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HomeMy WebLinkAbout2019-01-17 Agenda Review and Budget Workshop NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 BUDGET WORK SESSION AND AGENDA REVIEW, JANUARY 17, 2019 PAGE 277 ASSEMBLY The New Hanover County Board of Commissioners held a Budget Work Session and Agenda Review on Thursday, January 17, 2019, at 2:00 p.m. in the Harrell Conference Room at the New Hanover County Government Center, 230 Government Center Drive, Wilmington, North Carolina. Members present: Chairman Jonathan Barfield, Jr.; Commissioner Patricia Kusek; Commissioner Woody White; and Commissioner Rob Zapple. Vice-Chairwoman Julia Olson-Boseman was absent. Staff present: County Manager Chris Coudriet; Deputy County Attorney Kemp P. Burpeau; and Clerk to the Board Kymberleigh G. Crowell. Chairman Barfield called the Budget Work Session and Agenda Review meeting to order and announced that the purpose of the meeting is to discuss budget priorities for Fiscal Year 2019-2020 and discuss the agenda items for the January 22, 2019 Regular Meeting. REVIEW AND DISCUSSION OF STRATEGIC PRIORITIES FOR FY2019-2020 Chief Financial Officer Lisa Wurtzbacher stated the purpose of the meeting is to identify and understand the priorities for FY2019-2020. She introduced Budget Officer Sheryl Kelly and asked her to start the presentation. Budget Officer Kelly shared the following information:  Budget Calendar:  November 27, 2018: Budget Kickoff  January 17, 2019: Board of County Commissioners Budget Priority Meeting  January 25, 2019: Continuation Budget Submissions  February 1, 2019: New Strategic Initiatives  March 8, 2019: County Manager meeting with Departments  End of March to early May 2019: Budget Work Sessions  June 17, 2019: Budget adopted County Manager Chris Coudriet reviewed the current priorities in the 2018-2023 County Strategic Plan. He explained that County staff is working hard to deliver the priorities to the public and the expectation is to be a model of good governance. The priorities can be adjusted, if the Commissioners so desire, in order to focus on specific areas that need more attention or to expand and grow. Budget Officer Kelly continued with the following presentation:  New Hanover County Strategic Plan 2018-2023:  Three focus areas: Intelligent Growth and Economic Development, Superior Education and Workforce, and Superior Public Health and Safety  Expansion Funding Highlights – Strategic Focus Areas:  Intelligent Growth and Economic Development: The total funding presented for Intelligent Growth and Economic Growth is $1.7 million for FY17-18 and $1.9 million for FY18-19, for a combined total of $3.6 million as follows:  FY17-18:  $525,000 initial contribution to Cape Fear Public Utility Authority (CFPUA) for fire flow along US 421 as part of water/sewer installation (Board priority from 2014 Garner Report. Follows the completion of an engineering study in FY15-16 and Board approval for funding)  $312,000 for multi-use path along Military Cutoff Extension  $690,000 for incentives payments for private investment and job creation, and $75,000 for regional economic development marketing (Choose Cape Fear)  $50,000 for planning phase of Project Grace  $40,000 for market study of county-owned land on Blue Clay Road  $60,000 for Northern Water Main engineering study  FY18-19:  $525,000 contribution to CFPUA for fire flow along US 421 as part of water/sewer installation  $675,000 for multi-use path along Market Street  $250,000 for partnership with Wrightsville Beach for improvements to Johnny Mercer’s Pier  $214,000 for activities related to Project Grace RFP/RFQ and for conversion of Cape Fear Museum site into a collection and research center  $100,000 to improve readiness and suitability of Blue Clay Road property for return to private sector for industrial development  $130,000 for Phase 2 of a stormwater utility study  Superior Education and Workforce: The total funding highlighted under this strategic focus area is $8.9 million, which includes $2.8 million for FY17-18 and $6.1 million for FY18-19 as follows:  FY17-18:  1.5% increase in Average Daily Membership rate (ADM) (from $2,660 to $2,700): NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 BUDGET WORK SESSION AND AGENDA REVIEW, JANUARY 17, 2019 PAGE 278  Equates to $2.3 million increase for current expense  Includes $476,000 to increase the number of Pre-K classrooms by three (three-year plan)  Additional $85,000 for New Hanover County Schools (NHCS) capital over prior year  Four new positions to enhance school safety  $212,000 for infrastructure improvements to facilitate construction of workforce housing by Cape Fear Habitat for Humanity  Initiated ongoing collaboration with Cape Fear Community College (CFCC) and Chamber of Commerce on apprenticeship program to better align workforce skills with private sector needs (no appropriation required)  FY18-19:  3.7% increase in Average Daily Membership rate (ADM) (from $2,700 to $2,800):  Equates to $3.7 million increase for current expense  Includes $487,000 to maintain three additional Pre-K classrooms  Additional $1.6 million for NHCS capital over prior year  11 new positions to enhance school safety  New position to focus on workforce housing policies (shared with City of Wilmington)  Approved conveyance of parcels of county-owned land to registered nonprofits for the construction of workforce housing  Superior Public Health and Safety: Total funding for the enhancements presented is $7.1 million, which includes $3.5 million for FY17-18 and $3.6 million for FY18-19 as follows:  FY17-18:  $265,000 in funding for jail diversion program through LINC  New Crime Specialist position, and new position to support the Elements Youth Violence Intervention Program  $570,000 for communications equipment to assist emergency responders  $1.7 million towards the construction of a new Health and Human Services