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1999-02-05 Budget Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 66 ASSEMBLY The New Hanover County Board of Commissioners held a retreat on Friday, February 5, 1999, at 1:30 p.m. in the New Hanover County Administration Building, Room 501, 320 Chestnut Street, Wilmington, North Carolina. Members present were: Commissioner Buzz Birzenieks; Commissioner Ted Davis, Jr.; Commissioner Charles R. Howell; Vice-Chairman Robert G. Greer; Chairman William A. Caster; County Manager, Allen O’Neal; County Attorney, Wanda M. Copley; and Clerk to the Board, Lucie F. Harrell. Chairman Caster called the meeting to order. County Manager O’Neal advised that adoption of the budget was the single most important issue decided by the Board of County Commissioners during the fiscal year. The direction provided to Staff is of utmost importance since there are many unknowns at this time. At the present time, the actual value of property in New Hanover County is unknown. The sales tax revenue will be reduced to the County and School System because of the recent annexation by the City of Wilmington. Also, the County has more on-going projects than ever before, which affects the workload of Staff and funding resources. With the changes that are occurring, the community should be educated about the impact of the revaluation, annexation, and the responsibilities of county government. Vice-Chairman Greer asked if the projected increase in the valuation of property was 69%? Budget Director, Cam Griffin, responded the overall projected increase of the valuation was 50%. DISCUSSION OF ADDITIONAL SPACE FOR THE SHERIFF Chairman Caster reported on a study that was performed by CGA Consulting Services to determine the space needs for the jail. He advised that during this period when CGA was in the process of performing the study, he contacted Mr. Richard Christian, the Southeast Regional Director of Cornell Abraxas, about the possibility of building a Juvenile Center with a boot camp to train offenders. Abraxas is a leading provider of privatized correction facilities, and this company has already placed an option on a 200 acre site in Navassa. With the immediate need for jail space, it might be wise to have Staff to investigate this possibility. Sheriff Joe McQueen informed the Board that a regional concept was a good idea; however, after contacting the Attorney General, he found that State Statutes do not allow privatization of county jails without enabling legislation from the General Assembly. The Statute Statutes do allow two counties and two sheriffs to enter into an agreement for a regional jail. Deputy County Manager Atkinson explained that since juveniles were not under the Sheriff’s custody, the State could authorize a regional Juvenile Center. In this type of arrangement, the State would contract with Cornell Abraxas to construct the facility and the County would pay a portion of the cost. After discussion with Mr. Christian, the company is ready to construct the building, but there must be a guarantee that Cornell Abraxas will be paid a guaranteed rate per day for every juvenile sentenced to detention school. Mr. Christian has been working with the State to negotiate a rate. Chairman Caster requested Staff to continue to pursue this issue. County Manager O’Neal advised that Bertie County and Martin County have a regional jail facility with an appointed Jail Commission comprised of the Sheriff from both counties, two County Commissioners, and other appointees. Each county provides a pro-rata share for the jail construction cost. This system has worked well because both counties are small. Further discussion was held on the possibility of New Hanover County and Brunswick County constructing a regional jail. Sheriff McQueen again spoke in favor of the concept, but stated NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 67 it would not be beneficial to Brunswick County because their jail seldom has an overcrowding situation. If a regional jail facility should be constructed, all personnel would have to be trained to State jail standards. In concluding his remarks, Sheriff McQueen stated, in his opinion, the time has come to plan and construct a jail facility to address present and future needs of New Hanover County. After discussion of the cost involved with renovating the current Jail and Annex to required State standards, Vice-Chairman Greer requested the members of the Board and Sheriff McQueen to consider the possibility of constructing a new jail with enough space to house the Patrol and Vice Divisions. He said the existing Law Enforcement Center could be used as a holding facility for the courts. Deputy County Manager Atkinson reported the CGA study was broken down into phases. The next phase is the programming phase for developing the design concept. He advised that a team would be established with representatives from the Sheriff’s Department, County Engineering Department, County Manager’s office and others to determine what space is needed. This would provide an opportunity to decide if the facility should be a one floor structure with modular units that could be added in lieu of constructing a multi-floor structure. Most counties are using modular units and purchasing already constructed cells because of the extremely high cost of jail construction. Vice-Chairman Greer suggested moving forward with the next phase of the study since a new building is needed. He requested that video conferencing be included in the design, and he reported the N. C. General Assembly needs to amend the State Statutes to allow a guilty plea to be performed by video conferencing. The Board was informed that the N. C. Association of County Commissioners had adopted this request as one of its legislative goals and will lobby the General Assembly. Consensus: After further discussion, it was the consensus of the Board to request the County Manager to place a budget amendment on the March 8, 1999, agenda in the amount of $30,000 to authorize the Sheriff to proceed with the Phase II design concept of the Jail Study. Sheriff McQueen