2012-04-10 Budget Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 32
BUDGET WORK SESSION,APRIL 10,2012 PAGE 362
ASSEMBLY
The New Hanover County Board of Commissioners held a Budget Work Session on Tuesday, April 10,
2012, at 3:20 p.m. in the Harrell Conference Room of the New Hanover County Government Center, 230
Govermment Center Drive, Wilmington,North Carolina.
Members present: Chairman Ted Davis, Jr.: Vice-Chairman Jonathan Barfield, Jr.: Commissioner Jason R.
Thompson, Commissioner Richard G. Catlin;and Commissioner Brian M.Berger.
Staff members present were: County Attorney Wanda M. Copley; Deputy Clerk to the Board Teresa P.
Elmore;and County Manager Bruce T. Shell.
Chairman Davis called the meeting to order and requested County Manager Bruce Shell give an update on
the proposed FY 2012-2013 Budget.
County Manager Shell presented an outline of the proposed FY 2012-13 Budget noting the following
significant factors:
• Proposed budget is a balanced budget subject to adjustments by the Commissioners
• Budget developed with a revenue-neutral tax rate of 55.4 cents:
o Assumes use of$7 million fiord balance and salary lag adjustment of$600,000
• Includes finding for Cape Fear Community College(CFCC)bonds of$54 million
• Includes financing a solution for 320 Chestnut Street building
• Includes an increase in health insurance premium of 4.7%to be shared by the County and employees
• CFCC requesting an increase of$1 million for maintenance
• Recommendation for 8 new positions:
o 4—Telecommunicators/911 operators(replacing temporary personnel)
0 1 engineer position to assist with shore protection and beach renourishnnent efforts funded by
Room Occupancy Tax Funds
0 3 positions for the Parks, Gardens and Senior Resource Center Department
■ 1 position to assist with the landscaping for Schools
■ 2 grant funded positions for the Senior Resource Center(SRC)
• Increases in Sheriffs Budget due to direct finding of School Resource Officers of$467,151 (offset with
decreased contribution to Schools)
• Budget Calendar:
• Recommended Budget given to Board at May 17 Agenda Review
• Formal Recommended Budget presentation at May 21 Regular Board Meeting
• Public Hearing on June 4
• Adopt FY12-13 Budget on June 18
• Initial gap of$16.9 million between revenues and expenditures:but a balanced budget is offered
• FYI 3-14 Budget based on the following factors:
• Continued slow recovery in the econoniv,
• Prudent review of expenditures,
• No shifts of unfunded mandates from other levels of governments,and
• No future voluntary or involuntary annexations by the City of Wilmington.
Budget Director Cam Griffin presented the following information and highlighted the major changes found
in the draft budget:
General Fund-Percentage Change of Budgeted Expenditures by Activitv
FYII-12 FY12-13 Percent
Adopted Recommended Difference
General Government Departments $ 31,470,314 $33,000,741 4.86%
Human Services 55,242,386 54,224,962 -1.84%
Public Safety 10,940,909 11,439,019 4.55%
Sheriffs Office 35,031,852 37,165,828 6.09%
Economic&Physical Development 1,170,816 789,730 -32.55%
Cultural&Recreational 10,255,878 11,410,922 11.26%
Education 98,378,614 101,661,866 3.34%
Debt Seivice 18,237,826 17,325,476 -5.00%
Transfers 812,034 1,018,335 25.41%
Contingencies 735,000 635,000 -13.61%
Total Budgeted Expenditures $262,275,629 $268,671,879 2.44%
Major adjustments:
1) General Government Departments increase primarily due to:
a) Information Technology increases ($.5 million) for needed seiner equipment expansion, mandated
implementation of criminal justice security system, and other upgrades due to obsolete programs and/or
hardware.
b) Property Management increases ($0.1 million) due to increases in utility rates, natural gas, and fuel prices
and($1.0 million)for vehicle purchases.
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 32
BUDGET WORK SESSION,APRIL 10,2012 PAGE 363
2) Human Sei ices decrease primarily due to:
a) Health Department reductions ($1.9 million) associated with the transfer of Animal Control positions and
operations to the Sheriff's Office, elimination of positions and operating expense reductions due to State
cuts,and lower than anticipated finding for self-supporting programs.
b) Social Sei ices reductions were offset by an increase($0.6 million)associated with unfreezing 5 positions,
fimding child day care, additional vehicles, Federal and State cuts to Temporary Aid to Needy Families
(TANF)finded programs.
c) Southeastern Center for Mental Health increase of($0.2 million).
3) Public Safety increases in Sheriff s Office due to transfer of Animal Control to the Sheriffs Office and fimding
of all School Resource Officers in the Sheriffs Office, which will be offset with decreased contribution to
Schools. Emergency Management and 9-1-1 Communications increases due to additional need for firll-time
and temporary positions for call taking and dispatch.
