2001-01-26 Budget Work Session
NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28
BUDGET RETREAT, JANUARY 26, 2001 PAGE 414
ASSEMBLY
The New Hanover County Board of Commissioners held a Budget Retreat on Friday, January
26, 2001, at 1:00 P.M. in Room 1 of the New Hanover County Training Facility, 216 North Second
Street, Wilmington, North Carolina.
Members present were: Chairman Ted Davis, Jr; Vice-Chairman Robert G. Greer;
Commissioner Julia Boseman; Commissioner William A. Caster; Commissioner Nancy H. Pritchett;
County Manager, Allen O’Neal; County Attorney, Wanda M. Copley; and Clerk to the Board, Lucie
F. Harrell.
Chairman Davis called the meeting to order and welcomed everyone present. He commented
on the difficult decisions that will have to be made during the budget process, and requested the
Commissioners to work as a team and do what is right for New Hanover County and its citizens.
County Manager O’Neal referenced the agenda packet and noted that the first item was
discussion and adoption of major management and budget goals for FY 2001-2002. Each
Commissioner was mailed a copy of the goals last week and it would be helpful to staff for the Board
to adopt these goals with recommended adjustments. The second item will be a review of preliminary
revenue projections and everyone must understand these are estimates, not actual figures. With
counties so closely tied to actions passed by the N. C. General Assembly and State, final figures
cannot be determined at this time. Frequently, these numbers are not known until after the budget
is adopted. A list of mandated and non-mandated programs, projects, requests, and capital
improvements has been included. The major budget issues will be debt service, the fire service, and
school funding. With the opening of three new schools, the County will be required to provide
additional funding for operational and maintenance costs. No budget projections have been received
from the Board of Education; however, Dr. John Morris, Superintendent of Schools, understands
the budget constraints of the County. Pursuant to State Statutes, the Board of Education is not
required to submit the budget request until May 15, 2001, but traditionally, the school budget is
received in April.
In closing, County Manager O’Neal requested the Board to provide direction on major issues
so Staff can begin crunching the numbers.
DISCUSSION OF MAJOR MANAGEMENT AND BUDGET GOALS FOR FISCAL YEAR
2001-2002
County Manager O’Neal presented the following draft of goals for the Board to consider to
maintain the quality of life which is comprised of recreational, educational, and cultural needs as well
as maintain the fiscal needs of New Hanover County:
Provide a Safe Community to all Citizens of New Hanover County:
1. The provision of
effective and professional leadership during times of natural and man-made disasters; work
toward reducing the level of crime; and provide an efficient and effective emergency
communication system.
Continue Investing in Electronic Technology (Internet and Intranet) for the Efficient
2.
Facilitation of County Business:
Enhancement of the County’s technology resources to
provide greater public access, efficient internal operations, and improved electronic
communication and payment systems; and use the Internet and GIS resources for disaster
planning and response.
Protect the Environment and the Quality of Life Enjoyed by the New Hanover County
3.
Citizens:
Address air and water quality, stormwater management, and drainage; reduce risks
of hazards through mitigation efforts; effectively implement the Comprehensive Land Use
Plan and Policies for Growth and Development; support an efficient waste reduction system;
concentrate on the infrastructure and operational requirements of the Enterprise Funds; and
ensure that the Water & Sewer and Environmental Management operations will meet growth
needs of the County.
NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28
BUDGET RETREAT, JANUARY 26, 2001 PAGE 415
Ensure the Health and Welfare of All County Citizens:
4. Improve access to health care,
increase preventive services, and reduce lifestyle related risks; provide low cost transportation
services, nutritional meals, and other outreach services to the elderly and frail population; and
enhance welfare reform by continuing to move clients toward self-sufficiency.
Ensure Equality of All Citizens:
5. Conduct fair and honest elections; promote fair treatment
and equal access in employment, housing, and economic development; and improve the
quality of affordable housing through rehabilitation and loans to low and moderate income
households.
