1999-05-03 Budget Work Session
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27
MINUTES OF BUDGET WORK SESSION, MAY 3, 1999PAGE 226
ASSEMBLY
The New Hanover County Board of Commissioners held a Budget Work Session on Monday,
May 3, 1999, at 4:00 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; Clerk to the Board, Lucie F.
Harrell; and Budget Director, Cam Griffin.
Chairman Caster called the Budget Work Session to order.
County Manager O’Neal advised that Staff was trying to move forward with presenting a
recommended FY 1999-2000 Budget on May 17, 1999, with adoption of the budget on June 21,
1999.
Chairman Caster asked if any legislation has being considered by the General Assembly that
will impact the FY 1999-2000 budget.
County Manager O’Neal responded that a number of items could change at the State level
which would impact the budget, such as elimination of intangible taxes to local governments by the
General Assembly. This action would create a large loss of revenue for local governments. Also,
State appropriations for mandated programs administered by the Department of Social Services and
Health Department, as well as funding for schools, will not be known until after the County budget
has been adopted. These unknown factors are difficult to project and they must be monitored closely
during the budget process.
Discussion followed on the number of County paid local teacher and school employee
positions. Budget Director Griffin reported that New Hanover County pays for 635 teacher and
school employee positions. If the State approves a 7.5% increase for teachers, it will cost the County
$427,500 to pay for local teacher positions. If the State approves a 4% increase for local classified
and central office administration positions, the County will pay $436,000.
Commissioner Birzenieks spoke on being surprised about the percentage of positions paid by
New Hanover County and he recommended informing the public about this fact.
Commissioner Davis stressed the importance of everyone understanding that if the County
decides not to provide any additional funding to the School System or Cape Fear Community College
(CFCC) for FY 1999-2000, the County will have to provide $2,245,551 (representing 1.5 cents on
the tax rate) to cover the debt service for school bonds and $1,688,159 (representing 1.1 cents on
the tax rate) to cover debt service for CFCC bonds. This means that the tax rate will have to be
increased by 2.6 cents to cover bonds voted on by the people living in New Hanover County.
County Manager O’Neal said the figures presented by Commissioner Davis do not include
any operational costs for new buildings, which involve increased maintenance, higher utilities, higher
instructional costs, and more debt service.
Chairman Caster noted by the year 2002, the debt service for New Hanover County Schools
and CFCC bonds will represent 14 cents on the tax rate.
Discussion was held on the need for the Board to decide how to approach overcrowding in
the jail. Vice-Chairman Greer recommended not approving the second phase of the contract with
Carter Goble Associates, Inc., until the Board decides the best way to provide additional jail space.
He noted that $450,000 has been appropriated in the proposed budget for the jail expansion.
Discussion followed on increased funding for Mental Health Center. County Manager O’Neal
advised that historically some counties have received an adequate amount of funding from the State.
Approximately 30 years ago, the State decided that mental health services would be provided on the
local level instead of the State in an effort to improve services. Mental health services have improved;
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27
MINUTES OF BUDGET WORK SESSION, MAY 3, 1999PAGE 227
however, the General Assembly at that time was concerned about providing larger amounts of money
to the rural counties. Consequently, counties such as New Hanover, Cumberland, Wake, and
Mecklenburg have never received adequate funding to provide mental health services on the local
level. Over the years, the formula has not changed and New Hanover County has continued to
receive a smaller amount of funding. Efforts have been made to rectify this inequity, but very little
has been done by the General Assembly to change the formula.
After further discussion, the Board agreed that an effort should be made to correct the
inequity of funding at the State level for the provision of mental health services.
Budget Director Griffin informed the Board that Staff has reviewed the proposed budget to
see if the funding shortfall could be reduced. She advised that funding for the Airlie Gardens
Foundation has been reduced from $500,000 to $400,000, and the funding match for the N. C. Clean
Water Management Trust has been reduced by $120,000. The number of new positions has decreased
from 48 requested positions to 31 positions representing a savings of $408,000. The salary
adjustment for employees has been reduced from 5% to 3%, and the employees will pay more for
health insurance. Additional revenue from the one-cent sales tax has increased by $1,200,000, and
the ad valorem tax has increased by $4,200,000 in natural growth. No fund balance has been
appropriated to balance the FY 1999-2000 budget.
Commissioner Birzenieks commented on use of County Staff by other agencies, such as the
County Attorney providing legal services to the Airport Authority, and he asked if the County
charged a fee for these services.
Budget Director Griffin responded that $1,000 is budgeted annually for the County Attorney
to provide legal assistance to the Airport Authority.
Commissioner Birzenieks requested the Board to consider charging the Airport Authority
$150 per hour for the services provided by the Legal Department.
Further discussion occurred on funding cuts that have been made by the County Manager and
Budget Staff. Budget Director Griffin responded the proposed 9.3 cent tax rate increase has been
reduced to 7.6 cents by eliminating the completion of Ogden and Castle Hayne Parks, reducing
requested positions, reducing the salary adjustment for employees, and charging more to employees
for health insurance premiums.
Commissioner Davis supported the 2.6 tax rate increase to pay for debt service for the schools
and Cape Fear Community College, but he opposed the remaining tax increase of 5 cents.
County Manager O’Neal explained that the proposed 5 cent tax increase is a reflection of
what the community has demanded in services. This increase is to pay for parks, Airlie Gardens,
renovation of the Judicial Building, an Administration Building, funding for the Mental Health Center,
and increased funding to the schools and community college. After a complete review of budget
requests submitted by department heads, any additional cuts will impair the services being provided
by these departments.