4) Economic and Physical Development decrease primarily due to the elimination of incentive payments for two
outside companies($0.5 million)and partially offset by an increase in economic fimding($0.1 million).
5) Cultural&Recreational increase primarily due to Parks taking over landscaping for Schools($354,549),ground
maintenance for 8 fire stations, and site improvements for non-park properties including FEMA properties and
cemeteries.
6) Education increase due to:
a) Increase in CFCC bonded debt($1.5 million)and fimding for operating expenses($1.0 million).
b) Schools operating fiords will increase for retirement ($425,000) and health insurance ($250,000) for
County-finrded positions.
7) Debt Sei ice decrease due to reductions($1.2 million)in the amount of Cape Fear Public Utility Authority debt
held by County. (CFCC and Schools debt classified as Education)
8) Transfers increase due to increase in Law Enforcement Officers Pension and an increase in Other Post-
Employment Benefits transfers($0.2 million).
9) Contingencies reduced slightly, but remain significant given continued uncertainty about the impact of State
actions on the County Budget.
General Fund-Percentage Change of Budgeted Revenues by Class
FYII-12 FY12-13 Percent
Adopted Recommended Difference
Ad Valorem Taxes $156,967,697 $160,084,721 1.99%
Sales Taxes 46,541,536 47,573,764 2.22%
Other Taxes 3,033,332 2,840,204 -6.37%
Intergovernmental Revenues 37,471,061 36,450,127 -2.72%
Charges for Sei ices 8,598,148 8,939,421 3.97%
Other Revenues 6,663,855 5,783,642 -13.21%
Appropriated Fund Balance 3,000,000 7,000,000
Total Budgeted Revenues $262,275,629 $268,671,879 2.44%
Explanation of Changes:
1) Ad Valorem Taxes based on a revenue-neutral tax rate of 55.4 cents,an estimated base of$29,002,500,000,and
a 98.2%collection rate. The revenue-neutral tax rate allows for an annual average growth rate of 1.10% since
the last revaluation.
2) Sales Taxes based on a 4.5%growth from FY10-11 actual adjusted for changes in distribution.
3) Other Taxes decrease primarily due to loss of revenue from expiration of Cable Franchises.
4) Intergovernmental Revenues decrease primarily due to Federal cuts to the TANF program, decreases in State
fimding for administration and social work sei ices, loss of various grants, as well as loss of revenue received
from the Schools for deputies,which is now offset in the County's Schools contribution.
5) Charges for Sei ices increase primarily due to increase in Sheriffs Office Civil Fees, which were increased by
the State after the FYI 1-12 budget was adopted.
6) Other Revenues decrease primarily due to a reduction in debt sei ice repayments.
7) Appropriated Fund Balance of$7 million due to the County's strong financial health and desire to keep the ad
valorem tax rate constant.
Recommendation to Purchase 55 Count-v Vehicles
• DSS: 10 new vehicles; 2 replacements
• Parks Department for Schools(landscaping): 2 tucks
• Other departmental vehicle replacements: 11
• Parks/Gardens/SRC: 2 vehicles for trade personnel and 1 mini-van
• Sheriffs Office: 25 vehicles,2 vans with cages,and 1 replacement Animal Sei ices Truck
An analysis showed that purchasing vehicles would be more cost effective than mileage reimbursement to
employees over a five year period.
Other Significant Assumptions
• Funding in the amount of$600,000 included for a 1%market adjustment of the salary schedule.
• Increase in Workers Compensation of$150,000.
• Decrease in Unemployment Insurance in the General Fund of$250,000. In FY12-13,Unemployment Insurance
will be split between fiords.
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 32
BUDGET WORK SESSION,APRIL 10,2012 PAGE 364
• The retirement rate decreases in FY12-13 from 6.97%to 6.83%,a$90,000 savings:and rate increases in FY13-
14 from 6.83%to 7.61%,a projected $500,000 increase.
• Funds recommended for economic development of$400,000 in FY12-13. ($271,086 budgeted in FYI 1-12)
with current balance of$172,336, which will be transferred to FY12-13 to help with economic development
efforts.
• Repairs to Cobb Annex will be taken from fiord balance and set up as a Capital Project The balance of
$384,340 can be transferred to the Capital Project.
Fire Sei ice District Budget
• Continues to find existing operations at the current sei ice level assuming a revenue-neutral rate and using
$424,000 of fiord balance.
• Provides for hydraulic tools for two existing engines and purchase of a replacement engine.
o Installment debt of one$50,319 payment assumed for FY12-13 and four per year thereafter.
• Includes staffing software to reduce administrative time filling shifts, as well as allow better management of
overtime costs.
• Replacement generator for Federal Point Station. (Existing generator insufficient to handle required load.)
• No adjustment for the Monkey Junction annexation due to the uncertainty.
Environmental Management Budget
• Assumes no change to the tip fee($59/ton)with an annual tonnage of 200,000 tons.
• Funds current operations at the Landfill and administration,and SEF(temporary security).