Ensure and Encourage Prompt, Courteous, and Professional Services From All County
6.
Employees:
Offer training opportunities for employees; provide a safe working environment;
and adopt a pay philosophy and strategy that will ensure market competitiveness in
recruitment and retention of qualified employees in the current economy.
Provide for Recreational, Educational, and Cultural Needs of the Community:
7. Continue
to develop Airlie Gardens, Veterans Park, and other park facilities; support the literary needs
of citizens through the Main Library and its branches; preserve the history of New Hanover
County by supporting the Cape Fear Museum; incorporate the multi-year Capital
Improvement Program as an integral part of the annual budget process; and improve
communication and planning efforts with the Board of Education concerning school funding.
Ensure the Financial Stability and Legal Protection of the County:
8. Maintain a strong
undesignated, unreserved fund balance to at least 16.7 percent of the total General Fund
Budget in an effort to maintain adequate reserves and the highest possible bond rating;
maintain and improve the current bond rating with Moody’s and Standard and Poor’s; achieve
a 98 percent collection rate of ad valorem taxes; minimize litigation against the County and
maximize legal documents that ensure the County’s protection and legal well being; enforce
State and County code provisions; and maintain the current tax rate except for increases due
to bonded debt and operating expenses of new facilities.
Chairman Davis asked if any member of the Board would like to comment.
Commissioner Caster referenced Goal #1 regarding the need to work toward reducing crime
and stated nationally it appears that crime is down, but this does not appear to be true in New
Hanover County. He requested Staff to provide some statistics on whether crime has been reduced
in New Hanover County. He also referenced Goal # 4, the need to support an efficient waste
reduction system, and he asked if Staff was moving forward with implementing a plan similar to the
one in Charleston County.
Commissioner Pritchett, a member of the Solid Waste Advisory Board ( SWAB), reported
that numbers are being crunched by the SWAB and a proposal should be presented to the Board of
County Commissioners within the next 30 days.
Assistant County Manager Dave Weaver advised that the goal of the SWAB is to have a plan
implemented by January 1, 2002.
County Manager O’Neal requested the Board to wait until the proposal has been presented
before going into lengthy discussion on waste reduction.
Commissioner Pritchett referenced Goal #1 pertaining to crime and suggested changing the
language to include a word that will reference the homeless and dark corners, such as “ reducing the
level of crime and unease.”
Vice-Chairman Greer spoke on the crime rate being down nationally and stated this does not
mean that crime has been reduced.
Deputy County Manager Atkinson agreed with Vice-Chairman Greer and stated that the latest
juvenile crimes statistics reflect an increase in the number of crimes being committed in New
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BUDGET RETREAT, JANUARY 26, 2001 PAGE 416
Hanover County, which is discouraging with the number of programs in place to assist juveniles. He
also noted that once the Board adopts these goals, staff wants to ensure that all departments will be
implementing methods and programs that will conform to these goals.
Chairman Davis referenced Goal #8, “the need to maintain the current tax rate except for
increases due to bonded debt and operating expenses of new facilities,” and he stressed the
importance of the Board adhering to this goal.
County Manager O’Neal agreed with the goal and stated that the tax rate will be the major
focus of developing the budget for the upcoming year. The County continues to grow with the
citizens expecting quality services. Unfortunately, these services are becoming more costly to operate
and maintain.
Chairman Davis stated that he could not support a goal of increasing taxes for any reason.
Budget Director Griffin responded that the proposed wording was to keep the tax rate as low
as possible.
Chairman Davis suggested rewording Goal #8 to read as follows: “Attempt to keep the tax
rate as low as possible while providing essential services to the citizens of New Hanover County.”
Commissioner Caster spoke on the need to incorporate a multi-year Capital Improvement
Program as an integral part of the annual budget process, and he asked if this means that money
should be earmarked for the program.
