Loading...
2022-04-14 Budget Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 BUDGET WORK SESSION MEETING, APRIL 14, 2022 PAGE 398 ASSEMBLY The New Hanover County Board of Commissioners held a Budget Work Session on Thursday, April 14, 2022 at 2:00 p.m. via in-person and remote in the Harrell Conference Room at the New Hanover County Government Center, 230 Government Center Drive, Wilmington, North Carolina. Members present: Chair Julia Olson-Boseman; Vice-Chair Deb Hays; Commissioner Jonathan Barfield, Jr. (remote); Commissioner Bill Rivenbark; and Commissioner Rob Zapple. Staff present: County Manager Chris Coudriet; County Attorney Wanda Copley; and Clerk to the Board Kymberleigh G. Crowell. Chair Olson-Boseman called the Budget Work Session meeting to order and announced that the purpose of the meeting is to discuss budget priorities for Fiscal Year (FY) 2022-2023. FISCAL YEAR 2022-2023 BUDGET WORK SESSION Budget Officer Michelle Daniels presented the following information:  FY23 General Fund Revenue Estimates:  Tax Rate Reduction:  FY23 Estimated budget assumes a tax rate of 46 cents  Tax Base Growth:  Property Values:  Final estimate: 1.92% increase  FY22-23 General Fund Revenue Estimates:  $401 million: In response to Board questions, Ms. Daniels confirmed that of the $401 million, $7.3 million is coming from the principal of the revenue stabilization fund (RSF), reducing the RSF from the $300 million. Also being appropriated is $2.4 million in interest. Ms. Wurtzbacher stated that this would decrease the amount of the RSF that could be reinvested. With the proposed appropriation from the RSF, she does not believe that it would be a significant decrease in interest earned because rates are currently low. In response to Board questions about sales tax projections, Ms. Wurtzbacher stated that the County is currently 6.5% over the projections for FY21-22. Based on where the County is in sales tax collection, the expectation is to end the year at $77.2 million in sales tax collections, which is $9 million over the $68.2 million budgeted. Staff is projecting an additional 6.5% growth in sales tax for FY22-23 which brings the estimate to $82.2 million. If sales tax ends up being lower than projected, the difference would typically be covered by the general fund, but the Board could also decide to take it from the RSF. County Manager Coudriet added that it will not take long for staff to see if sales tax collections are off and other options are available. There is still the lever of controlling expenses so that the Board does not have to redirect revenues. Nothing in the research and data being used by staff suggests that sales tax is going to fall off precipitously next year. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 BUDGET WORK SESSION MEETING, APRIL 14, 2022 PAGE 399 In response to further Board questions, County Manager Coudriet stated that the plan to use the principle out of the escrow assumes to continue the Board’s support for prior commitments such as community building at $4.8 million. After that, there is only $2.5 million coming out of the escrow principal above what is necessary. Originally the escrow was looked at to fund the full amount of community building, but because of the Board’s direction, it has been reduced to $4.8 million. Regarding the $3.8 million in replacement revenue from the American Rescue Plan Act (ARPA), Ms. Wurtzbacher stated that there are several programs that staff is proposing to: 1) reallocate $1 million from the mortgage assistance program; 2) reduce the broadband program by $1.5 million; 3) reduce the water assistance program by $300,000; and 4) reallocate $1 million money reserved for future project administration. The redirects make up the $3.8 million which is one time revenue, as it is only available until it is spent. The reallocation is not taking away from people in need, but the County appropriated well above those needs, and now the money is being moved to where the need is now.  FY22 General Fund Sales Tax Growth:  FY23 Statewide Growth Projection: 3.75%  FY23 New Hanover County Growth Projection: 6.5% In response to Board questions regarding October’s budgeted sales tax versus the actual sales tax received, County Manager Coudriet stated that the sales tax paid by non-profits is refunded monthly from the County’s allocation. Ms. Daniels added that the County does an exponential smoothing over each month to break up the refunds for non-profits. If staff knew which month the refund would occur, they could apply it then. As it stands, there may have been a larger refund in October which netted less than the budget estimates. County Manager Coudriet stated that each year the County budgets more than the state projection and the actual collected amount typically ends up being higher than what is budgeted.  