Vice-Chairman Greer informed the Board that the public has agreed to pay the debt service
for schools and Cape Fear Community College bonds as well as increased operational costs for
opening new buildings. These items represent 5.2 cents on the tax rate. Other items, such as
additional costs for health insurance, salaries, Airlie Gardens, parks, etc. represent 4.8 cents on the
tax rate. If you add 5.2 cents and 4.8 cents, the proposed increase is 10 cents on the tax rate.
However, increased revenues will be received in the amount of 2.4 cents on the tax rate making a
difference of 7.6 cents, which is what was proposed by Staff.
Commissioner Birzenieks commented on the salary lag, and he recommended transferring
these funds into the fund balance at the end of each fiscal year.
Chairman Caster expressed concern for the amount of property tax that people can pay. He
said if the tax rate is not properly controlled, industries such as Corning or Dupont will eventually
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27
MINUTES OF BUDGET WORK SESSION, MAY 3, 1999PAGE 228
leave New Hanover County. He urged the Board to think about the burden being placed on
businesses and retirees if taxes are increased every year.
Discussion followed on the property tax rate in other counties similar to New Hanover
County. County Manager O’Neal advised that it is difficult to determine how to compare counties
because of the difference in property revaluation schedules. If all factors of similar counties could
be equalized, the New Hanover County tax rate would probably be lower. With the County’s
population, the services provided, and the ad valorem tax base, New Hanover County is unique when
compared to other communities, because it is a resort community. The County does not have a large
industrial tax base to offset the property tax.
Commissioner Birzenieks referenced the percentage of land mass within the Wilmington City
Limits being far greater than in other counties, and he stated this does not leave people with a choice
of living inside or outside the City, which creates a heavier tax burden on the property owners.
Chairman Caster said the total budget has increased 7.7% over the past five years, and the
Board is now faced with increasing the budget by 10%. He requested direction from the other
members of the Board.
Commissioner Birzenieks advised that many items are mandated, and the County has chosen
to provide a higher level of services. He asked if the Board should review services and cut each
program by 10%.
County Manager O’Neal reminded the Board that the recommended budget represents growth
and the demand for services. In addition to debt service and increased operational costs for the
schools and Cape Fear Community College, the County has purchased Airlie Gardens and constructed
new parks, which is a direct response to growth and a change in culture.
Vice-Chairman Greer commented on the expenditure appropriated for Ogden Park and Castle
Hayne Park, and he asked if these monies were not budgeted in the current fiscal year.
Budget Director Griffin responded that $740,000 was a contribution for two different projects
to be completed in FY 1999-2000. They are not the same projects that were completed in FY 1998-
1999. Last year, funding was transferred for the following capital projects:
Emergency Operations Center$350,000 (not expended)
Veterans Park$300,000
Castle Hayne Park$155,000
Ogden Park$400,000
Renovation for Courthouse$500,000
Other Projects$ 70,000
Commissioner Davis expressed concern for increasing taxes beyond the bond indebtedness.
After revaluation of property values, the County will be revenue neutral at a tax rate of 48 cents. If
2.6 cents is added for bond indebtedness, the tax rate will be 50.6 cents. If taxes next year have to
be increased 14 cents to cover debt service, this will increase the rate to 64.4 cents, which is a high
tax rate.
County Manager O’Neal responded that all available revenue sources are being utilized by
New Hanover County. Other options, such as the property transfer tax could be implemented or
charging an impact fee for schools, libraries, parks, etc. This would eliminate having to increase the
property tax to cover the cost of growth.
Commissioner Birzenieks requested a list of non-mandated services reflecting the funding
appropriations and the impact of cutting these programs 10% across the board.
After further discussion, County Manager O’Neal offered to prepare a list of non-mandated
services reflecting a 10% cut.
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27
MINUTES OF BUDGET WORK SESSION, MAY 3, 1999PAGE 229
Vice-Chairman Greer said that many services are not mandated, such as the Museum,
Department of Aging, Library, and Parks; however, these programs are of great benefit to the
community. The contribution to the Airlie Foundation was approved by the Board of County
Commissioners as well as the funding for the N. C. Clean Water Management Trust Fund. Many of
the items referenced in the proposed budget have been approved by the Board; therefore, it is the
responsibility of the Board to deal with these issues. No one wants to raise taxes, but the bond issues
and operational costs must be paid. The tax rate will have to be increased more than two or three
cents.
Commissioner Birzenieks agreed with Vice-Chairman Greer, and he stressed the importance
of everyone understanding that New Hanover County is providing a higher level of services to
provide a better quality of life for its residents.
County Manager O’Neal suggested authorizing him to work with the Budget Director to
prepare a responsible budget. This process will allow the Board to review all services provided to
see if a 10% reduction can be made. It will also provide an opportunity to discuss issues of concern.
After discussion, the County Manager was requested to prepare a recommended budget to
be discussed at the next Budget Work Session to be scheduled in June 1999.
ADJOURNMENT
Motion:
Commissioner Davis MOVED, SECONDED by Commissioner Birzenieks to adjourn.
Upon vote, the MOTION CARRIED UNANIMOUSLY.
Chairman Caster adjourned the meeting at 5:55 p.m.
Respectfully submitted,
Lucie F. Harrell
Clerk to the Board