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2005-05-12 Budget Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, MAY 12,2005 BOOK 30 PAGE 312 ASSEMBLY The New Hanover County Board of Connnissioners held a Budget Work Session on Thursday, May 12, 2005, at 5:30 p.rn. in Room 501 at the Administration Building, 320 Chestnut Street, Wilmington, North Carolina. Members present were: Chairman Robert G. Greer; Vice-Chairman William A. Caster; Connnissioner Ted Davis, Jr.; Connnissioner William A. Kopp, Jr.; Connnissioner Nancy H. Pritchett; County Manager Allen O'Neal; Assistant County Attorney Holt Moore and Clerk to the Board Sheila 1. Schult. Others present were: Budget Director Cam Griffin; Senior Budget Analyst Norma Troutman; Budget Analyst Donna Seal; Finance Director Bruce Shell; Assistant County Manager Dave Weaver and Director of Human Resources Andre Mallette. Chairman Greer called the meeting to order and requested County Manager Allen 0 'Neal to present the FY 2005- 2006 Reconnnended Budget. PRESENTATION AND DISCUSSION OF THE FY 2005-2006 BUDGET County Manager Allen O'Neal stated that the FY 2005-2006 Reconnnended Budget is being presented after completing a thorough budget review and in accordance with the County Connnissioners' directive to prepare a budget with no tax increase with a tax rate of 68 cents. Budget Director Cam Griffin reported the following budget reconnnendations: GENERAL FUND: Public Schools: . A transfer of $71.2 million from the General Fund is reconnnended for the Schools; the sales tax designated for the Schools will fund $5.8 million of this request. . This level of funding will provide $52.9 million in school operating expenses, $4 million in capital outlay, $706,000 in school pension, and $14.3 million in debt service. . The Board of Education requested an increase of$5.6 million or 11.2 percent in operating expenses and $4.2 million in capital outlay. A tax increase on.4 cents would be necessary to fund the balance ofthe School's request and debt service. . The budget also includes a $2.1 million transfer for school improvements approved by the Commissioners in FY 04-05. Cape Fear Community College (CFCC): . Funding of $5.7 million is reconnnended for Cape Fear Connnunity College, an increase of $940,000. The amount reconnnended is the requested amount. In addition to the direct contribution to Cape Fear Connnunity College, $3.9 million will be expended for debt service in FY 05-06. Personnel Issues: There are forty-three new positions reconnnended for FY 05-06. Of these positions thirty-nine are reconnnended in the General Fund. The General Fund positions are as follows: . One additional Administrative Support Assistant is reconnnended to support the efficient operation of the Engineering Department. . One additional Fiscal Support Technician is reconnnended in the Legal Department to improve the collection efforts of the County. No County funds are required for this position; the additional revenue collected will offset the cost. . Two positions are reconnnended for the Library to provide automation support. . Eight additional positions are reconnnended for Inspections due to increased building activity in the County; these positions will be funded by revenue from inspection fees. . Sixteen additional positions are reconnnended for the Detention Center to support efficient operations. . Two positions are reconnnended for the Gang Task Force - there is an offset of$52,000 in funding from the Schools for these positions. . Three additional Economic Services Case Workers are reconnnended in DSS to assist with the increasing caseload of the department. These positions will receive 50% of their funding from federal funds. . One additional Pretrial Release Coordinator is reconnnended to help reduce the inmate population at the new Detention Center. . One additional Custodian is reconnnended for Property Management to assist with maintenance of County facilities. . One T eleconnnunicator for Public Safety Connnunication is reconnnended to meet critical service needs. . Two Parks positions are reconnnended to keep the increasing acreage in the County park system up to standards and support efficient operations of the Parks Department. . One Fiscal Support Technician is reconnnended to increase efficiency for the Listing Office of the Tax Department. No County funds are required for this position; the additional revenue collected will offset the cost. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, MAY 12,2005 BOOK 30 PAGE 313 The Water and Sewer Fund positions are as follows: . Three positions are reconnnended in the Water and Sewer District to meet critical service needs. Five Fiscal Support positions were approved by the Connnissioners April 18, 2005, and are included. The Fire Services District Fund position is as follows: . One Administrative Support Technician is reconnnended in Fire Services to assist with the efficient operation of the department. Funding in the amount of $2.5 million is included for a two percent market and two percent merit adjustment for deserving employees. There is a $2.6 million increase projected in the cost of health insurance for County employees; these funds are included and are reconnnended