facility, and $524,000 to support the expansion of the Crime Scene Investigation Building  $300,000 for design of The Healing Place, a residential facility for substance abuse treatment  FY18-19:  $265,000 in continued funding for jail diversion program through LINC  $100,000 to support a federal prosecutor who will focus on local cases involving gangs and drug charges  $1.4 million for communications and other equipment to assist emergency responders  $1.5 million to begin the design of a new juvenile justice building  $315,000 for TIDES, a treatment program for pregnant women with opioid use disorder  FY19-20 Budget: Preliminary Projections for General Fund:  FY18-19 Revenues by Category – General Fund (Total = $332.9 million):  Ad Valorem: 57%  Fund Balance: 2%  Other Revenues: 1%  Sales Taxes: 23%  Charges for Services: 4%  Intergovernmental Revenues: 11%  Other Taxes: 1%  Other Financing Sources: 1%  Revenue Trends for General Fund:  FY14-15:  Ad Valorem: 57%; Sales Taxes: 20%; Intergovernmental Revenues: 15%; Charges for Services: 3%; Other: 2%; and Fund Balance: 3%  Revenue: $290.5 million (4.8% increase)  FY15-16:  Ad Valorem: 58%; Sales Taxes: 21%; Intergovernmental Revenues: 15%; Charges for Services: 4%; Other: 2%; and Fund Balance: 0%  Revenues: $298.6 million (2.8% increase)  FY16-17:  Ad Valorem: 59%; Sales Taxes: 20%; Intergovernmental Revenues: 15%; Charges for Services: 3%; Other: 3%; and Fund Balance: 0%  Revenues: $325.4 million (8.9% increase)  FY17-18:  Ad Valorem: 60%; Sales Taxes: 22%; Intergovernmental Revenues: 12%; Charges for Services: 3%; Other: 3%; and Fund Balance: 0%  Revenues: $321.9 million (1.1% decrease)  FY18-19:  Ad Valorem: 57%; Sales Taxes: 23%; Intergovernmental Revenues: 11%; Charges for Services: 4%; Other: 2%; and Fund Balance: 2%  Revenues: $332.9 million (3.4 % increase) NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 BUDGET WORK SESSION AND AGENDA REVIEW, JANUARY 17, 2019 PAGE 279  Revenue Trends for General Fund: Ad Valorem Tax:  FY14-15: 0.1%; Ad Valorem Collections: $164.7 million (0.39% decrease)  FY15-16: 1.5%; Ad Valorem Collections: $173.5 million (5.37% increase)  FY16-17: 2.1%; Ad Valorem Collections: $192.1 million (10.70% increase)  FY17-18 (Revaluation Year): 9.5%; Ad Valorem Collections: $193.2 million (0.57% increase)  FY18-19: 1.4%; Ad Valorem Collections: $189.1 million (2.12% decrease)  Revenue Trends for General Fund: Sales Taxes (includes collections for schools):  FY14-15: 9.50%; Sales Taxes: $57,992,719  FY15-16: 6.06%; Sales Taxes: $61,508,597  FY16-17: 5.89%; Sales Taxes: $65,128,617  FY17-18: 6.46%; Sales Taxes: $69,332,865  FY18-19: 10.33%; Sales Taxes: $76,494,634  Preliminary Revenue Estimates for FY19-20 – General Fund: Revenue Category Projection Ad Valorem (assumes 1.5% growth, no change in tax rate) $191,919,422 Sales Taxes (assumes 4.5% growth, no change in distribution) $75,756,893 Other Taxes (assumes no growth) $4,484,160 Intergovernmental Revenues (assumes no growth) $35,832,296 Charges for Services (assumes no growth) $12,194,509 Miscellaneous Revenue (assumes no growth) $2,764,906 Appropriated Fund Balance - Capital Projects $1,925,000 Appropriated Fund Balance – Debt Service $5,184,948 TOTAL $330,062,134 Chief Financial Officer Lisa Wurtzbacher stated that the general fund balance is a source of revenue that is drawn from for one-time expenses. She presented the following information:  Fund Balance – General Fund:  FY17-18:  Total fund balance of $107.2 million  $616,000 use of fund balance in FY17-18  Unassigned fund balance of 21%  $1.9 million reserved for future capital improvement projects (CIP)  Fund Balance:  Non-spendable: $61.8 million  Assigned/committed: $17.4 million (restricted internally by Board action, used for CIP for example)  Restricted: $27.9 million  Unassigned: $0.1 million  FY18-19:  Original appropriation: $7.5 million  Additional appropriation: $2.2 million  Hurricane appropriation: $30.5 million  FY18-19 Expenditures by Category – General Fund: $332.9 million  Education: 28%; Public Safety: 20%; Economic and Physical Development: 1%; Human Services: 17%; Cultural and Recreational: 4%; General Government: 13%; Transfers: 1%; Education Debt Service: 12%; and Debt Service: 4%  Expenditure Trends – General Fund:  FY14-15:  Human Services: 18%; Public Safety: 17%; Education: 28%; Debt Service: 6% Education Debt Service: 12%; and Other: 19%  Expenditures: $290.5 million (5.6% increase)  FY15-16:  Human Services: 18%; Public Safety: 17%; Education: 28%; Debt Service: 5%; Education Debt Service: 12%; and Other: 20%  Expenditures: $298.6 million (2.8% increase)  FY16-17:  Human Services: 18%; Public Safety: 18%; Education: 28%; Debt Service: 5%; Education Debt Service: 13%; and Other: 19%  Expenditures: $312.2 million (4.5% increase)  FY17-18:  Human Services: 16%; Public Safety: 19%; Education: 28%; Debt Service: 5%; Education Debt Service: 13%; and Other: 20%  Expenditures: $319.6 million (2.4% increase)  FY18-19:  Human Services: 17%; Public Safety: 20%; Education: 28%; Debt Service: 4%; Education Debt Service: 12%; and Other: 19%  Expenditures: $332.9 million (4.2% increase) NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 BUDGET WORK SESSION AND AGENDA REVIEW, JANUARY 17, 2019 PAGE 280  General Fund Expenditures – Education:  FY14-15:  Total Funding: $67.9 million; Funding per ADM: $2,575  FY15-16:  Total Funding: $70.6 million; Funding per ADM: $2,600 (1%)  FY16-17:  Total Funding: $72.9 million; Funding per ADM: $2,660 (2.3%)  FY17-18:  Total Funding: $75.1 million; Funding per ADM: $2,700 (1.5%)  FY18-19:  Total Funding: $78.8 million; Funding per ADM: $2,800 (3.7%)  Outstanding Debt as of 6/30/2018:  Cape Fear Community College: $124.8 million  New Hanover County Schools: $171.8 million  Parks and Recreation: $20.1 million  Other General Government: $62.3 million  Fire Services: $9.1 million  Environmental Management: $0.2 million  FY19-20 Debt Service: Note - $5.1 million reserve available to cover debt service increase in FY19-20: FY18-19 Budget FY19-20 Projected FY20-21 Projected Cape Fear Community College $15,520,520 $15,201,664 $13,976,544 New Hanover County Schools $26,153,949 $31,338,697 $30,044,104 Parks & Recreation $2,295,220 $2,227,926 $2,494,713 General Government $10,915,771 $14,265,763 $13,789,961 Total Debt Service Fund $54,885,460 $63,034,050 $60,305,322 Increase/(Decrease) from prior $278,616 $8,148,590 ($2,728,728) year  FY19-20 Debt Capacity: Limit FY 17-18 FY 18-19 FY 19-20 FY 20-21 Actual Projected Projected Projected Outstanding Debt Per Capita 2,200 1,681 1,959 1,735 1,520 Capacity – Per Capita 119,918,949 56,397,891 110,636,846 164,140,361 Outstanding Debt to 1.6% 1.2% 1.1% 1.3% 1.2% Assessed Value Capacity – Assessed Value 151,676,783 88,632,093 143,354,560 197,348,842 Debt Service to GF Expenses 20.0% 15.8% 16.0% 18.4% 17.4% Capacity – Debt Service 13,494,799 12,764,667 5,169,398 8,665,562 Budget Officer Kelly shared information regarding preliminary continuation estimates, which are expenditures required to continue existing operations within the County. The preliminary figures are estimated on known and likely increases. County Manager Coudriet stated the County is at a high level of success for a 1% increase for employee medical coverage. The industry average increase over the last ten years is between five to seven percent. Year after year, the County has beaten the industry average, and some years there have been no planned increase in premium costs.  Preliminary Estimate for FY19-20 Continuation Budget – General Fund: Category Budget FY18-19 Budget $332,859,432 Plus Medical Increase (assumes 1%) $177,000 Plus Retirement Increase (3%) $205,000 Plus Annualization of New Library and ECHO Farms $150,000 Plus Operating Increases (assumes 1%) $400,000 Plus Debt Service Adjustment $8,148,590 Plus Adjustment for Capital Projects $2,200,000 FY19-20 Preliminary Continuation Budget* $344,140,022 *assumes level funding for capital outlay  FY19-20 Continuation Budget for General Fund – Other Considerations:  Cost of Living Adjustment (COLA)/Market Increase:  FY18-19: Greater of $1,000 or 2.0%  FY17-18: Greater of $1,200 or 2.5%  FY16-17: $600  FY15-16: 1.7%  FY14-15: 2.0%  Five-year Maintenance and Repair Plan for County Facilities  Funding for Non-County Agencies NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 BUDGET WORK SESSION AND AGENDA REVIEW, JANUARY 17, 2019 PAGE 281  Non-County Agency Funding:  FY18-19:  Human Services - $619,000:  23 agencies  Funding ranges from $4,000 to $56,000  Applications reviewed by Non-County Agency Funding Committee for recommendations  Seven programs and services approved to be moved to vendor status:  Will be funded by relevant county department  $235,000 less to be allocated due to vendor status change  Economic Development - $430,000:  10 agencies  Funding ranges from $2,000 to $200,000  Reviewed by County Manager  Total: $1 million  Priorities for FY19-20:  Prioritizing among the Strategic Focus Areas and Objectives:  Priorities outside the Strategy  Identification of specific initiatives Chairman Barfield thanked Ms. Wurtzbacher and Ms. Kelly for the presentation and stated he thinks everyone is line with the information as presented. In discussion about the strategic plan from last year’s projections and what percentage has been accomplished to date to help with determining how to allocate moving forward, County Manager Coudriet stated he does not know if there is anything complete in terms of delivering to the Board outcomes and targets. While staff has been unable to begin collecting specific data on targets or desired outcomes, at a minimum the thought is that the Board would want staff to continue where there is a financial requirement with the things that are in play as they are aligned to outcomes in 2023. There are also items that are not current and/or obvious that may need to be added to the map. The map has not been setup in a way to have annual progress on the specific targets. What is known at this time is that the first year’s data related to childhood education was outstanding. The second year data was just received in October and he cannot speak to that portion of it yet. There are no measurable data points. The 2018-2023 strategic plan is being managed by staff similar to how the first five-year plan was managed in which the ultimate final results were brought to the Board in September 2017. Under Superior Public Health and Safety, Chairman Barfield stated that the Parks Conservancy, Inc. is exploring installing additional workout equipment at some of the County parks. He thinks a lot has been done to enhance the parks through projects such as widening the walking paths, additional basketball courts, and the Skatepark installation. He asked County Manager Coudriet to discuss what are some of the next steps that can be taken with the County parks to enhance the goal to “increase access to programs to prevent and reduce obesity.” County Manager Coudriet explained that most of the work done around the parks is completing the projects in motion as opposed to beginning too many things and only doing about 50% of them. For the most part, it would be continuing to invest in items that are currently in progress such as the multi-use trails and developing out the balance of the parks. There is money in the capital plan to begin the next phase of the Northern Regional Park that has a walking trail around it and he is sure what will be built into that is the fitness portion. There is also a significant plan to continue connectivity on Market Street with a multi-use path which is being done through a partnership with the Wilmington Metropolitan Organization (WMPO) and the North Carolina Department of Transportation (NCDOT). A recommendation that will be included in the budget is