/Crisis Line/Open House Discussion was held on increasing funding in the amount of $54,800 for Elderhaus and $25,000 for Coastal Horizons/Crisis Line/Open House by removing $79,800 from the DSS Medicaid budget because of the money saved by these agencies in the Medicaid expenditure. Motion: After discussion of the outstanding services provided by these agencies, Connnissioner Birzenieks MOVED, SECONDED by Commissioner Howell, to increase funding to Elderhaus by $54,800 and increase funding to Coastal Horizons/Crisis Line/Open House by $25,000 with $79,800 being deducted from the DSS Medicaid budget. Connnissioner Davis asked if the Board wanted to use the entire amount of money being deducted from the DSS Medicaid budget to fund these two agencies when there are so many other agencies in need. Commissioner Birzenieks responded that both of these agencies provide a service that decreases the County's Medicaid costs by keeping patients out of the emergency room and nursing homes. The additional funding will allow these organizations to serve more clients which will further reduce the County's Medicaid expense. County Manager O'Neal noted that Connnissioner Birzenieks was correct about Medicaid dollars being saved by Elderhaus and Coastal Horizons/Crisis Line/Open House, but stated this is an entitlement program budgeted as suggested by the State. If some unusual event should occur, such as a flu epidemic, and more money was spent than budgeted for Medicaid, this funding would have to be replaced. Chairman Caster called for a vote on the motion to approve additional funding to Elderhaus in the amount of $54,000 and to Coastal Horizons/Crisis Line/Open House in the amount of $25,000 with the DSS Medicaid budget being reduced by $79,800. Upon vote, the MOTION CARRIED UNANIMOUSLY. Approval of Additional Funding for the Greater Wilmington Film Office, Brigade Boys and Girls Club Capital Fund, and Funding for Bellamy Mansion Discussion was held on the funding request by the Wilmington Film Office in the amount of $90,000 with $80,000 being appropriated in the recommended budget. Chairman Caster commented on the recommended funding request for the Planned Parenthood/Quality Care Program in the amount of $7,000 and Parents as Teachers Program in the amount of $15,000 and stated he had no problem with the programs, but he felt there were other organizations in the community performing the same services. He noted that Parenting Place was an organization that has been supported by the local and National Exchange Club for a number of years. He requested direction from the Board. Vice-Chairman Greer stated if the Board decides not to fund the Planned Parenthood Quality Care and Parents as Teachers programs, he would recommend transferring $10,000 of these funds to increase funding for the Greater Wilmington Film Office. NEW HANOVER COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING ON BUDGET, JUNE 14,2000 BOOK 27 PAGE 1033 Connnissioner Birzenieks commented on no funding being recommended for the Bellamy Mansion and he requested the Board to consider funding $7,000 to this agency. He also requested the Board to consider funding the Brigade Boys & Girls Club Capital request in the amount of $5,000. Vice-Chairman Greer commented on the funding for the N. C. Aquarium at Fort Fisher and stated that other counties with aquariums have contributed $50,000 to their facilities, and New Hanover County has contributed $37,500. He asked if the Board would like to consider some funding for this agency. Commissioner Birzenieks commented on the Aquarium being a State facility and expressed concern for local governments being requested to fund more State responsibilities, which in his opinion is not right. Motion: Chairman Caster moved to deny funding to the Planned Parenthood Quality Care and Parents as Teachers programs in the amount of $22,000 and to use these funds to provide additional funding of $10,000 to the Greater Wilmington Film Office and to allocate funding in the amount of $12,000 to the Parenting Place. Connnissioner Davis requested Chairman Caster to amend his motion to deny funding for the Planned Parenthood programs and then discuss how the $22,000 should be allocated to other outside agencies. Substitute Motion: Chairman Caster made a substitute motion, seconded by Connnissioner Davis, to deny funding in the amount of $7,000 to the Planned Parenthood Quality Care program and $15,000 to the Planned ParenthoodlParents as Teachers program. Upon vote, the MOTION CARRIED UNANIMOUSLY. Chairman Caster requested direction from the Board on how the $22,000 should be allocated. Motion: Vice-Chairman Greer MOVED, SECONDED by Commissioner Birzenieks, to increase funding to the Greater Wilmington Film Office by an additional $10,000, from $80,000 to $90,000 as originally requested by this agency. Upon vote, the MOTION CARRIED UNANIMOUSLY. Motion: Commissioner Birzenieks