Budget Director Griffin explained that the Capital Improvement Ordinance adopted last year
specifically stated that the program would only be implemented if the money was budgeted on an
annual basis. The purpose of this goal is to provide staff with a plan to know what projects are
planned and the projected costs. This plan would be one step ahead of the regular budget process.
County Manager O’Neal advised that adoption of a Capital Improvement Program will be
beneficial to the Board and Staff in planning for future needs.
DISCUSSION OF PRELIMINARY REVENUE PROJECTIONS
Budget Director Griffin advised that the Tax Department has estimated a 2.3 percent increase
in the tax base which represents $2,241,750 additional revenue under the current tax rate. The tax
base is not continuing to grow as in the past. Based on one quarter, it appears that New Hanover
County will have a shortfall of $1,000,000 in the sales tax revenue from the amount budgeted in FY
2000-2001. Staff is hopeful that the next quarterly report will show an improvement in sales tax
revenue to reduce the difference in the amount budgeted.
Chairman Davis asked if the loss of sales tax revenue was due to annexation by the City.
Budget Director Griffin advised that the ad valorem tax and sales tax represent 78 percent
of revenue in the general fund. Phase I and Phase II annexations by the City have affected the sales
tax with retroactive taxes for 17 months under one annexation and 21 months under the other
annexation. These annexations have cost the County one cent on the tax rate, which represents
$1,600,000.
Commissioner Caster referenced the Corning contribution listed on Page 4 and requested an
explanation.
Budget Director Griffin explained this was an incentive payment by the County to Corning.
The revenue will not be received until next year, which will be considerably greater than the $450,000
incentive.
Commissioner Caster requested Budget Director Griffin to be sure this line item is
understood by the public.
NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28
BUDGET RETREAT, JANUARY 26, 2001 PAGE 417
Discussion followed on the additional money available over last year to begin the budget
process. Budget Director Griffin responded that $1.2 million of additional revenue, which is natural
growth, will be available; however, the total revenue is $175 million.
County Manager O’Neal recommended beginning the budget process by deducting the
required expenditures such as unfunded State mandates, unfunded federal mandates, and bond debt.
Once these items are deducted, the Board will have to decide how to spend the remaining money
which will require difficult decisions.
Vice-Chairman Greer suggested referring to Page 4 of the notebook and stated that
$2,221,750 was collected in ad valorem taxes this year and the sales tax collected as of the last
quarter is showing a $1,000,000 deficit. This means that the additional revenue available over last
year is $1,241,750. When reviewing the first two expenditures, the increase in debt service for the
public school fund and general fund represents 6.23 cents on the property tax rate. The debt service
cannot be reduced and funding is going to be required for on-going projects such as Veterans Park,
improvements to existing parks, an increase in the Cape Fear Community College budget because of
opening new buildings, an increase in funding for Legion Stadium, the cost of starting the revaluation
process in the Tax Department, implementation of the Pay and Classification Plan for one full year,
and the additional costs involved with opening new schools.