to do the actual design and planning for Battle Park. The first step in this process is to get the design portion committed. The community around Battle Park has agreed to help Parks and Gardens Director Tara Duckworth and her team with the design. In regard to Echo Farms, there is a significant capital project in place to complete renovations, pool renovations, etc. A brief discussion was held about Intelligent Growth and Economic Development and to leverage the County’s relationship with Cape Fear Public Utility Authority (CFPUA) to provide opportunities for builders to have lower costs to develop affordable housing outside of giving away land. Commissioner Kusek, who also is a member of the CFPUA Board, stated this was part of the discussion at today’s Affordable Housing Coalition meeting. It’s going to be Commissioner Zapple and herself starting a dialogue with CFPUA and will need to start as the staff moves into the budget process. The issue is how to pay for it. The entire dialogue with CFPUA needs to be expanded on a regular basis especially with that leadership team to understand where this Board is coming from. Commissioner Zapple, who also is a member of the CFPUA Board, stated he agrees with Commissioner Kusek and thinks it has already been seen through the partnerships between the County, CFPUA, and developers in such projects as the Highway 421 project and the water and sewer expansion around Sidbury Road in the northern part of the County. Projects such as this are the beginning of a path for the future. There are already a lot of plans laid out for the northern portion of the County around Sidbury Road. However, he would like to explore that more to be able to accomplish what is being said today, leveraging all of these partnerships for the quality of life here in the County. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 BUDGET WORK SESSION AND AGENDA REVIEW, JANUARY 17, 2019 PAGE 282 County Manager Coudriet stated that the cost for a preliminary engineering report (PER) of the extension of water and sewer via Sidbury Road is approximately $100,000. There have been preliminary discussions with the CFPUA technical staff and he would recommend to the Board that the cost of the PER be included in the budget. It is very similar to the cost of the PER for the Highway 421 project, and would allow an in-depth plan to be developed on how to route the water and sewer. Each time the County has funded a PER there has been some responsiveness either by the CFPUA or some other funding sources to build the infrastructure. His understanding from CFPUA is that the Sidbury Road project is the last major line to run for the infrastructure. In terms of a leveraging example, if the Board spends money for the PER and perhaps ultimately agrees to fund construction, there are conditions and concessions that can possibly be negotiated with CFPUA and others to make sure of the cost to access the infrastructure in order to keep the cost of construction down or allocating share of the capacity should be reserved for housing product that is within some defined amount of fair market value. While the decision would rest with the CFPUA, it does open up a lot of policy options including some that may not require any money. It may be leveraging the Board’s investments to get some of the policy positions it wants out of it. Further discussion was held about the average low-level county employee that starts out in the low $30,000 range that there is not a house the person can really buy in this County with that wage without additional income. The need definitely needs to be addressed. Commissioner Kusek stated that these type of concessions being discussed will have to be done not only with CFPUA, but with the City, the development community, etc. It is going to take having everybody at the table and having a little more personal investment in this to work towards solving this problem. Commissioner Zapple stated one small step towards this is the partnership between the Cape Fear Habitat for Humanity, the County, and the City to provide the infrastructure that will be in place to help future growth on Daniel Boone Trail off Gordon Road. This project could be a template used going forward in the future. Regarding Superior Education and Workforce, Chairman Barfield stated that during the New Hanover County Schools Legislative Luncheon, there was a request for the Board to think about a future school bond. The County is still trying to pay for the one currently in place. While he knows the County numbers are very tight when it comes to debt, it may be something the Board needs to put on the horizon for the next four or five years. Commissioner Zapple stated this is one of the reasons for advocating for a statewide school bond as a statewide issuance would take some of the pressure off. He thinks the Board can use some of the advocacy here in the County for the statewide school bond. While different total amounts have been discussed, if it were to pass the funds the County would receive would help to fill the gap and a portion of the needs discussed by the School Board. In regard to the current spending for the Pre-K program and adding 45 desks and if that meets the goal of “75% of children are ready for kindergarten on the Kindergarten Entry Assessment,” County Manager Coudriet stated that the goal is to get to the 75%. In working at a staff level with Superintendent Markley’s team, both sides agreed it needed to be a pilot project to prove the efficacy of what the school system is doing. The current model being funded will not achieve the 75% goal, but it is generating incredible results on the 45 kids that were in it and the 45 new ones this year. The data is demonstrating with that level of engagement of all of these students, whether they were already on the metrics that the school measures by, which is a statewide model, every child is ahead of where