MOVED, SECONDED by Commissioner Davis, to fund the Bellamy Mansion $7,000 and the Brigade Boys & Girls Club Capital request of $5,000. Substitute Motion: Chairman Caster MOVED to fund the Parenting Place by $12,000. The MOTION FAILED for the lack of a second. Chairman Caster called for a vote on the motion made by Connnissioner Birzenieks to fund Bellamy Mansion $7,000 and the Brigade Boys & Girls Club Capital request by $5,000. Upon vote, the MOTION CARRIED by a 4 to 1 vote as follows: Voting Aye: Commissioner Birzenieks Commissioner Davis Commissioner Howell Vice-Chairman Greer Voting Nay: Chairman Caster Denial of Assistant District Attorney Position and Two Groundskeeper Positions for Airlie Gardens County Manager O'Neal reported that Airlie Gardens Foundation, Inc. requested four Groundskeeper positions and two Landscape Technicians positions and stated that he had included two Groundskeeper positions in the recommended budget. He urged the Board to fund the two Groundskeeper positions that are badly needed to maintain the gardens. NEW HANOVER COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING ON BUDGET, JUNE 14,2000 BOOK 27 PAGE 1034 General discussion was held on the Assistant District Attorney position being a State responsibility. Commissioner Birzenieks expressed concern for New Hanover County being requested to fund a State position. Commissioner Davis spoke on having the utmost respect for Mr. Carriker and stated that he could understand why he had requested the position, but he could not ask the taxpayers to fund a State position, particularly with $25 million being spent for expansion of the Judicial Building. He asked how much money would be saved if the two Groundskeeper positions and Assistant District Attorney are removed from the budget. County Manager O'Neal responded that $53,332 would be saved by eliminating the two Groundskeeper positions and $69,929 by eliminating the Assistant District Attorney position for a total of $123,261. Commissioner Davis strongly objected to the taxpayers of the County being requested to fund a State responsibility. County Manager O'Neal advised that Mr. Carriker was frustrated with the lack of support and funding received from the Administrative Office of the Courts. He also noted that the Assistant District Attorney position would be used to focus on child sex offenders. Chairman Caster called for amotion to approve or disapprove the Assistant District Attorney position. Motion: Vice-Chairman Greer MOVED, SECONDED by Commissioner Howell, to deny funding for the Assistant District Attorney position. Upon vote, the MOTION CARRIED UNANIMOUSLY. Commissioner Davis stressed the importance of everyone understanding that denying the Assistant District Attorney position does not mean that the Board does not care about what is occurring in the Court System, but the Connnissioners do have a problem with funding a State responsibility. Vice-Chairman Greer informed the Board that he had requested the Budget Director to compile figures on the amount of money received by the local Court System from the Administrative Office of the Courts in Raleigh. After discussing this issue with State officials, he was informed there was enough money to fund the positions needed. Vice-Chairman Greer said that once the budget is adopted and the Budget Director has time to work on the figures, he will present these numbers to the Administrative Office of the Courts to see if additional funding can be received. General discussion was held on why the two Groundskeeper positions were approved in the recommended budget. County Manager O'Neal explained that two Groundskeeper positions were needed to clean up and maintain this 67 -acre garden. He noted that the two positions have been included in the Budget and he requested the Board to approve the positions because they are badly needed. Further discussion was held on recruiting more volunteers to work in Airlie Gardens. County Manager O'Neal stated that numerous volunteers are already working in the gardens; however, the two positions are needed for weeding, cutting grass, applying fertilizer, trinnning hedges and other routine maintenance. Chairman Caster called for a motion to either approve or deny the positions. Motion: Connnissioner Howell MOVED, SECONDED by Vice-Chairman Greer, to deny the two Groundskeeper positions. Upon vote, the MOTION CARRIED UNANIMOUSL Y. Discussion was held on contracting out some of the work at Airlie Gardens. The Board agreed to consider this option at a later date if it becomes necessary. NEW HANOVER COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING ON BUDGET, JUNE 14,2000 BOOK 27 PAGE 1035 Approval of Funding for MedSource Connnissioner Birzenieks spoke on MedSource being an excellent program and stated when elderly people do not have enough money to pay for their medication, they are usually hospitalized and end up on Medicaid, which is costly