A lengthy discussion was held on the debt service, installment financing debt, proposed
projects and budget requests with a review of the following list of items for FY 2001-2002 Budget:
Bonded DebtGeneral Fund
Cape Fear Comm. College 1996 General Obligation Bonds ($4.9 million issued) $ 452,265
Cape Fear Comm. College 1998 General Obligation Bonds ($9 million issued) 838,575
Cape Fear Comm. College 1998 General Obligation Bonds ($10 million issued) 931,750
Cape Fear Comm. College 2000 General Obligation Bonds ($14 million issued) 1,282,530
Cape Fear Comm. College General Obligations Bonds ($14.3 million authorized) 0
Public Improvement Bonds (General Portion)1,162,695
1993 Special Obligation Bonds 286,995
Total Bonded Deb Service - General Fund $4,954,810
Installment Financing Debt
Social Services Building $ 422,199
NorthChase Regional Branch Library 0
EMS Ambulance 0
Certificates of Participation-Library/Admin. Building and LE Facility 309,829
800 MHZ System - Sheriff’s Department 164,491
Certificates of Participation - School/Park Land Purchase 437,407
138 North Fourth Street Building 89,700
Mainframe Downgrading 16,760
Airlie Gardens 1,122,408
Airlie Gardens - Startup Costs 55,692
RMS and Jail System 56,733
Sheriff Vehicles, Register of Deeds Furniture & Automation 566,829
Certificates of Participation - Judicial Building (portion of dollars) 1,277,426
Certificate of Participation - Wilmington-Hanby Beach Water & Sewer 541,788
ERP Software System 425,600
Veterans Parks $ 307,163
Jail Expansion 4,460,957
Parking Deck 726,808
Library Renovations 302,837
Administration Building 627,305
Northeast Library 0
Total Installment Debt Service - General Fund $11,911,832
Total Debt Service - General Fund$16,866,742
NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28
BUDGET RETREAT, JANUARY 26, 2001 PAGE 418
Chairman Davis noted that the debt service had almost doubled from the last year and stated
if all items listed were approved, the current tax rate of 65 cents (61 cents for the County and 4 cents
for the Fire District) would have to be increased by 13 cents, which in his opinion would not be
acceptable.
County Manager O’Neal stressed the importance of the members of the Board, media, and
public understanding that staff is not requesting the Board to increase the current property tax rate
by 13 cents. Staff is trying to present a fair picture of the challenges facing New Hanover County.
The Board will be responsible for allocating funding to the various line items. The Board does have
control over many requests, such as whether to construct a new Administration Building, renovate
the third floor of the Main Library, or decide on the amount of improvements to Veterans Park.
These are the types of decisions that will have to be made by the Board.
Discussion was held on the Veterans Park School Project. Vice-Chairman Greer advised that
the County has agreed to put in the road as you enter the park from Carolina Beach Road, grade all
athletic fields and provide irrigation. Money has already been budgeted for these items in the amount
of $3.5 million which was left over from the original park project. He asked why this figure was
being budgeted twice.
Finance Director Shell explained that the $3.5 million was placed in the Capital Improvement
Plan and has remained there; however, the infrastructure project at Veterans Park for $7.1 million
came in under budget in excess of $2 million. This money will be available to complete future work
for Veterans Park. If the grant applications submitted by the Parks Department are awarded, the
costs for completing the work should be between $1 million to $2 million instead of $3.5 million.
Assistant County Manager Dave Weaver informed the Board that approximately three-fourths
of a million dollars should be received in grant awards.
Commissioner Boseman asked if the County’s bond rating would be negatively impacted by
the additional debt.
Finance Director Shell explained that bond rating agencies review the tax base growth, retail
sales, fund balance and the capital improvement plan in addition to debt. Percentage ratios are used
to determine the bond rating. A higher debt service means that New Hanover County must be aware
of its financial position and cognizant of the tax rate. The County’s tax rate is not considered high,
in terms of the ratios; therefore, if the tax rate increases, this would not have a negative impact on
the bond rating. In fact this could be considered positive, particularly when much of the debt is for
infrastructure improvements.
DISCUSSION OF MANDATED PROGRAMS
Budget Director Griffin presented the following list of mandated and non-mandated programs:
911 Center:
Not mandated. The 911 Center will be a separate department within a year.
Administration:
The State requires that a manager be appointed when the County has adopted the
county manager form of government administration.
Aging Department:
Not mandated.
Airlie Gardens:
Not mandated. This has become a separate department.
Board of Elections:
The State requires a Board of Elections although the funding level is
discretionary.
Budget Department:
The State requires a County to have a budget and appoint a budget officer.
Community College:
The State requires funding of plant-related expenses for land acquisition,
building construction, purchase of autos, buses, and other motor vehicles; purchase of maintenance
related equipment; expenses of plant operation; employees’ salaries; maintenance of furniture,
NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28
BUDGET RETREAT, JANUARY 26, 2001 PAGE 419
equipment, and buildings; fuel, power and telephones; and building support services such as
insurance.