they are or ahead of where they should be. As such, it does setup that the outcome of 75% can be achieved when it can be scaled or chosen to scale, and the school system has the bandwidth to scale it to the number of kids that are most in need. In response to Board questions, County Manager Coudriet stated that there is not a determined number that would need to be reached to meet the 75%. He believes the number can be developed in partnership with the school system to know what it would take and staff will work with the school system to prepare a target number. The number will vary year to year as the rate of natural and in-migration of people will greatly inform that. Commissioner Zapple stated that he thinks it has been a terrific investment on the County’s part. In regard to the school bond, County Manager Coudriet stated that for the Board’s planning perspective statutorily there are really only two times the school system can ask a board to run the school bond. It is when there are statewide general elections so the earliest for this County would be the March 2020 primary election or the November 2020 general election. Those are the only two times in the next 24 months that the Board is authorized to run it. A brief discussion was held regarding the County’s fund balance and having to make hurricane appropriations. Ms. Wurtzbacher explained what needs to be kept in mind is that not all of the money has been spent. However, if that were the case there would be approximately $22.8 million left in the unassigned fund balance and assuming FEMA reimbursements were not received this year. In response to Board questions, Ms. Wurtzbacher confirmed that the $22.8 million is taken from the unassigned fund balance of $61 million. No reimbursement has been received yet, but staff knows the documentation submission has made it through the initial review process. What was submitted was for initial debris pickup in the amount of over $9 million. The review process went very well and the documentation for it has been well received. Regarding what the percentage would be if the fund balance is down to $22.8 million in relation to the fund balance policy, Ms. Wurtzbacher stated she is estimating it to be possibly 8%. The percentage is predicated on the expenses in the current year and the fund balance remaining in that current year. The current percent right now is 21%. In response to Board questions about the value of a penny as it relates to ad valorem tax received, Ms. Wurtzbacher stated that it is $3.4 million for every penny. In regard to the quarter-cent sales tax, $15 million was collected last year. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 BUDGET WORK SESSION AND AGENDA REVIEW, JANUARY 17, 2019 PAGE 283 Commissioner White stated that in his six years as a commissioner, staff has conservatively estimated ad valorem and sales tax consistently under actual collections each year without exception, he thinks, and that is a good th thing. By doing so, the County reaps the benefits on June 30 when the reconciliation comes in. In regards to the estimated $14 million “deficit”, he thinks a few things are going to happen to close the gap: a) This will be the seventh year in a row of conservatively underestimating ad valorem and sales tax, that will organically close some; b) $5.1 million is going to be allocated which will close it some; and c) he feels very confident the federal government is th going to do what it needs to do. He believes fund balance is only relevant on June 30 of each year and should really only be looked at once year. He thinks bond rating agencies only look at it every two to three years rather than every year. In regard to educational funding, Commissioner White stated that what is not show in the information presented is for the recurring spending of $61.9 million for three years in a row. In FY14-15, it increased to approximately $67.8 million and has consistently increased moving forward. It’s an incredible investment and the benefits can be seen in rising test scores and so forth. However, at the same time the in-migration of kids is leveling off and is projected to drop a little bit next year and that needs to be remembered. In regards to the potential school bond request, in looking at the bonds generationally when they became the means by which communities financed infrastructure thirty or forty years ago, it comes in six, seven, eight or even nine year cycles. There is no statutory requirement to have one every five years or even every ten years. The County had one in 2014 and before that there was one in 1997 or 1998. Ideally, he thinks it would be nice to have one in 2020, but does not want the Board to neglect a conversation on waiting until 2022. In looking at the debt schedule, the County has about a $17 million variance from a 24-month budget cycle from 2020 and 2022. The capacity is incredible. The school system may ask for one thing in 2020 and possibly could ask for something else in 2022 in terms of a number. These are just his impressions as of today and to him the sky is not only not falling, it is in very good shape. He is encouraged by what he saw today during the presentation. A brief discussion was held about the current ad valorem tax value in comparison to what it was in 2008/2009 before the revaluation. County Manager Coudriet explained that from when the County lost approximately $5 billion in tax base as of December 31, 2011 to now, all of the lost revenue has been recovered as st of January 1 of last year from the major crash. The County went from $34 billion down to about $29 billion at that time, which from across the County, was about a 15% to 16% reduction in overall value in the base. There is another revaluation that should become effective January 1, 2021 which will keep the County on the four-year cycle. Commissioner Zapple stated regarding discussions about the need for a middle