advised that the firing range, building, and tower will be removed by the Smith Creek Parkway. He suggested including the firing range as part of the new jail facility project. Discussion was held on whether to use an outdoor or indoor firing range. Sheriff McQueen said that an indoor firing range would be more convenient for the training officers. Chairman Caster expressed appreciation to Sheriff McQueen for the presentation. BREAK Chairman Caster called a break from 2:30 p.m. until 2:45 p.m. DISCUSSION OF BUDGET CALENDAR AND BUDGET OBJECTIVES FOR FISCAL YEAR 1999-2000 Budget Director, Cam Griffin, presented the budget calender and reported that department meetings with the County Manager and Budget Team for review of departmental budgets will be held from March 8-26, 1999. The recommended budget will be presented to the Board on May 3, 1999 with Budget Work Sessions scheduled in May and adoption of the final budget on June 7, 1999. County Manager O’Neal invited and encouraged the County Commissioners to feel free to attend any departmental budget briefings. He said the meetings will be held in Room 501 in the New Hanover County Administration Building. Budget Director Griffin presented he following budget objectives: ? Incorporation of the multi-year Capital Improvement Program as an integral part of the NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 68 annual budget process. ? Develop a pay philosophy and strategy that will ensure market competitiveness in recruitment and retention of qualified employees in this economy. ? Concentration on the infrastructure and operational requirements of the Enterprise Funds. The Water & Sewer operation and Environmental Management operation should meet the growth needs of the County. ? Enhancement of the County’s technology resources to provide greater public access, efficient internal operations, and improved electronic communication and payment systems. ? Maintenance of tax collection rate of at least 98 percent. ? Maintenance of a strong undesignated, unreserved fund balance equaling at least 16.7 percent of the total General Fund budget. ? Continue customer service orientation of County employees through training in service, efficiency, and effectiveness to provide high quality citizen-oriented services in a caring manner. ? Develop a premier world class garden facility and environmental quality educational program for New Hanover County citizens and all visitors, through the restoration of Airlie Gardens to its late 19th century splendor with emphasis on the horticultural, architectural, cultural, and environmental components. ? Uniformity in permitting and regulatory policies. ? Maintenance and enhancement of the County’s high quality of life through coordination of planning efforts, focusing on efforts to reduce crime. ? Implementation of a welfare reform program that effectively moves clients towards self- sufficiency. ? Maintain a reasonable tax rate with a commitment to address priorities while containing expenses. Discussion was held on how much of the Water and Sewer District was in the area just annexed by the City. County Manager O’Neal responded that over 80% of the County sewer would be included in both phases of the City’s annexation plan. No County water lines are in the annexed areas. The sewer customers will remain under the Water and Sewer District. Commissioner Birzenieks asked if it was an advantage for the County to provide sewer in the annexed areas. Assistant County Manager Weaver responded that discussion has been held with the City about selling the sewer system in the newly annexed areas, but the City was not willing to offer enough money to recoup the County’s investment. County Manager O’Neal said that he felt it would be an advantage for the City to purchase the sewer system from the County. However, the most sensible solution would be for the City and County to jointly operate a water and sewer service for the benefit of all citizens. New Hanover County has over 22,000 water and sewer customers, which is more than many municipalities in the State. Discussion was held on the last budget objective and the meaning of a reasonable tax rate. Chairman Caster commented on the increase in the value of property with the revaluation, and he stated this should help to lower the tax rate. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 69 County Manager O’Neal noted that New Hanover County has entered into a great deal of debt with the school and community college bonds as well as financing for other projects. He stressed the importance of everyone understanding that increased operation expenses will be associated with these projects. Vice-Chairman Greer requested a list of projects that have been added since the beginning of the current fiscal year in order to have a definite starting point with the FY 1999-2000 budget. Budget Director Griffin reported the FY 1998-99 budget was adopted at $144,000,000 and she stated during the current year this figure has increased to $158,500,000. Approximately $2,300,000 of the increase is due to rollover items from the prior fiscal year. Other items, such as Hurricane Bonnie and the Pilot’s Ridge project increased the budget by $4,700,000. . Discussion was held on the problems being experienced at the Southeastern Center. Commissioner Davis advised the problem was with a contracted agency that was not monitored by the Southeastern Center. At this time, bills cannot be found to compare the charges to the insurance billings. It appears that a great deal of money could be lost by the Southeastern Center. He informed the Board that Dr. Art Costantini was not the director at the time the problem occurred. DISCUSSION OF ITEMS THAT WILL AFFECT THE FY 1999-2000 BUDGET Budget Director Griffin presented the following items that will affect the FY 1999-2000 budget: Debt Service on New Projects: 1. A.Airlie Gardens - $516,705 B.Judicial Building - $307,585 (pending) C.Administration Building - $334,745 (pending) D.Sheriff’s Department (to be determined) The increase in Debt Service between FY 1998-1999 and FY 1999-2000 for existing projects is