to both the County and Medical Center. County Manager O'Neal agreed with Commissioner Birzenieks and stated when the elderly or other people go for a period of time without their medication because of no money, they usually contact the Department of Social Services or go the emergency room for help. The MedSource program can save money for the taxpayers through a reduction in Medicaid costs. Commissioner Birzenieks asked if the $75,000 could be offset by another item in the budget. County Manager O'Neal responded that the offset could occur from the DSS Medicaid account and stated, in his opinion, it would be worthwhile to try the program for one year. Ms. Booth-Neal works closely with the Department of Social Service through the General Assistance Program and she operates a cost-effective program. Commissioner Birzenieks asked County Manager O'Neal if he would feel comfortable about funding $75,000 for MedSource with funds deducted from the DSS Medicaid budget. County Manager O'Neal responded that he would feel comfortable funding this program from the DSS Medicaid budget. Vice-Chairman Greer referenced the effort being made by the U. S. Congress to include a prescription benefit through Medicare to assist the elderly, and he asked if local governments should assume this responsibility. Further discussion was held on how MedSource has operated the program for three years without funding assistance from the County. County Manager O'Neal explained that funding has come from a grant, private donations, drug companies, and doctors' offices and stated these funding sources are beginning to dwindle. Connnissioner Howell noted that this was one program he would support during a tight budget year because Ms. Booth-Neal has operated an excellent program that helps people who are sick and in need of their medication. Motion: After further discussion of the MedSource program saving enough money that funding can be removed from the DSS Medicaid budget, Connnissioner Howell MOVED, SECONDED by Connnissioner Birzenieks to approve funding in the amount of $75,000 for the MedSource program. Upon vote, the MOTION CARRIED UNANIMOUSL Y. Approval of Additional Funding for the Council of Governments (COG) Chairman Caster advised that the Council of Governments (COG) submitted a funding request in the amount of $23,030 with only $21,612 included in the recommended budget. He advised that the $1,418 difference in funding was for the COG EMS program, which was eliminated when the County EMS was transferred to the New Hanover Regional Medical Center. The Council of Governments is requesting the Board to consider replacing these funds. County Manager O'Neal informed the Board that the per capita arrangement with COG has increased from 8 cents per capita to 9 cents per capita, which has to be paid by all four counties. He noted that during the past year, COG has been pro-active in resolving area problems. Motion: Chairman Caster MOVED, SECONDED by Vice-Chairman Greer, to approve additional funding in the amount of $1,418 to the Council of Governments. Upon vote, the MOTION CARRIED by a 4 to 1 vote. Commissioner Davis stated, for the record, he voted in opposition because so many other agencies were in need of funding for their programs. NEW HANOVER COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING ON BUDGET, JUNE 14,2000 BOOK 27 PAGE 1036 Discussion of Funding for the N. C. Aquarium at Fort Fisher Chairman Caster reported when considering funding for the St. John's Museum of Art and the N. C. Aquarium at Fort Fisher last year, both agencies requested $75,000 and the Board decided to fund each agency $37,500 for one year with no future connnitment. He requested direction from the Board on funding for these two agencies. Commissioner Birzenieks commented on the amount of money that has been saved with the elimination of positions in the recommended budget and he asked if the Board would like to reconsider the funding request by the Fort Fisher Aquarium. After further discussion, no action was taken. Discussion of New Hanover County Fire District Budget With the recent annexation by the City of Wilmington and the next phase to be implemented, Connnissioner Howell informed the Board that the Fire District will experience a revenue loss of $500,000 because the affluent areas are being annexed, which will leave the County with basically the same areas to serve. The Fire Service is also responding to every wreck that occurs in the county, which is an added expense, and the Medical Center has requested the Fire Service to become first responders because of the number of deaths occurring with cardiac patients. Volunteer firefighters are having more problems with getting off work to serve during the day, which will result in more paid personnel unless volunteers can be recruited. The current tax rate of 3.5 cents is not sufficient for the Fire District to operate. Other Fire Districts