Cooperative Extension Service:
Not mandated.
Courts:
The State requires the provision of adequate facilities and furniture for District Court,
Superior Court, and court-related functions. The County is required to have a Juvenile Crime
Prevention Council.
Emergency Management Department:
If this department is not provided, the Governor can
establish the function.
Engineering:
Not mandated; however, the water and sewer systems require a licensed operator and
engineers.
Environmental Management Department:
The State requires new landfills to be lined, all landfills
to be equipped with scales, implementation of solid waste programs to meet local needs, and
compliance to the solid waste reduction goals as well as comprehensive solid waste management
plans.
Finance Department:
The State requires the County to appoint a finance officer, conduct an annual
audit and submit annual financial information, adhere to bidding procedures, provide official bonds,
provide a purchasing function, and maintain an accounting system based on modified accrual.
Fire Protection:
The Federal Aviation Administration requires a manned fire suppression vehicle at
the Airport for FAA certification. Fire suppression is required by establishment of a Fire Service
District.
Governing Body:
The State requires a Board of County Commissioners.
Health Department:
North Carolina General Statutes require the following mandated public health
standards: Child Health; Maternal Health; Family Planning; Dental Public Health; Home Health;
Adult Health; Individual (on site) Water Supply; Sanitary Sewage Collection, Treatment and
Disposal; Grade “A” Milk Sanitation; Food Lodging, and Institutional Sanitation; Communicable
Disease; Vital Statistics, and Laboratory.
Human Relations:
Not mandated.
Human Resources:
The State requires funding of a Worker’s Compensation Program.
Human Services Transportation System:
Not mandated.
Information Technology:
Not mandated, but provides support for mandated and State departments.
Inspections Department:
The State requires the provision of inspection services including fire
inspection.
Legal Department:
The State requires the County to have an attorney.
Library:
If offered, it is mandated that the service be free. Law Library services are required to be
provided to prisoners.
Mental Health:
The State requires the provision of mental health, mental retardation, and substance
abuse services through an area authority.
Museum:
Not mandated.
Parks:
Not mandated.
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BUDGET RETREAT, JANUARY 26, 2001 PAGE 420
Planning:
The following programs are mandated: CAMA Land Use Planning Program;
Transportation Planning through the Metro Planning Organization for the Urbanized Area, which
includes the Transportation Coordinating Committee, Technical Advisory Committee, and the
Thoroughfare Planning Process; Water Supply Watershed Protection Plan, which requires zoning of
one small area along Toomers Creek; and the EPA requires stormwater permitting of all non-point
discharge sources.
Property Management Department Including Vehicle Management:
The State requires cleaning
and maintenance of court facilities and related office space. Other services are not mandated, but
provide support for other departments.
Register of Deeds:
The State requires the County to have an elected Registrar of Deeds with a
minimum of two Deputies.
Sheriff:
The State requires the County to have an elected Sheriff with a minimum of two Deputies;
the provision of bailiff services to the courts; funding of criminal and civil processing and prisoners
transportation; and the provision of jail services.
Schools:
The State requires funding of sites, buildings, furniture, and apparatus; repair and
maintenance of school property; garage and maintenance equipment for school buses; instructional
supplies, supplies, window shades, reference books, blackboards, library equipment, maps, science
equipment; and proper water supplies and sewage facilities.
Social Services:
The State requires funding for Work First Family Assistance & TANF Services;
Medicaid; State/County Special Assistance; Food Stamps; Low Income Energy Assistance & Crisis
Intervention Program; Foster Care/Foster Homes; Children’s Protective Services; Adoption &
Adoption Assistance; Adult Protective Services; Adult Homes Adult Day Care; Child Support
Enforcement; Services to the Blind; Child Day Care; Disposition of Unclaimed Bodies; Involuntary
Sterilizations; Issuance of Work Permits; and Guardianship of Incompetent Adults. The following
programs are not mandates: The Carolina Power & Light Energy Program; General Assistance; and
Good Friends.
