2008-03-13 Budget Work Session
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 31
BUDGET WORK SESSION OF MARCH 13, 2008 PAGE 331
ASSEMBLY
The New Hanover County Board of Commissioners held a Budget Work Session on Thursday, March 13,
2008, at 8:00 a.m. in Conference Room 601 at the New Hanover County Government Center, 230 Government
Center Drive, Wilmington, North Carolina.
Members present were: Chairman Robert G. Greer; Vice-Chairman William A. Caster; Commissioner Ted
Davis, Jr.; Commissioner William A. Kopp; Commissioner Nancy H. Pritchett; County Attorney Wanda M. Copley
Clerk to the Board Sheila L. Schult; and County Manager Bruce T. Shell.
Others present were: Finance Director Avril Pinder; Budget Director Cam Griffin; Senior Budget Analyst
Beth Schrader; Budget Analyst Donna Seal; and Special Projects Officer Amy Aiken.
Chairman Greer called the meeting to order and requested County Manager Bruce Shell present a budget
overview for FY 2008-2009.
OVERVIEW OF TOPICS
County Manager Bruce Shell reviewed the agenda topics for the meeting highlighting that revenues are
down and 89% of the requested budget amounts are for mandated items. The FY 08-09 budget request that is being
presented is a preliminary request and as always, staff will work to cut expenses as directed by the Board.
He requested Finance Director Avril Pinder to provide the overview of financial health of the County and
fund balance.
OVERVIEW OF FINANCIAL HEALTH OF THE COUNTY AND FUND BALANCE
Finance Director Avril Pinder presented an overview on the County?s fund balance and the financial health
of the County reporting that:
Fund Balance:
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Total Fund Balance as of July 1, 2007 in the amount of $72.4 million
Reserved = $26.5 million
o
Designated = $4.8 million
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Unreserved/undesignated = $41.1 million
o
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Projected June 30, 2008 Fund Balance in the amount of $72.4 million
Use $3.8 million ($9.2 million budgeted)
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Reserved = $29.6 million
o
Unreserved/undesignated = $39 million
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Equals 14.95%
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The Board?s fund balance goal is 16.67% or $42.5 million
o
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The County continues to maintain a strong Aa1 bond rating
Pending Debt Issues:
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General Fund - $28.64 million; debt service $2.45 million (airport customs building, jail property
acquisition, one-half of the Public Safety Training Center; Park Bonds)
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Water/Sewer - $10.67 million; debt service $1.26 million (Heritage Park project, water lines, schools
regional pump station)
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Environmental Management - $1.41 million; debt service $.24 million (scrapper pan, bulldozer/loader)
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Fire District - $6.14 million; debt service $.67 million; Aerial fire truck, Murrayville Fire Station; one-
half of the Public Safety Training Center)
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Total - $46.86 million; debt service $4.62 million
Finance Director Pinder continued reporting that on the horizon are the following items:
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Cape Fear Public Utility Authority ? staff is working to transfer assets July 1, 2008; NHC will be
responsible for paying the debt service until CFPUA issues debt.
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Cape Fear Community College ? preliminary discussion concerning a bond referendum
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New Hanover County Schools ? $43 million remains from 2005 bonds to be issued in 2010; $42.7
million currently on hand for school bond projects; schools have talked about a bond referendum for
2009
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Parks/Greenspace Bonds ? $35.5 million authorized in 2006
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First sale of bonds scheduled for May 16, 2008 - $12 million for City of Wilmington; $6 million for
New Hanover County/Beaches
A question and answer period was held.
OVERVIEW OF FY 08-09 BUDGET
Budget Director Cam Griffin reported that the requested budget shows a gap of 5.6 cents above the 3.4
cents that isnecessary to adjust for the error in the FY07-08 tax base, increase in debt service,and operational
expenses related to Parks Bonds.
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 31
BUDGET WORK SESSION OF MARCH 13, 2008 PAGE 332
It is anticipated that as the budget process progresses reducing budgets and revising revenue assumptions,
the gap will narrow; but a gap will remain that will necessitate a tax increase above the 3.4 cents, unless non-
mandated quality of life programs are reduced or eliminated.
Revenue is less than FY07-08 due to:
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FY07-08 Budget was balanced with some one-time revenue that is not available in FY08-09:
Transfer from Capital Projects - FY07-08 adopted amount was $1.5 million.
o
ABC revenue in the amount of $.5 million was donated for Sheriff Operations in FY07-08.
o
Less fund balance can be appropriated in FY08-09 ($.8 million).
o
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Inspections revenues have been negatively impacted by downturn in economy ($2 million decrease
from adopted budget).
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Sales tax growth has been less than in recent years and projection for FY08-09 is questionable.
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Grant revenue is uncertain; Juvenile Crime Prevention Council Funds in the amount of $.2 million. In
the Department of Social Services IV-E Waiver in the amount of $1.3 million and Foster Care
assistance in the amount of $.6 million revenue decreased.
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Correction in tax base continues to impact FY08-09 budget.
Budget Director Griffin continued reporting that requested expenditures exceed the FY07-08 adopted
budget by 4% due to increases for education and debt service, salary adjustment for County employees, and
inflationary increases.