FY23 General Fund Expense Estimates:  $401 million: County Manager Coudriet stated that the County is victim to the continuation budget as it relates specifically to the Consumer Price Index (CPI), or the cost of doing business. The CPI for the southeastern United States was published April 13, 2022 and he believes that it was at 9.6%. Staff did communicate to the Board at the first budget work session their concerns about the CPI and discussed at that time how that would be a driver in the continuation budget. However, at that time, he believes that staff underestimated what the CPI would do. It is now more reflective of the cost increases seen for things such as a gallon of gas, supplies, and construction projects. The $253 million continuation budget is more because it costs more to do business. There are limitations on what can be done to reduce the effect unless the County stopped doing some things in various places because it costs more now just to keep a facility safe and clean. In response to Board questions, County Manager Coudriet stated that the continuation budget does include salaries as well as what was discussed regarding salaries. In response to Board questions, Ms. Wurtzbacher stated that the FY22-23 debt service for Cape Fear Community College (CFCC) is $10,368,000 and for New Hanover County Schools (NHCS) it is $23,000,227. She added that most of the debt service comes from the debt service rate. There are some pieces of the NHCS debt that are not covered by that rate because the County only put the $160 million voter approved bond in the rate when NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 BUDGET WORK SESSION MEETING, APRIL 14, 2022 PAGE 400 determining how much was needed. There were also some older general obligation bonds that are not included in the rate. County Manager Coudriet stated that the total contribution to NHCS is $95.7 million plus $23.22 million in capital. The total contribution to CFCC is $13.5 million plus the $10.386 million for capital.  FY22-23 General Fund Enhancement Summary:  Existing Programs and Services:  Technology infrastructure and automation  Capacity building: workload, service levels, efficiencies  Park improvements  New Programs and Services:  Positions  Software  Equipment  Government Center  Workforce Housing  Community Building In response to Board questions, Planning and Land Use Director Rebekah Roth stated that staff has created three new positions and reclassified one position for the workforce housing program. The reclassified position will be focused on the planning aspects of the program. The three new positions will be a program manager, program coordinator, and system support specialist who are all devoted to spending the minimum $3 million a year plus whatever other funding that can be leveraged such as grants. The County is currently in the hiring process for the housing planner and the program manager position and the other two positions will be posted later this week. The program manager will supervise the other two programmatic positions. The program framework is anticipated to be presented to the Board by the end of this fiscal year. What was budgeted for the program outside the $3 million allocation was about $250,000. She also believes that includes the latitude to hire in the mid-range of each of those positions. A brief discussion was held about the various housing initiatives the County is already a part of. In response to Board questions, County Manager Coudriet stated that the Northside Food Co-op is scaled in terms of sustainability. It is a 6,000 – 8,000 square foot building and is based on the current population density in the community. It is also far enough removed from the neighborhood grocery store so that there is not a lot of cross- pollination. The contents of the grocery in terms of product and staple goods will be tailored to what the community determines is necessary and appropriate. The location will be factored into the City of Wilmington’s (City) long-term transportation planning, but City staff has shared that no commitments can currently be made. The Northside Food Co-op supports the site. Chief Facilities Officer Sara Warmuth and Parks and Gardens Director Tara Duckworth are the points of contact for the project.  Public Education:  FY22-23 Preliminary Expenses – New Hanover County Schools (NHCS):  Average Daily Membership (ADM):  NHCS: 24,532 (held flat at FY22 actuals)  Charter Schools: 1,942 (2% growth above FY22 actuals)  Virtual Charter Schools: 81 (2% growth above FY22 actuals)  ADM Rate:  NHCS and Charter Schools: $3,434 (same as FY22)  Virtual Charter Schools: $790 (same as FY22)  Estimated Operating Expense: $90,975,649 ($916,463 less than FY22)  Capital Expense: $3,696,000  Pre-K: $974,844 (not including ARPA/Community Building classrooms) In response to Board questions, County Manager Coudriet stated that NHCS has a plan for the addition of Pre-K classrooms. The funding is also to maintain the classrooms that are already put in place. Ms. Wurtzbacher stated that the $3,696,000 of capital expense is currently a placeholder and is also the same amount appropriated to NHCS for the current fiscal year. The request from NHCS for FY22-23 has not yet been received. When that request is received, it will list specific items and staff will have more detail at that point. Brief discussion ensued regarding the funding for charter schools. The funding is provided to NHCS for the charter schools and NHCS provides the funding to the charter schools as dictated by the state. The average daily membership (ADM) rate is the same for both NHCS and charter schools. County Manager Coudriet stated that he thinks that if a child left one charter school and went to another, the funding would follow the child. Ms. Wurtzbacher stated that there was a change in the law for the current fiscal year in which NHCS pays the charter schools each month based on that month’s student population, so the payment could vary from month to month.  