Tax Department:
The State requires the County to appoint a Tax Supervisor; an assessor to
appraise, list, classify all property, discover, appraise, and list unlisted property; appoint a Tax
Collector to collect taxes and delinquent taxes; and provide uniform assessments and octennial
reappraisals.
Outside Agencies:
Funding is not mandated.
Veterans Services:
Not mandated.
County Manager O’Neal informed the Board that the FY 2001-2002 Budget will have to be
approached in a different way. Staff has listed programs that are not required and eliminating these
services would cut the budget; however, it would be difficult to eliminate the 911 Center or
Department of Aging. There is no requirement for a Legal Department, the Museum, Library, or
Parks Department. A decision will have to be made on funding for outside agencies and Veteran
Services. All of the services mentioned are important services provided to the community, and the
Board will ultimately have to decide on funding allocations.
County Manager O’Neal also expressed concern for bills in the State Legislature that could
require counties to take over Mental Health programs, which will be expensive. He also expressed
concern for an increase in the County’s contribution to Medicaid. The Medicaid Program is a federal
entitlement program, and in North Carolina the arrangement is that counties have to provide these
services with a required match regardless of the increased cost. The largest percentage of
expenditures in the Department of Social Services is for the Medicaid Program, and the typical
recipient is a white, elderly female.
Chairman Davis stated that speaking for himself, the County is losing revenue partly because
of annexation and the City is gaining revenue. The Mayor has taken the position that the City tax rate
NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28
BUDGET RETREAT, JANUARY 26, 2001 PAGE 421
will not increase because there is additional revenue from the recent annexations. The County is
facing a difficult budget year, but there are elderly people living in New Hanover County on fixed
incomes that cannot continue to pay increased property taxes. The County must find additional
sources of revenue. He suggested working with the local legislative delegation and the N. C. General
Assembly to secure enabling legislation to allow New Hanover County to implement a one cent local
option sales tax. Other options, such as the land transfer tax, impact fees, etc., have been discussed
over the years with strong opposition from the home builders.
Commissioner Caster stated after seeing mandated and non-mandated programs, he felt
services provided by the Library, Department of Aging, and Museum, and Airlie Gardens are a few
of the services that truly enhance the quality of life in New Hanover County. A recent news release
from the Chamber of Commerce named the Wilmington Metropolitan Statistical Area as the best
place in the country to start a small business. This is because the County has a reasonable tax rate,
a high quality of life, cultural activities and recreational activities. These types of services are
important to the community.
Chairman Davis asked how the Board would feel about stopping the budget session and
asking the County Manager and Budget Director to prepare a budget without any tax increase other
than 1.11 cent for school debt service.
Commissioner Pritchett spoke on understanding the need to maintain the tax rate but stated
to be realistic, the budget should be re-worked to reflect a tax increase of more than 1.11 cent. She
also suggested discussing the possibility of charging fees for various uses.
After a lengthy discussion on which services and projects to eliminate or leave in the budget,
the Board agreed to direct County Manager O’Neal and Budget Director Griffin to re-work the
budget with a 10.16 tax increase as a working document for next budget Work Session.
County Manager O’Neal advised that he and Budget Director Griffin would be glad to re-
work the budget and schedule another Work Session within the next four to five weeks. He also
expressed appreciation to the Board for taking time to discuss the best way to approach closing the
budget gap.
ADJOURNMENT
Chairman Davis announced that since the Board agreed to have staff to re-work the budget,
it would not be necessary to hold the Work Session scheduled on Saturday, January 27, 2001.
Chairman Davis adjourned the meeting at 4:30 P.M.
Respectfully submitted,
Lucie F. Harrell
Clerk to the Board