projected to be $1,994,000. Environmental Management - 2. (to be determined) Health Insurance 3. - 20 percent increase in County cost for each employee estimated at $800,000. Salary Adjustment for County Employees: 4. A Pay and Classification Study is being performed that will not impact the budget until after January 2000. Operating and Capital and Foundation Expenses for Airlie Gardens: 5. A.Net Operating Expenses FY 1999-2000 - $836,000 B.Foundation - $500,000 (first of three annual contributions) C.Local Match for Clean Water Management Trust Fund - $484,000 (first of four years - $314,000 net increase each year). Cape Fear Community College 6. - An increase of $438,819 Major Increases for Schools 7. - (to be determined) Health Department and Department of Social Services Requests 8. A.Health Department projected increase - $451,000 B.Department of Social Services - implementation of electing county plan NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 70 Impact of Annexation: 9. A.Sales Tax - $1,863,000 to $2,610,000 decrease B.Fire Service District - $460,000 decrease (current tax rate) C.Other Revenue Sources: 1. Cable TV Franchise Fee - $60,000 decrease 2. Beer and Wine Tax - $38,000 decrease 3. Intangibles Tax - $160,000 to $218,000 decrease Revenue: 10. A.Sales Tax - $2,300,000 (will be eliminated by annexation) The estimated value of a penny in FY 1999-2000 is $1,558,200. Discussion was held on the additional expenses that will be incurred by the Department of Social Services. Vice-Chairman Greer questioned the projected figure of $985,000 for child day care services to provide care for 985 children, which is $1,000 per child. He requested an explanation of this figure. Assistant County Manager Pat Melvin explained that the figures were projected from the County’s Work First Plan submitted to the State. She noted that to provide second and third shifts, additional day care facilities, and transportation services, the projected figure was reasonable. Discussion was held on the impact of annexation on the sales tax. Budget Director Griffin said at this time there are many unknowns. Neither the City or County have a definite tax base which will affect the sales tax distribution because the money is distributed by the ad valorem method. A question to be answered by the Tax Research Division is whether the City’s share of the ad valorem tax for the next year will be based on 12 months or 17 months. The impact on the County’s budget should be between $1,863,000 and $2,610,000 depending on the number of months used in the ad valorem formula. This estimate includes sales tax revenue loss for the County, Schools, and Fire Service District. The final amount of sales tax allocated to the County will depend on the number of months of ad valorem taxes allocated to the City, the final ad valorem tax base of the City and County, the tax rates levied by the City and County, and the overall growth in sales tax. Discussion followed on the impact of annexation on the Fire Service District. Budget Director Griffin reported the City’s annexation will reduce the tax base of the Fire Service District by approximately $460,000. This will be offset by the increase in the tax base due to revaluation. The City will have to be reimbursed $55,000 from the FY 1998-99 Fire Service District budget. Since residents in the annexed areas have already paid the fire tax, the City will be required to reimburse them. In turn, the County will have to reimburse the City for what is paid to the three volunteer fire departments for the remainder of the fiscal year. An agenda item will be prepared to decrease the contributions to the three volunteer fire departments. These volunteer fire departments will still receive some County funding as well as City funding because the entire district was not taken in by annexation. Vice-Chairman Greer expressed concern for pieces of districts being in the County, and he suggested rearranging existing districts to eliminate this problem. Assistant County Manager Weaver reported that the Fire Commission will be addressing this problem. The entire Seagate District will be lost, a small portion of the Winter Park District will be lost, and a moderate portion of the Ogden District will be lost. The Ogden District is large enough to remain in operation. Vice-Chairman Greer asked if it would be wise to eliminate the Seagate and Winter Park Districts. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 71 Commissioner Howell advised that the Fire Commission would probably eliminate the Winter Park and Seagate Districts and increase coverage of the Ogden District into the northern end of the County. Assistant County Manager Weaver advised that difficult decisions would have to be made by the Fire Commission. There will be a loss of districts and revenue to these fire departments. With the need for fire service in the northern end of the County, it may be possible that one of the fire departments eliminated will be interested in moving their headquarters and serving the Murrayvillle area of the County. Discussion was held on the what will happen to the fire equipment in the annexed areas. County Manager O’Neal responded the City will not be required to purchase the fire equipment in the annexed volunteer fire departments. During the past seven years, equipment purchases over $40,000 are in the name of New Hanover County. The County can reassign this equipment within the Fire Service District. Prior to this period, some of the volunteer fire departments purchased equipment in their names. Vice-Chairman Greer stated he felt the City should have to purchase the equipment. Assistant County Manager Weaver responded that State law requires the City to pay 50% of the tax revenue base for each volunteer fire department. For example, if a volunteer fire department loses an area to annexation that was generating $100,000 in tax revenue for the Fire District, the City is required to contract with that department for at least $50,000 per year for five years. Vice-Chairman Greer strongly objected to the City having to contract for 50%. County Attorney Copley