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2004-04-15 Budget Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 30 BUDGET WORK SESSION, APRIL 15, 2004 PAGE 9 ASSEMBLY The New Hanover County Board of Commissioners held a Budget Work Session on Thursday, April 15, 2004, at 5:10 p.m. in the New Hanover County Administration Building, Room 501, Wilmington, North Carolina. Members present were: Vice-Chairman 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, Sheila L. Schult. Members absent were: Chairman Robert G. Greer and Commissioner Ted Davis, Jr. 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; Tax Administrator Robert Glasgow; Director of Information Technology Leslie Stanfield; and Public Information Officer Mark Boyer. Vice-Chairman Boseman called the meeting to order and requested County Manager O’Neal to present an overview of topics and outstanding issues 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 following information was not the FY 04-05 Recommended Budget, but a status report and update on the budget process. He advised the Board that the proposed budget would not include a tax increase but in order to accommodate no tax increase there is a gap of $1.5 million dollars that Staff is working toward eliminating. Commissioner Caster spoke on considering a half-cent tax reduction and his concern especially for the small business owner. County Manager O’Neal responded that if the Board was considering a tax reduction Staff would need that information soon and would need the Board’s direction of which currently offered services the Board would recommend to be cut. Commissioner Pritchett shared with the Board that if the tax rate was dropped one cent the yearly savings for an average resident would only be $12 to $15. She pointed out that the cost to the County in the decrease of services would be much greater. County Manager O’Neal continued with highlights of the preliminary recommendation: •The tax base growth between FY 03-04 and FY 04-05 is expected to be 3%. •No revenue is budgeted in the General Fund from Airlie Gardens so that the Airlie Foundation can use any revenue generated, which will assist Airlie in becoming financially self-supporting. The revenue amount budgeted in the General Fund for FY 03-04 was $53,000. •The preliminary amount recommended for capital outlay for the schools in FY 04-05 is $1 million less than the current year’s amount because of the one-time contribution of an additional $1 million by the County Commissioners from the General Fund balance this year. The preliminary recommendation for operating is a decrease of $880,000 from the FY 03-04 amount since there is not a fund balance from which to appropriate in Fund 125. The Fund 125 balance of $1 million was appropriated in FY 03-04. Fund 125 is a county, not a school fund, that is used to account for the dollars that are disbursed to the schools. The preliminary recommendation is that the Board of Education appropriate a portion of their $10.3 million fund balance to meet the needs of the schools as they have during FY 03-04. •The Department of Social Services is requesting an increase in County funds of almost $1.1 million, which is approximately a 6% increase over last fiscal year. The increase is due to expected increases in Medicaid and salary adjustments. The County cost of Medicaid is projected to increase $600,000, or 7.8 percent, from FY 03-04. •The preliminary recommendation is that $5.1 million fund balance be appropriated to balance the FY 04-05 budget. Of this amount, $1.1 million is due to shifting debt service from the FY 03-04 to the FY 04-05 budget, due to restructuring of the debt, which resulted in a savings to the county of $2.4 million over the next fifteen years. Very preliminary projections for FY 03-04 indicate a growth of $1 to $2 million in the fund balance. In further discussion of appropriating money from the fund balance, County Manager O’Neal informed the Board that the appropriation of fund balance at this level will not jeopardize the strong financial position of the County. Vice-Chairman Boseman requested that Staff present a comprehensive comparison report on keeping trash in the county and out-sourcing this process at a future meeting . County Manager O’Neal replied Staff would be glad to do that and that it would include a report on the availability of landfill space. County Manager O’Neal continued with preliminary recommendations for employees noting that it appears the increase in the cost of health insurance will be minimal. The recommendation includes a 2% market and 1% merit adjustment for deserving employees. He continued that there are five new positions recommended: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 30 BUDGET WORK SESSION, APRIL 15, 2004 PAGE 10 •Two additional Ground Maintenance Workers for Parks due to the expansion that has taken place in the number of acres maintained by the department. •One Landscape Technician position at Airlie to assist with the continued development of the gardens. •One additional Custodian recommended for Property Management to help maintain the expanded County facilities. •One Administrative Support Specialist position to assist with the efficient operation of the Emergency Management Department. In response to the Board’s request for information concerning the increase of property tax exclusion for disabled and low-income senior citizens, County Manager O’Neal reported that the State of North Carolina first provided the Homestead Exemption in 1972. This exemption provided a partial tax break from local property taxes for primary residences of a person 65 or older, or totally disabled with limited income. In 2002, the exemption was altered to be the greater of either $20,000 or 5 percent of the appraised value of a residence owned by an elderly or disabled person whose annual income does not exceed $18,000. The income limit for 2004 increased to $18,800; this amount is adjusted by the same percentage as the Social Security cost-of-living adjustment. He continued to report that the loss of taxes due to the exemption for FY 01-02 was $208,636; and for FY 02-03 was $408,093. He shared that Dare County has a program which effectively increases the amount of the exemption over the state amount by $14,000 and that the impact of such a program on New Hanover County in FY 03-04 would be about $156,000 and would be cumbersome to administer. County Manager O’Neal continued with the preliminary budget recommendations by informing the Board that County departments were instructed not to increase budgets over the previous year’s adopted amount reporting that keeping the operation portion of the budget at a constant level becomes more difficult each year. As a means to allow department heads to express their budget concerns, they were given the option of submitting their requested budget increases separately from their FY 04-05 budget submission. These requests were not included in the preliminary budget recommendation. County Manager O’Neal stated that Staff will continue to follow the direction from the Board and that he will present the recommended budget to the Board at the May 21, 2004, Board of County Commissioners meeting. Hearing no further comments, Vice-Chairman Boseman called for a motion to adjourn the meeting. Motion: Commissioner Caster MOVED, SECONDED by Commissioner Pritchett, to adjourn the meeting. Upon vote, the MOTION CARRIED 3-0. Vice-Chairman Boseman adjourned the meeting at 5:50 p.m. Respectfully submitted, Sheila L. Schult Clerk to the Board