throughout the State have a much higher tax rate than New Hanover County. Connnissioner Howell requested the Board to consider increasing the Fire District tax rate by one-half cent. He advised that if the Fire Service can reduce the ISO rating from 9 to 6, which should occur within two years, the homeowners insurance will decrease far below the cost of the proposed one-half cent tax increase. Motion: Commissioner Howell MOVED, SECONDED by Commissioner Birzenieks, to approve a one-half cent tax increase in the Fire District tax rate. Upon vote, the MOTION CARRIED UNANIMOUSLY. Chairman Caster requested the Fire Connnission and Staff to review the existing boundaries of fire districts and location of fire stations as each phase of annexation occurs to ensure a high quality of fire protection to the unincorporated county. Discussion of Lease Agreement with the Airport Authority for Rental of Space Occupied by the Sheriff's Department Chairman Caster requested the County Manager to comment on the reason for eliminating payment of rent in the amount of $79,926 annually to the Airport Authority for use of space occupied by the Patrol Division of the Sheriff's Department in the old terminal building. County Manager O'Neal explained that a lease arrangement between New Hanover County and the Airport Authority requires the County to charge the Airport $1.00 per year. Approximately four years ago, the County agreed to paid $65,000 annually, which has increased to $79,926, for rental of space used by the Patrol Division. Connnissioner Davis referenced discussing this issue during the budget process last year and advised that the Board generally agreed this was a form of a subsidy. He said from a business point of view, it is not logical to rent the entire building to the Airport Authority for $1.00 per year and then pay $79,926 plus maintenance for the Patrol Division to use the space. Chairman Caster advised that after discussing this matter with the Airport Director, it appears that the FAA feels any property belonging to the Airport should generate revenue. Since the FAA does provide a great deal of revenue to the Wilmington International Airport, this point may need to be considered. He suggested reducing the amount of the annual rental. NEW HANOVER COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING ON BUDGET, JUNE 14,2000 BOOK 27 PAGE 1037 County Manager O'Neal advised that the Airport Authority is a fairly autonomous operation which is probably an asset when working with the FAA. From that perspective, there could be some rationale for payment of rent. He stated with tight budget restraints for FY 2000-2001, every item that could be eliminated was not included in the recommended budget. Commissioner Birzenieks commented on being fair with the Airport Authority and stated since sufficient notice was not given, he would recommend paying the $79,926 with notification that no funding would be received for the next fiscal year. Connnissioner Davis requested an explanation of how the space is used by the Patrol Division of the Sheriff's Department. County Manager 0 ' Neal responded that Patrol personnel was housed in the building with the remaining space used for training activities. Motion: Chairman Caster stated that he felt the Airport Authority would not object to reducing the amount of rent, and he MOVED, SECONDED by Commissioner Howell, to pay the Airport Authority rent in the amount of $50,000 for the space used by the Patrol Division of the Sheriff's Department. Upon vote, the MOTION CARRIED UNANIMOUSL Y. Connnissioner Birzenieks requested the Board to consider allowing the Airport Authority to hire their own attorney instead of using the County Attorney because of future potential conflicts that could arise between the Airport Authority and the County. After further discussion, the Board agreed to discuss this matter at a later date. Discussion of Funding for the Cape Fear Coast Convention & Visitors Bureau (CVB) County Manager O'Neal reported in 1993, the County eliminated receiving rent from the CVB because of the need for this agency to have additional money to market the area. In the recommended budget, there is a request for the CVB to pay the County rent in the amount of $25,000 per year for use of the space in the New Hanover County Courthouse. The CVB has requested the Board to consider allowing the agency to pay $12,000 in the FY 2000-2001 budget, $18,000 in FY 2001-2002; and $25,000 in FY 2002-2003. Motion: After discussing the need to provide sufficient notice, Commissioner Birzenieks MOVED, SECONDED by Commissioner Howell, to charge the CVB $12,000 for FY 2000-2001. Upon vote, the MOTION CARRIED UNANIMOUSL Y. Commissioner Birzenieks requested Staff to notify the CVB well in advance of the amount of rent to be paid for the next fiscal year. BREAK Chairman Caster called a break from 7:45 p.m. until 8:00 p.m. Discussion of Revenue Chairman Caster