2010-03-15 Budget Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 31
BUDGET WORK SESSION OF MARCH 15,2010 PAGE 777
ASSEMBLY
The New Hanover County Board of Commissioners held a Budget Work Session on Monday, March 15,
2010, at 12:30 p.m. in the New Hanover Room of the New Hanover County Library, 201 Chestnut Street,
Wilmington,North Carolina.
Members present were Chairman Jason R. Thompson; Vice-Chairman Jonathan Barfield, Jr.;
Commissioner William A. Caster; Commissioner Ted Davis,Jr.; County Attorney Wanda M. Copley;Deputy Clerk
to the Board Teresa P.Elmore,and County Manager Bruce T. Shell.
Commissioner Robert G. Greer was absent.
Chairman Thompson called the meeting to order and requested County Manager Bruce Shell make the staff
presentation on the budget situation for FY 2010-2011.
DISCUSSION OF BUDGET GAP
County Manager Bruce Shell presented the following information on the updated budget gap:
Expense Revenue Net
Revenue:
Very preliminary projected increase in tax base $2,490,000
Eliminate Appropriation of Fund Balance (1,933,000)
(to restore Fund Balance)
Decrease in Sales Tax due to economic conditions (4,000,000)
Decrease in Sales Tax due to final phase of (1,300,000)
Medicaid/Sales Tax swap
Expenditures:
Furlough days and leave accrual $3,000,000
Increase in General Fund Bonded Debt 3,064,000
Increase in Employer Contribution to 970,000
State Retirement System
Decrease in Installment Debt (421,000)
Total Revenue and Expenditure $6,613,000 $(4,743,000)
Projected FY10-11 Overage/(Shortfall) $(11,356,000)
FYI 0-11 Additional Funding Request from $1,832,000
New Hanover County Board of Education
Total Revenue and Expenditure $8,445,000 $(4,743,000)
Projected FY10-11 Overage/(Shortfall) $(13,188,000)
Additional Concerns for FY10-11
• No additional funding for arts organizations or arts councils
• No funding available for economic development activities
• Revenue estimates are uncertain due to current economic situation
• The State may balance their FY09-10 or FY10-11 budget by taking action that may impact the County
• Continued annexation will negatively impact revenues without corresponding decrease in responsibilities
• Lack of funding for maintenance of downtown buildings,including 320 Chestnut Street
• No funding included for a Capital Improvement Program
• Reduced Fund Balance limits ability to respond to unforeseen events
DISCUSSION OF 2011 REVALUATION IMPACT
Finance Director Avril Pinder presented the following information on the impact a revaluation would have
on the tax base:
Sales Ratio
• Percent difference between the sales price and the tax appraised value
• Sales price higher than tax value= lower ratio
• Sales price lower than tax value=higher ratio
Normal Foreclosure Sales
Kure Beach 118% 129%
Carolina Beach 125% 133%
Wrightsville Beach 101% 110%
Wilmington 101% 110%
Fire District 106% 111%
New Hanover County 111% 122%
Sales Ratio Impact Normal Sales Levy Foreclosure Sales Levy
Decrease Decrease
Kure Beach $284,548 $458,437
Carolina Beach $1,072,448 $1,393,338
Wrightsville Beach $26,031 $260,308
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 31
BUDGET WORK SESSION OF MARCH 15,2010 PAGE 778
Wilmington $424,232 $4,242,317
Fire District $394,323 $722,925
New Hanover County $15,416,861 $30,833,721
Additional Additional
Pennies Needed Pennies Needed
Kure Beach 2.90 5.37
Carolina Beach 5.68 8.17
Wrightsville Beach .08 .86
Wilmington .33 3.23
Fire District .33 .63
New Hanover County 4.96 11.14
DISCUSSION ON LOCAL OPTION 1/4 CENT SALES TAX REFERENDUM
Budget Director Cam Griffin presented the following information on the proposed 1/4 cent sales tax:
• 1/4 cent sales tax would be collected by the State on sales within the County
■ Exceptions: groceries(most non-prepared food items),prescription drugs, gas,cars,and utilities
■ Estimated revenue for first 12 months= $7 million
■ Current sales tax rate 7.75 cents
■ State retains 5.75 cents
■ Successful referendum in May would become effective October 1,2010
