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2004-01-15 Budget Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 29 BUDGET WORK SESSION, JANUARY 15, 2004PAGE 877 ASSEMBLY The New Hanover County Board of Commissioners held a Budget Work Session on Thursday, January 15, 2004, at 5:15 p.m. in the New Hanover County Administration Building, Room 501, Wilmington, North Carolina. Members present were: Chairman Robert G. Greer; Vice-Chairman Julia Boseman; Commissioner William A. Caster; Commissioner Ted Davis, Jr.; Commissioner Nancy H. Pritchett; County Manager, Allen O’Neal; County Attorney, Wanda M. Copley; and Clerk to the Board, Lucie F. Harrell. Others present were: Budget Director Cam Griffin; Senior Budget Analyst Norma Troutman; Budget Analyst Donna Seal; Finance Director Bruce Shell; Human Resources Director Andre’ Mallette; Assistant County Manager Patricia A. Melvin; Assistant County Manager Dave Weaver; Assistant County Attorney Holt Moore; and Public Information Officer, Mark Boyer. Chairman Greer called the meeting to order and requested County Manager O’Neal to present a budget overview for FY 2004-2005. PRESENTATION AND DISCUSSION OF THE FY 2004-2005 BUDGET County Manager O’Neal began the presentation by informing the Board that the projections in the budget overview were assumptions and will be more accurate as the budget process moves forward. He advised that the Board has directed Staff to prepare a budget without a tax increase which can be done; however, there will be some budget constraints: •The Board of Education will need to consider using part of its $10.9 million of unrestricted and unreserved fund balance. Removing a portion of the fund balance will not jeopardize the financial position of the School System. •In order to balance the New Hanover County FY 2004-2005 Budget at the same tax rate, a $3 million appropriation from the County’s fund balance will be required. In further discussion of appropriating money from the fund balance, Finance Director Shell informed the Board that appropriating $3 million from the fund balance would not negatively affect the bond ratings or the strong financial position held by the County. Budget Director Griffin stated that realistically holding expenditures to the current level of funding will make it difficult for County Departments. For several years, all departments have cut expenditures each year and some of these needs will have to be addressed. In further discussion of the fund balance, County Manager O’Neal explained that State Law does not actually require local governments to have an 8% fund balance. This is a standing policy that was established by the Local Government Commission, a Division of N. C. State Treasury. However, if a local government drops below an 8% fund balance, the State has the authority to financially operate that government. The 16% fund balance is needed to maintain the County’s AA bond ratings and financial credibility; however, if the County drops slightly below the 16%, it will still be in a strong financial position. Vice-Chairman Boseman asked the following questions: •Will an economic incentive for the One Tree Hill production be included in the FY 2004-2005 Budget? Chairman Greer responded that he felt an economic incentive would be requested by the Wilmington Film Commission for this production. •Did the increase in revenue at the Register of Deeds Office cover the additional positions? Budget Director Griffin responded that she would not know about these figures until the end of the year. •Will a raise be included in the FY 2004-2005 Budget for County employees? Budget Director Griffin responded that a 2% increase has been included in the budget for County employees; however, if the cost of health insurance increases more than estimated, there may have to be a trade off between the salary adjustment and health insurance. These figures are unknown at this time. Discussion was held on the anticipated $1 million increase in expenditures for the Department of Social Services. Budget Director Griffin explained that the County received a one-time decrease in the local share during FY 2003-2004 which resulted in a savings of $975,023. Returning to the level before FY 03-04 reductions will result in an increase of approximately $1 million, which does not include the $500,000 increase for the number of people served. In discussion of the value of a penny on the tax rate, Budget Director Griffin advised that the value of a penny for FY 2004-2005 is $1,731,307 and the current value is $1,697,360. Vice-Chairman Boseman spoke on the revenue generated by Airlie Gardens and suggested changing the funding policy to reduce the County’s contribution by a certain percentage based on the revenue generated by Airlie Gardens. She stated that this would serve as an incentive for Airlie Gardens to become self-sufficient. Commissioner Davis spoke on Airlie Gardens trying to work toward becoming self-sufficient and stated if the funding contribution is going to be changed, he would like to keep the Airlie Foundation Board of Directors informed. County Manager O’Neal advised that the Budget Director and he would be glad to keep the Foundation Board informed once budget requests have been received from County Departments. NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 29 BUDGET WORK SESSION, JANUARY 15, 2004PAGE 878 County Manager O’Neal urged the Board not to become too focused on the proposed figures at this stage of the budget process. He stressed the importance of Staff knowing that the budget is being approached in the right direction. Discussion was held on the anticipated debt service for the 800MHz System. Assistant County Manager Weaver reported that to upgrade the current system to a 25-channel simulcast trunked system will cost approximately $3.8 million. This figure will increase to approximately $5 million with the cost of land and equipment added. It appears that the U. S. Coast Guard is willing to discuss the use of the Loran Tower site; however, no firm answer has been received. He advised that Staff would continue to pursue this matter. Further discussion was held on other additional operating costs with opening of the new Jail, increased operating expenses for Veterans Park with athletic activities becoming a year round process, and additional staff for the Parks Department. County Manager O’Neal also advised that due to limited funds, the FY 2004-2005 budget will include the same level of funding for non-county agencies. County Manager O’Neal informed the Board that until all budget requests have been received from County Departments, it will be impossible to know what funding cuts will have to be made. He advised that he would keep the Board informed on any major issues that occur with the budget He suggested scheduling another Budget Work Session once these figures have been refined, which should be in mid-March. In discussion of the need to provide direction for preparation of the budget, the Board directed Staff to prepare a budget without a tax increase and keep the Board informed of major developments that could impact the FY 2004- 2005 Budget. County Manager O’Neal advised that Staff would proceed in that direction. He expressed appreciation to the Board for taking time to discuss the upcoming budget and stated that additional Budget Work Sessions will be needed. Additional Item Assistant County Manager Patricia Melvin requested the Board to meet with the City Council on Monday, February 16, 2004, at 11:30 a.m. to discuss the merger of New Hanover County Transportation Services and the Wilmington Transportation Authority. After discussion, the Board agreed to hold a joint meeting with the City Council on February 16, 2004. Further discussion was held on scheduling a breakfast meeting with elected officials of the municipalities to become better acquainted. The Board directed the Clerk to the Board to schedule a breakfast on Thursday, February 12, 2004, from 7:30 a.m. until 9:00 a.m. Hearing no further comments, Chairman Greer called for a motion to adjourn the meeting. Motion: Commissioner Caster MOVED, SECONDED by Commissioner Boseman, to adjourn the meeting. Chairman Greer adjourned the meeting at 6:15 p.m. Respectfully submitted, Lucie F. Harrell Clerk to the Board