for the County to absorb the increase. There is a slight increase in dental insurance, which will be absorbed in the existing budget. An amount of$165,000 is included for a Wellness Program for County employees; the program is reconnnended to help reduce the cost of medical insurance. Department of Social Services: . An increase of $1.6 million in County funds is reconnnended for the Department of Social Services due to projected increases in Medicaid and adoption assistance subsidy. The County cost of Medicaid is projected to increase $1.2 million or 14.1 percent from FY 04-05. Sheriff's Office: . An increase of $3.4 million in County funding is reconnnended for the Sheriff's Office. The increase includes the full-year funding of thirty-seven positions added for the Detention Center in FY 04-05 ($1.6 million), sixteen positions added for the Detention Center in FY 05-06 ($600,000), and funding for the Gang Task Force, which includes two positions ($91,000). Public Safety Communications Center: . An amount of $1. 3 million is included for improvements to the Public Safety Connnunications Center as part of the move to their new location. Wireline and Wireless funds will be used to offset eligible costs. Communication Improvement (800 MHz): . Consultants are currently analyzing the best way to address the connnunication needs of the County. The amount of $1 million is included for the first year of debt service on the $8.5 million plan to improve connnunications (800 MHz) in the County. Information Technology: . A PC replacement program is reconnnended. This will provide for a more standardized PC program and will aid in installation, maintenance and repair. Computers will be replaced on a three to four year cycle. The program will also reduce the per-unit cost through volume discounts. The goal of this program is to replace all obsolete PC equipment. . Funds in the amount of$ll 0,000 are included to begin the replacement ofthe County telephone systern. The total cost of the new system is estimated to be $1 million. The savings realized on recurring costs of operating a new integrated system would repay the cost of implementation within five years. The system will provide for uniformity in County telephones and allow for such advanced features as unified messaging and automated call distribution, features that are currently unavailable or only available to a select few departments. The purchase will coincide with the move of the remaining employees from the County Administration Building. The County has been notified that timely repair will no longer be guaranteed on some of its older phone systems. All departmental phone costs are included in the Information Technology budget in FY 05-06 for more efficient bill processing. WAVE: . Funding in the amount of $150,000 for the contribution for WAVE transportation has been moved to the Non- Departmental section of the budget. Parks: . Funds are included for a walking trail at Hugh MacRae Park in the amount of $150,000. Park's capital expenditures will be eligible for matching funds at a 50 percent return. Included in an administrative reserve account in the Non-Departmental division ofthe budget is $500,000 to begin implementation ofthe Park's Master Plan (following the adoption of the Master Plan). Museum: . Funds of$150,000 are included to implement part ofthe Museum's Master Plan. This will include moving the gift shop and creating a new entrance to first floor exhibits. Property Management: . Funds are included to replace windows and the HV AC system at the Historic Courthouse. Funds are also included for a generator at the Judicial Annex to keep lift pumps and security cameras activated during power outages. Also included are funds to expand the parking lot at the Northeast Branch Library. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, MAY 12,2005 BOOK 30 PAGE 314 Tax: . Funds are included to begin the revaluation process. Juvenile Day Treatment Center: . County funding for the Juvenile Day Treatment Center is reconnnended to increase $173,000 compared to FY 04- 05 adopted amount. This is a result of phasing out of state money. Three positions are being eliminated, but funding cannot be reduced further if the Center is to operate in a safe and efficient manner. Southeastern Center: . Funding of $1.7 million is reconnnended for the Southeastern Center for Mental Health, Developmental Disabilities, and Substance Abuse Services. This amount has been constant since FY 02-03. Airlie Gardens: . The funding arrangement with the Airlie Foundation is reconnnended to change. In FY 04-05, the Foundation funded an Administrative Support Technician and an Environmental Educator position. In FY 05-06, the Airlie Foundation will fund the temporary Ticket Agents and the Administrative Support Technician. The reconnnendation is for the Environmental Educator to be funded by the General Fund. . Funds of $150,000 are included for an irrigation system for the Gardens. Non-County Agencies: . Funding at the FY 04-05 adopted amounts, with a few changes, is included for Non-County agencies. Funding applications for FY 05-06 were not sent to Non-County agencies (nor in FY 04-05), as funding is limited. . An increase of $15,500 is reconnnended