school that will cost approximately $35 million, some of the debt capacity referenced by Commissioner White would be necessary to make that happen. He thinks that project needs to also be placed on the horizon for discussion. He thinks the request for the middle school will come forward quickly from the school board along with several other items. A brief discussion was held about the ADM funding increases between 2014 and 2015 and then again from 2016-2017 to 2018-2019. County Manager Coudriet stated that the increase in the number of school resource officers (SROs), school nurses, and mental health professionals in the school system were done in addition to the $2,800 per pupil funding. These are additional items the Board is doing through the general fund. Beyond the $2,800, the Board is absorbing more than another million dollars just last year alone in additional support for the school system. There are also support services in the form of Parks and Gardens maintaining the fields and such that are not in the $2,800. While the school system possibly used some of the $2,800 to do school safety things, the Board can rest well knowing what it has done has been above and beyond that. Commissioner Zapple stated that is a tremendous investment in the school system. Chairman Barfield stated that for him, in looking at the strategic map and the priorities, he does not know that the Board is going to veer too much from it as those priorities are still pressing and relevant. He knows there will be a concerted effort to spend resources for Project Grace as that comes on line. Also the ongoing epidemic opioid situation may require different funds outside what the County is doing with Trillium and Healing Place. However, he does not know there is a whole lot more that the Board will be focusing on. Discussion was held about the outside agency funding. Commissioner Zapple stated he believes there has been tremendous success across the board with each agency that was approved to receive funding. He also thinks the Board should consider increasing the amount of money that is being allocated for the entire pie. This way, more non-profits who are doing work and meet the qualifications of what the County wants have an opportunity to benefit. In order to stay at the status quo, if he has calculated correctly, an additional $235,000 is needed just to keep to the $1 million level. County Manager Coudriet stated it would be $619,000 for human services. The $235,000 represents the seven agencies that have been moved to vendor status. County Manager Coudriet stated that to keep it as status quo would be $235,000, but the only things that have been moved effectively to vendor status at this point are in the human services category. The question would be does the Board grow the $1 million as the target or keep the $430,000 for economic development and grow the $619,000 to have more than $1 million. Commissioner Zapple stated that increasing an additional $235,000 across the board would be the way to consider. Commissioner White stated that this may be the will of the new Board, but that is certainly not the intent of what was contemplated when the change was made. What was contemplated, understanding elections have consequences and the votes may be there to change it, he thinks the record should reflect what the intended outcome was, which was to identify those services that are vendor-like, that are year over year recurring that should not be subject to the day to day vagaries of blowing political whims, relationships, and friendships and just put them NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 BUDGET WORK SESSION AND AGENDA REVIEW, JANUARY 17, 2019 PAGE 284 in the budget and that has happened. Seven of those agencies transferred over totaled to $235,000. If the argument now is that the $619,000 be raised versus lowering it by $235,000, he would suggest it be lowered by $235,000. That was the intent. Again, understanding that a majority of the Board may or may not agree, the idea was two-fold: a) to lock in those types of items so those seven agencies do not have to come back every single year to beg the Board for money and b) so that a citizen group which reflects gender, race, socio-economic income, etc. across this community can meet and objectively score and prioritize who should get what and by how much and completely divest the process of political influences. Those two goals were accomplished, and he would respectively suggest that it be maintained in that way understanding a majority of the Board may or may not agree. Commissioner Zapple stated that the only item he objects in Commissioner White’s comments is the term “locked in.” The population is expanding and there is a huge non-profit sector doing tremendous work throughout the community. He thinks through this process it has been discovered just how important they are. To him this is all about success and there is additional room to grow with it. Commissioner White stated while that is true, in a growing economy with the lowest unemployment that has been seen in 30 years, growing government for non-profit is not a trend he would suggest the Board should do. He is suggesting that people are more dependent on government at certain times and less dependent at other times. At this point, it’s probably less dependent than in anytime certainly since he has been a commissioner, so the inverse of spending more when less are depending on it is counterintuitive. Commissioner Zapple stated he sees it as an investment. He thinks the County gets back value within the community many fold for every dollar spent with those that qualify through the process and in some cases it is work that the County, debatable, should be doing itself. Without the non-profits, the community would be in miserable shape. He thinks their investing in these non-profits is a tremendous return throughout New Hanover County. He