informed the Board that she would check the General Statutes governing annexation of volunteer fire departments and report back to the Board. Assistant County Manager Weaver reported the Fire Commission is considering reducing the budget contribution from the Fire District to each Volunteer Fire Department by the amount of the contract with the City. Vice-Chairman Greer, again, recommended rearranging the districts to eliminate this problem. He stated he is not willing to finance volunteer fire departments that are within the city limit. County Manager O’Neal advised that the fire boundaries could be rearranged, but the new boundaries would have to be approved by the State. Commissioner Birzenieks commented on the present law not being fair, and he suggested meeting with the local legislative delegation in Raleigh to present the figures and discuss the current law that requires cities to pay only 50% of revenue generated by each annexed volunteer fire department for five years. Finance Director Shell reported in earlier discussions regarding annexation, it was clear the City wanted to provide the same fire service in newly annexed areas as done in other areas of the city. This means the City will move to a fully paid fire service as quickly as possible. Since the State law allows municipalities to pay each volunteer fire department only 50% of the tax revenue generated in each service area, the City of Wilmington was not willing to pay any more than required by State Statutes. Vice-Chairman Greer stressed the importance of the County resolving this situation as soon as possible. Budget Director Griffin reported that annexation would have very little impact on the Water and Sewer District. The District will continue to provide sewer service in the annexed areas. Efforts are already being made to coordinate sewer and water services in the annexed areas between the NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 72 County and City. The Tax Department will incur several thousand dollars of staff time to modify data bases to reflect the expansion of the City. The Planning Department will be reduced by annexation since much of the annexed area is already developed and encounters relatively little zoning and subdivision activity. Significant staff time will be required to help in the transition for City staff. Lower income areas needing housing programs tend not to be in the annexed areas and will still require County attention. The lead function by County staff in such areas as Land Use Planning and the Clean Water Trust Fund grant administration will continue. It is important to note that the City’s non-participation in the FEMA Community Rating System program will probably result in an increase of 10% in flood insurance premiums for those households in floodplains in the annexed areas because the County is a Community Rating System partner only for the unincorporated County. Budget Director Griffin reported that Aging provides transportation services for the elderly and disabled in areas under annexation. This service will continue on a more limited basis after annexation. Although it is anticipated that costs may decrease around 5%, or approximately $25,000 per year, the general increase in demand for transportation service in the remaining unincorporated areas will probably overshadow the reduction in cost. She advised that the Inspections Department will have very little impact from annexation because the County already provides inspection services for all trades in the City. The one function that may see a reduction in its workload is Zoning Enforcement. The following factors negate the impacts of this reduction: ? The annexed areas are generally built out, which means they create little existing workloads concerning site plan review and inspections. ? The zoning workload has increased at a rate much greater than the increase in staff. ? The transition to a new set of ordinances through the proposed Unified Development Ordinance will create a new workload. ? The County Zoning Staff will face considerable work in helping the City’s staff to assume control over the annexed areas. ? The County Zoning Staff will continue to administer the CAMA regulations. Budget Director Griffin reported the Recycling Division of Environmental Management may see a reduction of several thousands dollars per year, primarily for aluminum cans at the recycling drop-off centers at Ogden and Myrtle Grove. Each of these sites will still be in demand by residents living in the northern and southern parts of the county. It is important to note that these locations attract recycled materials, such as cardboard from a number of commercial businesses. Budget Director Griffin listed other revenue sources that will be impacted by annexation: ? The Cable TV Franchise Fee will decrease approximately $60,000. ? Beer and Wine taxes are distributed on a per capita basis. It is estimated that New Hanover County will lose approximately $38,000 due to the decrease in the non-municipal population. ? The County will be allocated the full hold harmless amount on the intangibles tax on an overall basis, but the municipalities will be distributed their shares annually based on the changing ad valorem percentages. Depending on the number of months used for the City’s ad valorem tax, this loss could be between $160,000 and $218,000. Vice-Chairman Greer requested a clearer explanation of the intangibles tax revenue. Deputy County Manager Atkinson responded the intangibles tax reimbursement is based on the same type of distribution as the sales tax. With recent annexation, the distribution of the fixed amount will change because of the change in the distribution of the property tax. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 73 Commissioner Birzenieks stated the figures presented on the impact of annexation were alarming. He requested Staff to provide to the County Commissioners a list of revenue generating options and a list of services that do not have to be provided by New Hanover County. County Manager O’Neal advised that Section XI in the agenda covers revenue sources. He stated the County does not have to provide water and sewer services, Emergency Management, Environmental Management, Fire Services, Parks, Planning, Aging, Library, Museum, Veterans Services, Human Relations, and possibly the Cooperative Extension Service. Commissioner Birzenieks commented on the services listed by the County Manager, and stated he could not image our community without these services. DISCUSSION OF THE MILLENNIUM IT Director Bill Clontz reported on the misinformation about the chaos that will occur when we celebrate the year 2000. Last Tuesday, the news reported that the Red Cross was showing people how to stockpile food. Also, a TV reporter said the County would be opening the Emergency Operations Center. He advised that New Hanover County had been working on the Y2K problem for three years. All critical systems, such as the Oasis Tax System, Payroll, and Personnel, are fixed and in operation. All systems will be in compliance by July 1999. In order to prepare for Y2K, the calender and clock on the main computer have been set past the year 2000. An informational pamphlet has been published and distributed to the employees and public about how New Hanover County has addressed the Y2K problem. The pamphlet also provides information on lurking problems such as improper function of alarm clocks, cameras, electronic door locks, fax machines, mobile telephones, personal organizers, voice mail systems, and coffee makers. In summary, Director Clontz said New Hanover County is in good shape for the year 2000. There will be some problems, but overall most of the issues have been addressed. An area of concern is whether the State is prepared for the millennium, which could severely impact the Department of Social Services. Hopefully, the State will be in compliance by the end of the year. Chairman Caster expressed appreciation to Director Clontz for having the foresight to begin working on the Y2K problem three years ago so the County would be in compliance. Vice-Chairman Greer complimented Director Clontz for doing an excellent job and saving the County $300,000 on the OASIS Tax System by performing the work in house. MEETING RECESSED UNTIL SATURDAY, FEBRUARY 6, 1999 Chairman Caster recessed the meeting at 5:30 p.m. until Saturday, February 6, 1999, at 8:00 a.m. in the Auditorium at the Cooperative Extension Service, 6206 Oleander Drive, Wilmington, North Carolina. MEETING RECONVENED Chairman Caster reconvened the meeting on February 6, 1999, at 8:00 a.m. in the Auditorium at the Cooperative Extension Service. DISCUSSION OF THE ENVIRONMENTAL MANAGEMENT DEPARTMENT Assistant County Manager Weaver stressed the importance of taking action regarding the revenue loss at WASTEC because of waste being carried out of New Hanover County. There will be a loss of 120 tons per day if action is not taken as other hauling companies activate transfer stations. This equates to $5,520 per day, including the loss in energy sales. The Board will have to decide if WASTEC should remain open, or if the County should lower the tip fee or take other actions to keep the solid waste flow in New Hanover County. It would be cheaper in the short term to dispose of trash in the landfill; however, there are many long term benefits of allowing WASTEC to remain open: ? Reduce volume of trash by 80%. ? Reduce landfill space required. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 74 ? Reduce environmental liabilities. ? Solve the disposal problem, not just delay it. ? The WASTEC Facility is a part of an integrated solid waste management system to control the County’s future. ? Difficulties will occur in de-commissioning the multi-million dollar facility and terminating employees. Other options for the Board to consider are as follows: ? Reduce the tip fee now. ? Add user fee or tax as done in Wake County. ? Add surcharge per ton generated as done in Hennepin County Minnesota. ? Establish County collection system. The following schedule was presented to lower the tip fee and consider options: ? Staff meetings with solid waste haulersFebruary 9, 1999 ? Solid Waste Advisory Board MeetingFebruary 17, 199 ? CPA firm completes financial analysis of cost of operation for WASTEC and the Landfill ? Board of Commissioners MeetingMarch 8, 1999 County Manager O’Neal said if the County decides to de-commission WASTEC, this will be a costly process. It will be more costly if the County decides to bring WASTEC back on line in the future. The expertise of employees will be lost, and changes will occur in technology that could create a problem with re-firing the incinerator. Assistant County Manager Weaver said the main purpose for constructing WASTEC was to allow New Hanover County to control its future in managing the disposal of solid waste. Many counties have contracted with companies to haul and manage trash; however, many of these companies have become bankrupt and gone out of business. These counties are left without a way to dispose of waste. Chairman Caster asked which hauler was carrying the trash out of New Hanover County. Assistant County Manager Weaver responded that Waste Management was carrying the trash to Sampson County. Chairman Caster asked if the Sampson County Board of Commissioners could decide at a future date to terminate the contract with BFI and stop trash from be placed in the landfill. Vice-Chairman Greer responded that termination of the contract would be highly unlikely since this is a money-making machine for Sampson County with a royalty received for all trash carried to the landfill. New Hanover County could create its own landfill and make money, if this was desired by the Board. Assistant County Manager Weaver reported that Staff would like for the Board to consider reducing the tip fee as soon as possible. Commissioner Birzenieks asked if New Hanover County could impose a surcharge to the haulers carrying trash outside the county in lieu of reducing the tip fee. Assistant County Manager Weaver responded in Hennepin County, Minnesota a surcharge is imposed on every ton of trash whether going to the county facility or outside of the county to another