The following assumptions are being made: 1) the savings generated by the Medicaid sales tax switch are
being transferred. The plan is to set funds aside for FY10-11 when there will be no further decrease in Medicaid
from the previous year and the reimbursement continues to the City for sales tax loss. The budget as presented sets
aside FY08-09 savings of approximately $1.2 million; 2) the tax rate in the Fire Service District will remain
constant; and 3) an increase in the tipping fee may be required in Environmental Management due to the need to
construct a new cell in the Landfill and a state-imposed $2/ton surcharge.
The following are concerns: 1) in difficult economic times the demand for services from Human Services
departments increases and revenue based on the economy decreases; 2) the full impact of the Mental Health
financial problems is still being reviewed may have an impact on the FY08-09 budget; 3) forty-four new positions
are being requested by County Departments; and 4) there are no funds allotted for capital projects.
In addition to the 3.4 cents required by the error in the FY07-08 tax base and the increase in debt service
between FY07-08 and FY08-09 there is need for an additional 5.6 cents; for a total of 9 cents to fund the preliminary
budget as presented.
The following is an explanation of the requested expenditures:
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General Government increase is due to 3% salary adjustment, requested positions and inflationary
increases.
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Human Services decrease is due to Medicaid Sales Tax Exchange.
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Public Safety increase is due to 3% salary adjustment, new position request, continuation of
replacement program for radios, and additional funding requirements of Sheriff?s Office.
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Increase in Economic and Physical Development is due to increased funding request from Non-County
Agencies.
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Increase is Cultural and Recreational due to 3% salary adjustment, new position request, additional
parks expenditures for Park improvements.
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Education increase due to a $2.7 million increase in Board of Education Debt Service between FY07-
08 and FY08-09, estimated 5% increase in operating expenses, and estimated $2 million capital
request. Board of Education is not required to submit their budget request until May 15.
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Debt Service increase is related to additional debt service for Parks and Recreation Bonds - $700,000;
land purchased for jail expansion - $506,000; and Cape Fear Public Utility Authority for Water and
Sewer Debt Service $6.7 million. (CFPUA debt is offset by a $4.8 million contribution by the CFPUA
for a net NHC contribution of $1.9 million.)
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Transfers have decreased due to reduced funding requirements for Other Post-Employment Benefit
Contribution.
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Transfer for Medicaid /Sales Tax Swap is preliminary estimate of savings that will be reserved.
The following is an explanation of revenues:
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Ad Valorem taxes are based on a 45.4 cent tax rate, 98% collection rate, and less than 1.5% increase in
the base. 3.4 cents of the tax rate is due to correction in base, increased debt service (excluding water
and sewer) between FY07-08 and FY08-09, and expenses related to Parks Bonds.
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Other ad valorem taxes are same amount as FY07-08.
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Sales tax is based on an increase of 5% from FY06-07 actual adjusted New Hanover County
percentage of sales tax and changes due to Medicaid Sales Tax swap.
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Other taxes decrease due to lower projection ($250,000) in real estate transfer tax.
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Intergovernmental revenue reduction due to adjustment in Department of Social Services Programs
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 31
BUDGET WORK SESSION OF MARCH 13, 2008 PAGE 333
due to decrease in revenue for IV-E Wavier in the amount of $1.3 million and Foster Care Assistance
in the amount of $.6 million and grant revenue.
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Charges for Service decrease are based primarily on decrease in projected revenue from Inspection
Services. Expected to be $2 million less than FY07-08 adopted. FY08-09 revenue is estimated to be
$.3 million less than current FY07-08 estimate.
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Other Revenue is estimated to increase primarily due to the transfer from the Cape Fear Public Utility
Authority for Water and Sewer to fund a portion of Debt Service in the amount of $4.8 million. This is
offset by no transfer from capital projects in FY08-09 and projected lower interest income.
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Less fund balance is recommended for appropriation in FY08-09 than in FY07-08.
PROPOSED BUDGET CALENDAR FOR FY 08-09
Budget Director Griffin presented the following proposed budget calendar:
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April 21, 2008 ? Budget Work Session immediately following Board meeting
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May 15, 2008 ? Budget to the Board of County Commissioners (informally)
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May 19, 2008 ? County Manager presents recommended budget at Board meeting
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June 2, 2008 ? Public Hearing on budget
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June 16, 2008 ? Board adopt FY 08-09 budget
In closing, Budget Director Cam Griffin reported that for the Board?s review in their workbook is the
following information:
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Non-County Agency Budget Requests
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Countywide Goals
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New Position Requests by Department
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Debt Service Report for the Next Five Years
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Requested Capital Improvement Projects Report
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Frozen Positions Report
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Critical issues that were identified during the FY 07-08 budget process
The Board held a question and answer period and discussion on transportation funding alternatives.
A copy of FY 08-09 budget work session presentation is available for review in the Budget Department.
ADJOURNMENT
There being no further business, Chairman Greer adjourned the meeting at 11:10 a.m.
Respectfully submitted,
Sheila L. Schult
Clerk to the Board