for The New Hanover Soil and Water Conservation District to fund a portion of a position that was previously federally funded. . A $5,000 increase is also reconnnended for The Carousel Center. . Coastal Horizons has requested an additional $98,000 for FY 05-06; the FY 04-05 amount of $44,000 is reconnnended. In addition to this funding, DSS and Southeastern Center also contract with Coastal Horizons for services and the County provides meeting space for the agency. . Funds currently budgeted and undistributed in FY 04-05 for General Electric and Verizon will be carried over to FY 05-06. No additional funds for these companies were budgeted in FY 05-06. REVENUES: . The tax base growth between FY 04-05 and FY 05-06 is expected to be 3.7 percent. The ad valorem tax base is estimated to be $18.5 billion. Based on this estimate, a penny will be worth $1.8 million. . The one-cent sales tax revenue is estimated to increase by $2.9 million from the FY 03-04 actual amount. The projection is that the revenue from the Article 40 and Article 42 half-cent sales tax will exceed the FY 04-05 adopted amount by 3 percent. Revenue from Article 44 sales tax, adopted July 2003, is projected at 3 percent above the FY 04-05 estimated amount. . Revenue for FY 04-05 is estimated to exceed the amount budgeted. . Local sales taxes are distributed by the ad valorem method and are the second largest revenue source for the County. . Approximately $5.2 million ofthe undesignated portion ofthe two existing one-half cent sales taxes is budgeted for General Fund operations; $1.9 million is budgeted as a transfer to the Water and Sewer District, the same amount that has been transferred since FY 01-02. Fund Balance: . The appropriation of fund balance in the amount of $5.1 million is being reconnnended. Of this amount, $2.1 million is for school improvements as approved by the County Connnissioners in FY 04-05. The appropriation of fund balance at this level will not jeopardize the strong financial position ofthe County. Umeserved/undesignated fund balance grew by $4.4 million between FY 03-04 and FY 04-05. Very preliminary projections for FY 04-05 indicate a reduction in fund balance of $2 million. Transfer in from Capital Projects: . An amount of $4.8 million is reconnnended to be transferred in from capital projects and will be used to fund a portion of the FY 05-06 Debt Service. Municipal Tax Collection Fees: . The proposed rate charged to collect municipal taxes has been decreased from 2 percent to 1.75 percent. This reduces the projected revenue the County will receive for providing this service by $105,000. ENVIRONMENTAL MANAGEMENT FUND: . The Environmental Management Fund is balanced with a $46 tipping fee. No transfer from the General Fund is budgeted. Partial funding for construction of Ce1l6C was approved in FY 04-05, with the remainder of $600,000 being reconnnended in FY 05-06. SPECIAL FIRE SERVICES DISTRICT FUND: . The tax rate of 6 cents is reconnnended for the Fire Service District, no increase from the tax rate for FY 03-04. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION, MAY 12,2005 BOOK 30 PAGE 315 . The ad valorem tax base in the Fire Service District is estimated to be $7 billion. Based on this estimate each penny of the tax rate will be worth $684,000. WATER AND SEWER DISTRICT FUND: . The Water and Sewer District currently provides service to approximately 32,000 water and sewer customers (residential, industrial, and connnercial), which is far greater than many municipalities in North Carolina. The District's current operation and future expansion is funded by user fees, a $1.9 million transfer funded by sales tax revenue from the General Fund, and approximately $1 million in Water and Sewer Fund Balance. No ad valorem property taxes are used to fund the district. CAPITAL IMPROVEMENT PROGRAM: . Capital requests for FY 05-06 were all valuable projects but due to budgetary constraints, no funding will be reconnnended. After discussion, the Board came to consensus on the following items: . Parks - remove reconnnended amount of $500,000 for an administrative reserve to begin implementation ofthe Park's Master Plan . Soil and Water Conservation District- increase reconnnended amount of $34,500 by $15,500 for a new total amount of $50,000 . Libraries - remove reconnnended amount of $1 00,000 for the NE Branch Library parking lot expansion . Pre- Trial Release Coordinator- increase amount from $0 to $50,532 . Mediation Center - increase amount from $0 to $15,000 . SoccerPlex - remove reconnnended amount of $150,000 . Coastal Horizons - keep amount of$44,133; remove reconnnended increase of$98,067. . A vehicle replacement schedule and funding needs to be added to next year's budget . Advisory Boards will provide the Connnissioners with annual reports/updates (i.e. Airlie Gardens, Library, Museum, etc) Budget Director Griffin reported that the appropriation of fund balance in the amount of $5.1 million would be reduced due to a reduction in the projected health insurance costs of$683,536 and the consensus items that were removed or decreased. Hearing no further connnents, Chairman Greer adjourned the meeting at 6:35 p.rn. Respectfully submitted, Sheila 1. Schult Clerk to the Board