facility. He noted that he was not familiar with the recording procedure in Hennepin County; however in the State of North Carolina there is a recording requirement. The New Hanover NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 75 County Landfill receives a report on the tons of trash that have been carried from New Hanover County to Sampson County on an annual basis. County Attorney Copley advised that she was not sure a surcharge could be imposed on haulers carrying trash out of the county. In her opinion, this would be a violation of flow control. She offered to check into this matter and report back to the Board. County Manager O’Neal noted that imposing a surcharge on both in-county and out-of- county haulers would not be in violation of flow control. If a surcharge is considered by the Board, it would be better to place the charge on the tax bill. Vice-Chairman Greer reported when the incinerator was constructed several years ago, it was an excellent idea; however, things have changed. Currently, Sampson County has a landfill and New Hanover County can carry trash to the this landfill and pay the fee, which is cheaper than incineration. Also, it appears that other landfills will be opening in surrounding areas in the near future. Another option to consider is closing the incinerator and continuing to pay the debt service with revenue received from the Landfill. In Sampson County, the tip fee is $20 per ton with a $7 dollar transportation fee. With a $34 tip fee in New Hanover County, the haulers can save money by carrying trash to Sampson County. The County contends that it must preserve landfill space; however, when the incinerator burns 100 tons of trash, approximately 20 tons of unburned trash is carried to the Landfill. If the County closed the incinerator and charged a $27 tip fee for use of the Landfill, enough revenue would be generated to pay off the debt service. The County could control the flow by increasing or decreasing the tip fee at the Landfill. Discussion followed on the capacity of the New Hanover County Landfill. County Manager O’Neal responded there was a large amount of landfill space. Commissioner Davis recalled when he represented the County in a lawsuit filed to prevent WASTEC from opening, the entire concept of the incinerator was to save space in the Landfill by burning trash and making steam to sell. He asked why the County could not implement a mandatory county trash pick-up, prepare a bid and submit it to the haulers with the condition that all trash collected will be carried to County disposal facilities. County Attorney Copley reported that New Hanover County could go into the trash collection business. A mandatory trash collection would be imposed, and the collection service would be bid contingent upon the haulers carrying the trash to County facilities. County Manager O’Neal advised that a great deal of discussion has occurred in the past on using the current haulers with development of zones. This would allow all haulers to remain in business and provide the trash collection service. Commissioner Davis stressed the importance of addressing the revenue shortfall at WASTEC as soon as possible. Establishment of a mandatory trash collection system would guarantee trash flow to the incinerator and curb illegal dumping and the litter problem. County Manager O’Neal noted that if the Board decides to implement a mandatory trash collection system, it will open up recycling opportunities that will better control management of trash. Assistant County Manager Weaver reported that Staff met with the haulers two weeks ago and discussion was held on the concept of lowering the tip fee to accomplish economic flow control. During the meeting the haulers did not want to discuss this matter in public. Private meetings have been scheduled with each hauler to determine how much the tip fee would have to be lowered to keep the trash in New Hanover County. Another meeting is scheduled next week with the haulers to present what is considered an acceptable tip fee. After this meeting, the Solid Waste Advisory Board will meet to discuss the issue. When the Commissioners meet on March 8, 1999, Staff will present recommendations based on the meetings with the haulers and the findings of the Solid Waste Advisory Board to request lowering the tip fee to accomplish economic flow control. Some revenue will be lost if the tip fee is lowered; however, more revenue will lost if the tip fee remains at $34 per ton. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 76 County Manager O’Neal reported that he was meeting with two representatives from McGladrey & Pullen to perform an economic analysis of the Environmental Management Department, including the WASTEC Facility, Landfill, and recycling programs. In summary, Vice-Chairman Greer said if McGladrey & Pullen can provide the economic analysis, the Solid Waste Advisory Committee will be able to make a determination on the best way to resolve this issue. In the final analysis, a figure will be established for operating the incinerator, and the Board and citizens of New Hanover County will have to determine if the incinerator is too costly to operate. Commissioner Birzenieks emphasized the importance of the Solid Waste Advisory Committee providing a long term perspective on solid waste disposal in lieu a short term solution. Vice-Chairman Greer said the long term solution would be to carry trash to Sampson County. He stated the Commissioners will have to determine if the incinerator should remain open. Once McGladrey & Pullen provide the economic figures, the Advisory Committee will be in a better position to make recommendations. Chairman Caster urged the Solid Waste Advisory Committee to move forward as soon as possible so the Board can determine what method should be used to manage solid waste. He stated the County cannot continue losing several thousand dollars a day. BREAK Chairman Caster called a break from 9:20 a.m. until 9:40 a.m. DISCUSSION OF SCHEDULING A JOINT MEETING WITH THE CITY OF WILMINGTON Commissioner Davis advised there are many issues that need to be addressed between