FY22-23 Teacher Salary Supplement Analysis:  FY21-22 teacher supplement goal $9,000  Funding available to maintain that goal for FY22-23  Wake and Mecklenburg counties’ stated goals of best paid teachers going forward  Additional funding above $9,000 would require additional escrow dollars Brief discussion ensued regarding teacher supplements. In response to Board questions, County Manager Coudriet stated that this budget does not assume a recommendation to remain at the current ADM rate. NHCS decides how use ADM and could pay teacher assistants more with the ADM if that is what they chose to do. It is the NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 BUDGET WORK SESSION MEETING, APRIL 14, 2022 PAGE 401 prerogative of the Board of Education to decide how they choose to use the current expense funds provided by the th County. Statutorily, the school’s budget request is due by May 15 to the County, but it typically comes before that.  FY22-23 Requested Expense – Cape Fear Community College (CFCC):  Operating Increases: positions and benefits, property and motor vehicle insurance, contracts, fuel/oil, and maintenance and repair  Capital Increases: roof replacements, chillers, exhaust fans, curbs, and ductwork Discussion ensued regarding the salary increase request for CFCC. In response to Board questions, Ms. Wurtzbacher stated that the details of the salary request are for a salary-only increase for the president in the amount of $22,000, an increase for senior administrators of $2,000 with the rest being benefits and taxes, increases in salary and benefits of $15,000 for general administration which is not broken down by any specific position, an increase of $76,000 for benefits and salaries for plant operations, and that it does appear there is a decrease in salary expense for plant maintenance.  Next Steps: th  April 28 Budget Work Session:  New Hanover County Schools Proposal (if received)  Environmental Management  Stormwater  Fire Services  Revenue and Expense Summaries – Other Funds  ARPA Update  Workforce Housing Update  Community Building Update th  Manager’s Recommendation – May 16:  Includes Non-county Agency Funding Committee Recommendation th  Public Hearing: June 6 th  Budget Adoption: June 20 General discussion ensued regarding the capital expense which has been budgeted for NHCS. In response to Board questions, County Manager Coudriet stated that what NHCS will submit will be its annual budget. The school projects that have been discussed will be a capital ask which would be funded through a limited obligation bond so that will not be part of the ask. He stated that NHCS has presented its plans to the Board and the Board has authorized them to proceed and endorsed the grant application. If those grants do not come through, it will then be a decision for the Board on how much of any of those projects to fund, or not, there is no obligation to do so. Further discussion ensued regarding ADM. Ms. Daniels stated that the Department of Public Instruction (DPI) releases monthly numbers and in February 2022, there were 24,586 students in NHCS. Of those, 1,787 were enrolled in charter schools with 82 students enrolled in the virtual charter school. Private and homeschool numbers are unknown as the County does not provide funding for those students. County Manager Coudriet stated that if the th updated numbers are available by the April 28 budget work session, staff will be able to walk the Board through it. Unless the Board directs otherwise, it is not staff’s intention to change the recommendation of the ADM, which is $3,434 based on a student population of 24,532 and a capital appropriation of $3.7 million. The budget presented by NHCS may reflect more or not. Enterprise funds, environmental management, fire services, and stormwater will th also be discussed at the April 28 budget work session as well as any other revenue and expense changes that staff thinks are appropriate. The Board congratulated Ms. Wurtzbacher on her promotion to assistant county manager and thanked Ms. Daniels for her assistance during these changes. ADJOURNMENT There being no further business, Chair Olson-Boseman thanked staff for the presentation and adjourned the meeting at 3:35 p.m. Respectfully submitted, Kymberleigh G. Crowell Clerk to the Board Please note that the above minutes are not a verbatim of the New Hanover County Board of Commissioners meeting.