■ Visitors to the area would help fund County services
• 1/4 cent sales tax will not completely fund the County budget gap
■ Revenue from Sales Tax=$5,000,000
■ Gap$8,188,000
■ Projected property tax increase needed with successful referendum=2.5 cents
■ Projected property tax increase needed without successful referendum=4 cents
• Impact of Property Tax increase (based on a$240,000 house)
0 2.5 cent tax increase
■ Annual Impact$60
■ Monthly Impact$5
0 4 cent tax increase
■ Annual Increase$96
■ Monthly increase$8
• Impact of Successful Sales Tax Referendum
■ FY10-11 Gap,Including Schools $13,188,000
■ Revenue from Sales Tax 5,000,000
■ Gap with successful referendum $ 8,188,000
■ Increase in ad valorem taxes needed 2.5 cents
• Without Successful Sales Tax Referendum
■ FY10-11 Gap,including Schools $13,188,000
■ Increase in ad valorem taxes needed 4 cents
• Tax increase includes 1 cent for debt service on voter-approved bond debt
• Value of a penny ad valorem tax= $3.3 million
Budget Director Griffin presented the following breakdown of the General Fund based on net costs of
Adopted Budget FY09-10:
Tax Rate %Ad Valorem
Type of Service Net Expense Net Expense
Mandated Service with Mandated Funding Requirements 8.09 cents 17.9%
Mandated Service with Discretionary Funding Levels 34.03 cents 75.2%
Discretionary Service with Discretionary Funding Levels 3.13 cents 6.9%
Total 45.25 cents 100.0%
Discretionary Services by Function Tax Rate Net Division Costs
Cultural and Recreational 1.93 cents
General Government 0.39 cents
Economic and Physical Development 0.29 cents
Human Services 0.30 cents
Public Safety 0.20 cents
Contingencies 0.02 cents
Total 3.13 cents
In conclusion,Budget Director Griffin noted that additional information regarding the net division costs by
function was included in the budget notebook.
The Commissioners discussed the following budget issues:
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 31
BUDGET WORK SESSION OF MARCH 15,2010 PAGE 779
• New Hanover County Schools have requested an additional $1,832,000 for utility increases at existing
schools and two new schools and the increases in State benefit rates for locally paid employees. The State
has planned to cut$3 million from the School's budget.
• An increase in bonded debt of$3,064,000 will require one cent in the property tax rate. ($1.7 million for
Parks bond and$1.4 million for CFCC bonds)
• It will be important to educate the public on the need for the local option sales tax referendum and that the
impact of a failed referendum will mean drastic cuts in governmental services and quality of life programs.
Community groups should be used to help inform the public on the necessity for the new funding source.
• If 1/4 cent sales tax option does not pass, 4 cent property tax increase is needed to maintain the current
level of services.
• Chairman Thompson and Vice-Chairman Barfield supported a property tax increase that would maintain
the current level of services and to keep the County Library, Parks, Museum, and Senior Resource Center
open at normal hours.
• Commissioners Caster and Davis said that they did not support a property tax increase and expressed
concern that any tax increase would be harmful to those who are already struggling in the current economic
downturn.
In conclusion,the Board agreed to hold a budget work session on Wednesday,March 24, 2010 at 9:00 a.m.
immediately following the Public Hearing for a proposed development moratorium on internet gaming
establishments. The meeting will be held at the New Hanover County Courthouse, 24 North Third Street,
Wilmington,North Carolina.
County Manager Shell was directed to provide budget scenarios using the 1/4 cent sales tax as well as no
sales tax option and proposing options in cutting services with no tax increase, 2.5-cent increase, and 4-cent increase
in property taxes.
ADJOURNMENT
There being no further business, Chairman Thompson adjourned the meeting at 1:10 p.m.
Respectfully submitted,
Teresa P.Elmore
Deputy Clerk to the Board