the City Council and Board of County Commissioners. The County needs to know if the City desires to transfer Legion Stadium to the County or if a joint water and sewer service is possible. Decisions need to be made so the County and City can move forward. Commissioner Birzenieks agreed with Commissioner Davis. These items need to discussed and answered by the City. After further discussion, the Board agreed to schedule a joint meeting with the City. REPORT ON PAY AND CLASSIFICATION STUDY Director of Human Resources, Andre’ Mallette, reported the contract with the firm of Fox Lawson & Associates LLC to perform the Pay and Classification Study has been approved. The study should officially begin March 1, 1999. The consultants will hold focus meetings with eight groups of employees comprised of 15 employees in each group. Discussion will be held with each focus group to discuss the feelings about the advantages and disadvantages of the current plan. Once these comments have been analyzed, a Strategic Advisory Committee, comprised of department heads, will meet to determine the process to be used, including a pay philosophy in developing the Pay and Classification Study. Director Mallette requested two elected officials to serve on the Board. Commissioner Birzenieks tentatively volunteered to serve on the Strategic Advisory Committee. Chairman Caster volunteered to serve on the committee if Commissioner Birzenieks could not attend the meeting on March 5, 1999, at 9:00 a.m. in the Room 501 of the County Administration Building. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 77 Discussion followed on the increase in medical insurance for the next fiscal year. Finance Director Shell explained that New Hanover County switched from a self-insured carrier to a fully insured carrier so the risk would be assumed by the insurance company instead of New Hanover County. When negotiating premiums with Blue Cross Blue Shield, the County was able to lock in a three year premium at an excellent rate. This contractual agreement will expire June 30, 1999. Staff has been working with Health Care 2000 to find the best coverage and benefits for the money. Blue Cross Blue Shield has projected an increase of 36.5% to continue the current coverage. Staff feels this is an excessive increase. A company known as United Health Care has presented a plan with better benefits at an increase of 13.9%. As this process continues, Blue Cross Blue Shield will be given another opportunity to negotiate a figure. Staff will keep the Commissioners informed about the projected increase in medical coverage for county employees. Commissioner Birzenieks strongly objected to the failure of managed care which has placed an undue burden on the American people. Companies and people are paying higher premiums for fewer benefits. Further discussion was held on the County implementing a Health Fitness and Wellness Program. After discussion of the current program, Commissioner Birzenieks urged the Human Resources Department to implement a strong program for New Hanover County employees. PRESENTATION OF CAPITAL IMPROVEMENT AND CAPITAL PROJECTS Budget Director Griffin presented a list of capital projects identified by the various departments for future needs. She advised that a Capital Project Plan would include these items with each project being prioritized according to need. For example, the Jail Expansion Program is a priority. County Manager O’Neal reported that a Capital Project Improvement Plan would serve as a guide to the County in planning for future projects. He commented on the plan prepared for the expansion of the Water and Sewer District some years ago and he stated this plan has served as a guide for the past ten years. He requested the Board to consider establishing a Capital Project Improvement Plan. A lengthy discussion was held on the fund balance. Finance Director Shell reported the current fund balance available for appropriations is $22.2 million with a total fund balance of $43.8 million. During the past year, the fund balance did increase because projected expenditures were less than budgeted. The following list of FY 1998-99 fund balance transactions was presented: Appropriate Fund Balance as of 7/1/98 $1,733,520 8/17 Rollover expenditures from FY 1997-98 to FY 1998-999 $ 601,196 8/17 Outstanding Purchase Orders from FY 1997-98 to FY 1998-99 $1,023,232 9/21 Rollover Unexpended grant funds from FY 1997-98 to FY 1998-99 $ 10,726 10/19 Rollover of Unexpended TDP match from FY 1997-98 to FY 1998-99 $ 22,075 11/23 Animal Control - New Computer System $ 41,215 12/7 Set up operating budget for Airlie Gardens $ 500,000 12/7 Debt Service for 138 N. Front St. Building - Remainder of FY 1999 $ 36,000 12/21 Sheriff’s Dept. - Extend AFIS Grant until 6/30/99 $ 9,450 2/1 Transfer to Pilot’s Ridge Capital Project $1,398,923 Appropriate Fund Balance to Date: $5,376,337 A lengthy discussion was held on the need to protect the fund balance. Vice-Chairman Greer stressed the importance of maintaining a strong fund balance because of unexpected events, such as hurricanes. He also noted that having a healthy fund balance will allow the County to pay for smaller capital projects in lieu of borrowing money and having to pay interest. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 78 REVENUE ENHANCEMENTS Deputy County Manager Atkinson presented the following revenue enhancements: Real Estate Transfer Tax: Calculations are based on a 1% Real Estate Transfer Tax. The County’s portion could generate up to $8,104,488. Special legislation from the N. C. General Assembly is required. At the present time, only two or three counties have implemented the Real Estate Transfer Tax. The Real Estate Transfer Tax would be distributed on the current formula used for the Sales tax distribution. After discussion of the Real Estate Transfer Tax, the Board did not decide to pursue this issue. A: Inspections: Discontinue the present policy of providing free permits and inspection services to County and City funded organizations. Currently, fees are waived to all organizations receiving County or City funds regardless of the funding amount. The following entities receive free permits: New Hanover Regional Medical Center; Cape Fear Community College; City of Wilmington; Wrightsville Beach; Carolina Beach; Kure Beach; Volunteer Fire Departments; and New Hanover County Departments. If free permits are discontinued, the County could collect $100,000 to $120,000 annually. After discussion of discontinuing free permits to County funded organizations, the Board felt this policy change would not be beneficial because it would simply switch tax dollars. B: Restructure the Inspections Fee Schedule: Restructure and simplify the present fee schedule ensuring a more equitable distribution of fees. Average fees would increase by approximately 19%. The Inspections Department is currently developing a new schedule and will be reviewing it with the Building Inspections Advisory Board in early February. A restructured fee schedule would generate approximately $300,000 per year. After discussion, the Board agreed not to consider this item until the fee schedule has been reviewed by the Building Inspections Advisory Board. Water and Sewer: Increase Water and Sewer User fees. The fee schedule in effect was established in August 1991. Staff recommends waiting to increase the fees until the purchase of the Dobo water systems has been resolved. Parks: Operation of concession stands at athletic fields by either contracting these services or charging the athletic organizations a percentage of gross receipts. Approximately $1,000 to $3,000 per concession could be generated. After discussion, the Board was not in favor of this option. A: Legal: Offer a 30-day period of amnesty on interest as an incentive to all individuals against whom the County has been granted a judgement in the Small Claims Court. Under this temporary program, interest accrued on judgements would be waived for anyone who voluntarily comes forward and pays the principal amount of the judgement plus the court costs. If amnesty is granted, this process will produce approximately $15,000 to $20,000 annually. After discussion, the Board was not in favor of this option. B: Legal: Turn over unpaid library accounts of patrons who are judgement proof to the State of North Carolina for garnishment of their State income tax refund. State legislation is in place to authorize this process, and the details to implement the policy are now being established. The Legal Department is working with the Institute of Governments to develop the necessary forms, and the State has yet to identify the appropriate office to serve as a clearinghouse for these cases. Once these procedures are in place, counties may begin turning over the accounts in 1999 with payments to the counties beginning in the year 2000. The potential revenue is unknown at this time. Discussion followed on the large number of library books that are not returned to New Hanover NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF BUDGET RETREAT, FEBRUARY 5 & 6, 1999PAGE 79 County. Vice-Chairman Greer said he did not know how long libraries can continue to operate in a society where people do not care about other people’s property. This is a problem that is being experienced by other libraries and public facilities. No opinion was rendered by the Board on this option. Planning: To review the current fee structure to determine if development application fees should be increased. The present fee schedule was approved on May 16, 1989 with fees increased by 50%. Approval of an increase will generate $10,000 to $15,000 per year. When comparing the cost for approval of 25 lot subdivisions with other comparable counties, New Hanover County charges less. The Board agreed for Staff to continue to review the minor subdivision fee schedule increase. ABC Revenue: ABC Revenue in the amount of $947,800 was received last year. With the opening of new restaurants, this revenue should increase; however, approximately $38,000 in revenue will be lost with the recent annexation by the City. County Manager O’Neal reported this concluded the presentations by Staff. A lengthy discussion followed on the need to find ways to avoid placing the increasing demand for services on local property owners by raising the property tax. Commissioner Birzenieks commented on the challenges of local governments with education, jails, human services, water and sewer, and the proposed annexation by municipalities, and he stated other revenue sources must be found. Chairman Caster reported that Senator Patrick Ballantine was in the process of introducing a bill to remove the remaining two cents sales tax on food and to request the N. C. General Assembly to change the current distribution of the 6% sales tax to allow 3 cents of the 6 cents to be returned to counties to fund the growing demand for services. County Manager O’Neal reported the sales tax provides an opportunity for people to participate in paying for services provided by the local government when they do not own property. Discussion followed on the need for the Commissioners to provide direction to Staff in preparing the FY 1999-2000 budget. Commissioner Birzenieks stressed the importance of informing the public about why taxes have increased, and he recommended placing these items on the tax bill. He also recommended reviewing expense reduction. Vice-Chairman Greer spoke on the increased expenses due to bond debt for Cape Fear Community College and the Schools as well as the projects approved by the Board during the current fiscal year, and he stressed the importance of the County not out spending its increased revenues. In conclusion, the Board generally agreed that any increase in the property tax should be to cover the bond debt incurred with bond issues for Cape Fear Community College, the New Hanover County School System and other debt service. County Manager O’Neal expressed appreciation to the Board and Staff for attending the retreat and discussing issues that will have to be addressed in the FY 1999-2000 budget. ADJOURNMENT Chairman Caster adjourned the meeting at 12:05 p.m. Respectfully submitted, Lucie F. Harrell Clerk to the Board