stressed the importance of everyone understanding that the 3 cent tax increase is because of bond debt for the schools, which was voted on by the citizens. The actual amount is 3.6 cents; however, through a good budgeting process, the tax rate increased by only 3 cents which also includes the loss in growth of the sales tax. Discussion was held on the fact that no general fund balance was used to prepare the recommended budget. County Manager O'Neal explained that the County does have an account for the schools referred to as the "school fund balance". He said that $1 million was used from this account to balance the budget. Discussion was held on when the Pay and Classification Plan will be completed. County Manager O'Neal advised that the plan should be completed in two months. The consultant is performing a good job, but due to the large number of classifications, time is needed to be sure the system implemented will be accurate and properly classify all positions. Classifications of positions in the Department of Social Services and Health Department will have to be approved by the Office NEW HANOVER COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING ON BUDGET, JUNE 14,2000 BOOK 27 PAGE 1038 of State Personnel because these employees are subject to the State Personnel Act. This means that New Hanover County will have to receive State approval for substantial equivalency, which is a review of the relationships between State classifications and County classifications. The Pay and Classification Plan cannot be implemented until this approval is received. Discussion was held on the amount of funding that had been included in the budget toward implementing the Pay and Classification Plan. County Manager O'Neal advised that $1,998,826 had been included in the FY 2000-2001 budget for the following options to be considered: (1) implementation of the Pay and Classification Plan at some point during the next fiscal year; (2) a merit increase; (3) a market adjustment; or (4) a combination of a merit increase and market adjustment. Vice-Chairman Greer spoke on the length oftime already taken for completion ofthe Pay and Classification Plan and stated the employees want to know when the plan will be implemented. Since the Commissioners have not seen the plan and what is being recommended in the document, it is hoped that most of the issues will be addressed so when it is completed, the Board of County Commissioners will be in a position to move forward with implementing the plan. He asked how the Board should approach this matter. After discussion of budgeting enough money to give a merit increase or market adjustment, County Manager O'Neal explained that $1,998,826 was appropriated in the recommended budget for salaries. If the Pay and Classification Plan is implemented on January 23, 2001, it would not be possible to give a merit or market adjustment effective July 1,2000. The following chart was presented: Merit & Market Adjustment Implementation of Pay Plan & Classification Plan 1 % merit or market effective July 1,2000 2% merit or market effective July 1,2000 3% merit or market effective July 1,2000 4% merit or market effective July 1,2000 February 20, 2001 April 3, 2001 May 15, 2001 June 26,2001 County Manager O'Neal explained that every employee will not receive a merit or market adjustment because all salary increases are based solely upon performance. Commissioner Birzenieks requested the County Manager to recommend an option that would be fair to all employees. He expressed concern for turnovers and stated a tremendous amount of money can be spent on losing experienced employees, particularly in the Sheriff's Department. County Manager O'Neal responded that the Sheriff did make a passionate plea for his department; however, county employees in all departments feel just as passionately about salary increases. If the Pay and Classification Plan is implemented by the 13th Pay Period, a 3% merit or market adjustment can be given on July I, 2000, which will satisfy the employees. Commissioner Birzenieks asked how much money would be needed to implement the Pay and Classification Plan for the entire year. County Manager O'Neal responded that it would cost $4,827,441. Vice-Chairman Greer stated since the tax rate increased by only 3 cents instead of 3.6 cents, he would recommend increasing the tax rate to 3.6 cents and using the additional $940,800 toward implementing the Pay and Classification Plan. County Manager O'Neal requested the Board to consider increasing the tax rate by 4 cents. He stated if the Board agrees to adopt a budget with a 4 cent tax increase, Staff will have enough additional funding to prepare an option to implement the Pay and Classification Plan and give a merit or market adjustment at an appropriate time during the next fiscal year. This option can be NEW HANOVER COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING ON BUDGET, JUNE 