further stated that with Hurricane Florence it was seen how many gaps there are. The non-profits provided tremendous support during that time and in many cases without a single dime. Commissioner White stated that support happened without relying on the $619,000. It happened organically and happened because everybody did not wait to see if the bill would be paid. It is just what happens when acts of God hit communities like this. However, to suggest the response could have been better or worse because of spending $235,000 more or less to him is a non sequitur. Commissioner Zapple thanked Commissioner White for his comments. Commissioner Kusek stated everyone agrees that the non-profits do great work. She has asked though and will keep asking “How do we pay for it?” She wishes the County could do everything for everybody but wants to know how does the County pay for it. It is known whose pocketbooks are gone to and the Board needs to be mindful of that. Chairman Barfield stated one thing that was a commitment when the quarter-cent sales tax was passed, was a commitment to the quality of life initiatives, parks and gardens, museum, and libraries in this community. He thinks the County is definitely hitting those targets and the citizens stepped forward to pass the quarter-cent sales tax. The first year was projected to bring in $7 million and now it is bringing in $12 to $15 million a year. As such, he would think the County would want to give a good return on that investment to folks to give to something besides property tax. He thinks it is great the NC General Assembly expanded the base which is bringing more money into the County. There were other counties in this past election cycle that were unsuccessful in trying to pass a quarter- cent sales tax. That is one area of growth that can be looked at and it is not a lot of money at the end of the day. There is approximately $14 million coming in from a quarter-cent sales tax and the discussion is about a $300,000 increase for non-profits. To him it is not a big comparison. In response to Board questions about the local chapter of the American Red Cross, County Manager Coudriet stated that the County did not fund them last year and the agency was not compensated for their work during Hurricane Florence. Chairman Barfield stated this is an example of a non-profit that has come to the County and requested resources and have always said no. To him, they really stepped up with Hurricane Florence to the point of having food trucks going into neighborhoods that were underserved and feeding 200-300 people at a time, much less setting up the shelter for the County. This was done out of their own funds and their request from the County was miniscule in relation to what they provided for the citizens in the community. Groups such as American Red Cross and Smart Start who do provide a return to the community are the ones the Board definitely needs to look at. Some of these agencies are asking for 1% or 2% of what they have already given back in return for their commitment. He thinks there is a need to look at it in a different way, particularly for those who have been repeatedly turned down who have provided aid in the community’s time of need. Commissioner Kusek stated she believes the Non-County Agency Funding Committee will look at it differently in light of the hurricane response. Chairman Barfield stated that the Community Boys and Girls Club turned down the $50,000 they were approved for and that money is still in the budget. This action concerns him as there were some groups who really needed that money. They were able to provide services that they agreed to in the contract, and at the same time there were other groups who really needed those resources that could have been helped. He thinks with the NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 BUDGET WORK SESSION AND AGENDA REVIEW, JANUARY 17, 2019 PAGE 285 committee, it takes them knowing the community well, knowing who the players are so people do not come and, for lack of better words, run game on them so to speak. In response to Board questions, Ms. Kelly stated that the Cape Fear Literacy Council, Carousel Center-Child Advocacy Center, Coastal Horizons-Rape Crisis Center and Youth Shelter, LINC Transitional Housing, Vantage Point Teen Court, and the Domestic Violence Shelter became vendors. In response to questions regarding Cape Fear Literacy Council (CFLC) being moved to vendor status, County Manager Coudriet stated that he cannot speak to the vendor status. As he recalls, it was a recommendation made by the committee based on its evaluation of the agency and the agency’s scope of work. Commissioner White stated literacy is at an all-time low, globally but certainly nationally and he would not have thought CFLC would have been a vendor. The definition of the word has changed over time, he understands that, but the need has been drastically reduced by a virtue of a combination of factors. Commissioner Zapple said he heard, but didn’t know the details, that the case was made strong here locally. There continues to be a nagging trend or need within, especially adult literacy issues that are here locally. It seems to be one of the main issues he consistently heard. Chairman Barfield said he knows two people, one who is older that he knew for years and did not know the person could not read. The person was almost 60 years old and learned how to read. Another person who was recognized during the Cape Fear Community College’s Gift of Education Luncheon went through the CFLC program and is now attending UNC-Wilmington. There are some success stories here in the community. Commissioner White said he and his wife support CFLC every year and he is a big believer in CFLC. He is just suggesting that for 20 years down the road, the goal has been no illiteracy and that has mutated now into illiteracy means not proficient in working a computer, using