• Recycling Division will continue to operate the existing drop-off sites.
• Includes finds for the purchase, set up and operations of a small-scale"proof of concept" sorting station.
• Staffed with a contract sei ice temporary to sort out and separate plastics from the drop-off site
recN-clables.
• Projected to be self-supporting and will reduce the overall net County cost of the recycling program by
$381,000.
• Provides for the final $720,351 repayment of the General Fund loan and the annual $38,500 repayment of the
administration land purchase.
• Includes$500,000 in unemployment expense associated with the RIF.
• Environmental Management will pay $443,957 in indirect cost to the General Fund (an increase of
approximately$95,000).
• Plans to purchase outright: a GPS Rover and Receiver Expansion for the landfill, a lighting system for the
working face, a gator for yard pick-up,and a roll-off container.
• The recycling program plans to purchase a replacement roll-off truck.
• Includes a transfer to Capital Projects of:
o $1.1 million to complete construction of Cell 6E and partial closure of Cell 5,
o $200,000 for phase 2 of the southern property permitting process,
o $250,000 for initial design engineering work for west side of Cell 6 partial closure.
Education- Summary of Revenues and Expenditures
FY 11-12 FY12-13 FY12-13 Percent
Adopted Requested Recommended Difference Difference
Expenditures:
Current Operating $61,808,440 $62,536,740 $61,681,740 $(146,700) 0%
Capital Outlay 750,000 750,000 750,000 0
Total Current Expenditures $62,558,440 $63,286,740 $62,411,740 $(146,700) 0%
NHC Schools Debt Sei ice $22,315,648 $21,541,425 $21,759,868 $(555,778) -2%
Total Expenditures $84,874,085 $84,828,166 $84,171,806 $(702,478) -1%
Revenues:
Transfer from General Fund $72,507,489 $74,061,036 $73,574,831 $1,087,342 1%
Transfer 1/2 Sales Tax 9,266,597 9,022,165 9,109,336 (157,261)
Other 1,600,000 244,964 351,837 (1,248,163)
Appropriated Fund Balance 1,500.000 1,500,000 1,135,604 364,396 -24%
Total Revenues $84,874,086 $84,828,166 $84,071,608 $(702,478) -1%
(Current amount for school operations includes an increase of$675,000 for increase in retirement and health
insurance cost for locally funded positions. This amount is offset for a decrease of$821,700 for the County
to find the School Resource Officers directly and provide landscaping sei ices for the School System. The
difference in the requested and recommended amount is the$875,000 that the School Board requested to fiord
a possible 2%increase for locally funded positions.
General Fund
Cape Fear Community College Expenditures
CFCC-Contribution $6,191,767 $8,706,153 $7,191,787 $1,000,000 16%
CFCC Debt Sei ice $10,412,761 $11,873,103 $11,873,103 $1,460,342 14%
Total CFCC $16,604,528 $20,579,256 $19,064,570 $2,460,342 15%
Other Material Provided to the Board:
• Debt Sei ice Impacting General Fund
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 32
BUDGET WORK SESSION,APRIL 10,2012 PAGE 365
• Debt Sei ice on Bonded and Installment Purchases for Next Five Years for the following:
• General Fund
• Public Schools
• Special Fire District
• Environmental Management
• Requested and Recommended Capital Outlay Projects for FY12-13
• Budget Calendar for FY12-13
• Actual and Effective Tax Rate Comparisons for FYI 1-12
The Commissioners reviewed and discussed the draft budget with Staff responding to questions. The
Board will need to review and decide on the finding request for Outside Agencies. Staff was requested to provide
the following additional information:
• Provide an analysis or investigate on whether it would be more economical to purchase new vehicles using
natural gas for local travel and dual engines using gasoline and natural gas for out-of-town trips.
• Provide line item budget showing the$16.9 million reduction in expenses(requested and recommended).
• Re-examine projection of 4.5% growth in sales tax and possibly reduce the projected revenues to a more
conservative amount.
• Provide the total property value for the counties used in the Actual Tax Rate Comparison for FYI 1-12 chart.
• Schedule opportunities to inform the public on the proposed tax rate and the effect on the new property values.
• Determine whether private/public partnerships can be used in the renovation of 320 Chestnut Street property.
• Review contract agreement for the Schools' Red Light Camera Program.
• Reexamine needs for fire engine if the City's annexation plans proceed.
In conclusion, County Manager Shell said that the proposed budget is fiscally responsible and maintains the
quality of life programs that citizens support and enjoy in New Hanover County and is based on the Board's desire
to keep the tax rate constant. The Commissioners were requested to provide further feedback as the Recommended
Budget is prepared and suggested additional work sessions be scheduled if needed.
ADJOURNMENT
There being no further discussion, Chairman Davis adjourned the meeting at 4:45 p.m.
Respectfully submitted,
Teresa P.Elmore
Deputy Clerk to the Board