14,2000 BOOK 27 PAGE 1039 presented to the Board on Monday, June 19,2000. Vice-Chairman Greer also noted that no funding had been budgeted for the State increase that might be given to teachers; therefore, some of the revenue generated by the additional penny should be added to the School Budget to fund salary increases for County paid school positions. Commissioner Birzenieks spoke on the need for the State to stop unfunded mandates and stated until the N. C. General Assembly decides to increase the percentage of the sales tax given back to counties or provides other revenue sources, such as a local option sales tax, no relief can be provided to the taxpayers. Government has certain fundamental responsibilities which are public safety, law enforcement, and education. New Hanover County is in a situation where no funding assistance will be given by the State or Federal Government, and annexation by the City of Wilmington has cost the County $1.6 million. He suggested increasing the tax rate to 4.5 cents to fund law enforcement needs, implement the Pay and Classification Plan as appropriate, and provide additional funding to the School System to increase salaries equivalent to the State percentage for County funded teacher and employee positions. Chairman Caster stated for clarification, the Board has agreed to increase the tax rate to 4.5 cents with the additional 1.5 cents being used to: (1) cover the increased debt service for schools and Cape Fear Community College (3.6 cents); (2) make up a portion of the loss in sales tax growth resulting from annexation by the City (1 cent); (3) and increase funding to the Board of Education by $669,601 to pay the State percentage of salary increase to all County paid school positions. County Manager 0' Neal reported that once the final figures are received from the consultant for the Pay and Classification Study and the final numbers are received from the State about the percentage of increase for teachers, the exact figures cannot be presented to the Board until September. He requested the Board to adopt the budget with the 4.5 cent increase and allow Staff to prepare a plan. Commissioner Davis expressed concern about increasing the tax rate to replace the decrease in the sales tax due to annexation. He stated that people living in the City and in the Phase I annexed area pay both County and City taxes. These people are now being asked to pay increased County taxes, out of which a portion will be used to replace sales tax revenue lost because of annexation. Connnissioner Birzenieks stated as the Connnissioners go through the budget process, the merits of consolidation are quite evident. It is also obvious that the N. C. General Assembly must provide alternate sources of revenue, other than the property tax. County Manager O'Neal advised that if the Phase II annexation occurs before September 1, 2000, the last quarter of sales tax proceeds recommended in the budget will be less than predicted. This will place more stress on the budget, and before the next fiscal year is over the Board may be requested to use a portion of the fund balance. Chairman Caster requested a motion to approve increasing the tax rate by 4.5 cents. Commissioner Davis stated that he needed time to consider whether the tax rate should be increased more than 3 cents. County Manager O'Neal advised that the appropriate action would be for Staff to develop a Budget Ordinance including a 4.5 cent tax rate increase to be considered by the Board on June 19, 2000. Commissioner Birzenieks stressed the importance of informing the Board of Education that additional funding is being included to pay for increases to County paid positions, which includes the 130 teachers. Commissioner Davis agreed and stated last year, additional funding was provided to the Board of Education to pay for teacher supplements and salary increases, but the money was not used NEW HANOVER COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING ON BUDGET, JUNE 14,2000 BOOK 27 PAGE 1040 for that purpose. He asked why should the Connnissioners feel that the Board of Education will use the additional money for this purpose during FY 2000-2001. Chairman Caster said the Connnissioners want to be fair to County employees and County paid positions for the School System. County Manager O'Neal read a statement prepared by Budget Director Griffin and stated since FY 1996-97, the current Board has increased funding to the schools for operating and capital expenditures by 45%, which does not include debt service. He stated this Board has been most supportive of schools for the past four years. ADJOURNMENT Chairman Caster called for a motion to adjourn. Motion: Connnissioner Birzenieks MOVED, SECONDED by Connnissioner Howell, to adjourn. Upon vote, the MOTION CARRIED UNANIMOUSL Y. Chairman Caster adjourned the meeting at 8:55 p.m. Respectfully submitted, Lucie F. Harrell Clerk to the Board