an iPhone, etc. He is satisfied with the answer to the question in relation CFLC being moved to vendor status. Again, he understands there is still a place for them and he has clients that benefit from them and he supports them personally. In response to Board questions about sales tax collections, Ms. Wurtzbacher stated that hitting the goals set for the County of where staff wanted to be at this time of year has not happened. November looked much better than October did. It seems to be hopefully on a positive uptick so staff is looking month by month and hoping it continues on this path. There is no percentage of how far behind the collections are at this point. However, based on projections for each month, the amount is approximately $900,000 below what was estimated. It was realized in September there was an anomaly when it came to the refunds than normally seen. It was well over $2 million on the sales tax refund, more than has ever been seen which brought the total distribution down significantly. The hope is for the remainder of the year that it will catch up because there were so many refunds throughout September. In response to Board questions, Ms. Wurtzbacher said it is difficult to quantify the storm impact. This is due to the sales tax already being a little lower than hoped before the storm. In additional discussion about sales tax collections, Chairman Barfield stated he hopes the impacts are in a positive way. Shelves were cleared off, people were buying generators, and there were lumber sales due to the storm. Commissioner White stated the snap back effect was October and November when the County started seeing some of that. County Manager Coudriet said November was significantly better than what the budget estimate was, which is certainly a reflection of increased spending associated with the storm. However, a belief that organically what should have been happening anyway was beginning to pick up as well. If the County continues with just half the pace of growth that was seen in November as compared to the prior year, the County will end up in pretty good shape. The budget will probably not be made but it will be very close to the budget. Ms. Wurtzbacher stated that in regards to ad valorem, staff is in its second quarter review and ad valorem is looking positive. Staff has not seen an effect on that. Chairman Barfield stated in connection with Commissioner White’s earlier comments, during his first few years on the Board, the former County Manager Bruce Shell and his team would say the sky is falling and we are going to go broke, but there will always be new money coming in. He learned over time that the County is in pretty good shape in terms of revenues and new resources coming in. County Manager Coudriet stated that in regard to what staff has said today, it was not the intention to suggest the County is upside down. The County is absolutely structurally balanced, an anomaly here and there, but he hopes the Board believes the County is in outstanding shape financially. Commissioner White stated he wanted to share an email he received that relates to Chairman Barfield’s earlier question about the priorities the Board sets, the metrics associated with measuring, and whether or not the County is doing what it needs to do. The email is from a person with the opioid overdose Quick Response Team (QRT) who made him aware that “…the QRT has gotten 53 people into treatment and a large percentage of those had to be visited multiple times by the QRT team. They are averaging 10 overdose survivors entering treatment each month. As well, Coastal Horizons reports that of those 53, an above average amount are successfully remaining in therapy. This is even more favorable considering the setback of Hurricane Florence.” When thinking about the Pre- K programs, the proficiencies, and whether or not the County is meeting those metrics and also in thinking about all NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 BUDGET WORK SESSION AND AGENDA REVIEW, JANUARY 17, 2019 PAGE 286 the things that are done, this data is the type that tells you it makes a difference. Absent of that, it doesn’t make a difference. Not everything can be measured dollar to dollar, there are funding mandates that have to be done, and there is hope that it works in theory. However, for the specific targeted dollars, the more and better the measurements are, the more efficient the Board will be able to do its job. Commissioner Zapple thanked staff for the presentation and stated that the information is valuable. Chairman Barfield again thanked Ms. Wurtzbacher and Ms. Kelly for the presentation. It was very good, concise information and was just what the Board needed in order to get a snap shot of what has been done. He may have more questions as he continues to review the information and reflect on what was said today. He also said that in regard to the Healing Place when it was presented to the Wilmington City Council, he hopes the citizens got a good education in terms of what the County does overall and provides funding for. With all that is being done, citizens may not be aware that it is a county function versus municipal functions that are occurring behind the scenes. When looking at the accomplishments, the County has done a lot this past year and continues to do so, more than is realized. BREAK: 3:40 pm. to 3:57 p.m. DISCUSSION OF JANUARY 22, 2019 AGENDA ITEMS Chairman Barfield asked the Board if there were any questions regarding the January 22, 2019 agenda in regards to consent or regular agenda items: Consent Item. No discussion held. Regular Item. No discussion held. ADJOURNMENT There being no further discussion, Chairman Barfield adjourned the meeting at 3:58 p.m. Respectfully submitted, Kymberleigh G. Crowell Clerk to the Board Please note that the above minutes are not a verbatim record of the New Hanover County Board of Commissioners meeting.