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HomeMy WebLinkAbout2025-03-06 Budget Work Session and Agenda Review NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 6, 2025 PAGE 439 ASSEMBLY The New Hanover County Board of Commissioners met on March 6, 2025, at 9:00 a.m. for the Budget Work Session and Agenda Review meeting in Conference Rooms 138-139 at the New Hanover County Government Center, 230 Government Center Drive, Wilmington, North Carolina. Members present: Chair Bill Rivenbark; Vice-Chair LeAnn Pierce; Commissioner Dane Scalise; Commissioner Stephanie A.C. Walker; and Commissioner Rob Zapple. Staff present: County Manager Chris Coudriet; Clerk to the Board Kymberleigh G. Crowell; and County Attorney K. Jordan Smith. Chair Rivenbark called the meeting to order, stating that the purpose is for the Board to discuss budget priorities for the 2025-2026 fiscal year and the March 10, 2025 regular meeting agenda. FISCAL YEAR (FY) 2025-2026 BUDGET WORK SESSION PRIORITIES DISCUSSION County Manager Coudriet thanked the Board for the opportunity to hold this second work session of the FY 2025-2026 budget. Chief Financial Officer Eric Credle and Budget Officer Amanda Kostusiak shared the following information concerning the FY 2025-2026 budget:  Budget Work Session agenda: revenues, non-General Funds, escrow, opioid funding recommendation, and mental health funding recommendation  Property tax rate history: Mr. Credle confirmed that over the years, the tax rate dropped $0.17 as property values increased.  North Carolina county tax rates: th  New Hanover County is the 16 lowest out of 100 counties  Tax rate range is $0.27 to $0.99  Average tax rate is $0.62  New Hanover County market value increase:  Residential:  Mean change: 67.23%  Median change: 59.40%  Commercial:  Mean change: 66.90%  Median change: 59.06%  Total:  Mean change: 67.15%  Median change: 59.08%  Jurisdictional market value increases: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 6, 2025 PAGE 440  Overall tax base increase factoring in all taxable property = 57.7%  New tax base analysis: County Manager Coudriet stated that staff will not propose the current tax rate for Board consideration in the FY26 budget. He clarified that increased property values do not necessarily result in higher taxes for residents. He also noted that absorbing $68 million in increased costs is not under consideration. In response to questions, he acknowledged that purchasing power is down but emphasized the County's continued investment in its workforce, funded through organic tax base growth. Commissioner Zapple commented that the $68 million reflects the current cost of doing business. County Manager Coudriet added that staff are committed to minimizing inflation impacts on taxpayers. He also referenced an article ranking New Hanover County ninth in GDP growth among 100 counties, crediting responsible public investments for supporting that growth, including workforce development and infrastructure.  Sample bill scenarios: The Board discussed the revaluation and appeals process. Tax Administrator Allison Snell stated that in 2017, the appeal rate was about 3%. In 2021, there were about 5,000 appeals. As of today, the County received about 700 appeals out of the 115,000 taxable parcels, but that number is expected to increase. Ms. Snell confirmed that written appeals must be submitted by 5:00 p.m. on May 22, 2025 to meet the deadline.  Sales tax revenues: The Board briefly discussed how tariffs will affect sales tax projections. Ms. Kostusiak stated that staff base the sales tax collection numbers on historical data, but they do consider and discuss tariffs. Commissioner Scalise stated that he believes in remaining conservative in revenue projections to avoid underperformance.  Status of the General Fund budget:  All continuation and enhancement budget requests received:  Senior management enhancement meeting held 3/5/25: Vetting in process  Substantial focus of the 3/20/25 Budget Work Session:  Review of enhancements  Comparison of department budgets to the prior year:  Three-year trend data and staff info included  Analysis of mandated vs. discretionary expenditures  Capital Plan will also be a focus of the 3/20/25 Work Session County Engineer Tim Lowe provided the following information regarding Stormwater Services:  Stormwater Services: FY25 Performance Report and FY26 Outlook:  FY2025 Performance:  Maintenance performed:  Preventative and proactive: 32 miles  Reactive: 163 work orders totaling 23 miles; 800+ citizen calls  10 Capital projects constructed: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 6, 2025 PAGE 441  Including ~$800,000 White Road Project  Stormwater five-year Capital Improvement Plan (CIP) development  Data collection:  Mapping: 450+ miles mapped to-date  Stream gauges: NCFIMAN  Watershed planning  Capacity building: professional services on-call, staff development, equipment, procedures, and policies  FY2026 Outlook:  Maintenance:  Preventative and proactive maintenance  Continued reactive maintenance and repairs  Capital Projects:  Courtney Pines Culvert ~$1 million  Construction of 10 additional capital projects  Design development of 19 future projects  Renovation of the stormwater services office building  Data Collection:  10 additional stream gauges  Infrastructure condition assessments  Watershed planning:  Initiate planning studies for a portion of Smith Creek and a portion of Motts Creek  FY2026 Budget Proposals/Requests:  Stormwater Fee:  No changes proposed for FY26: $6.14/ERU:  The prior year’s increase from $5.65 is scheduled to be a three-year fee  Higher FY25 fees expected to add to fund balance in FY2025 to be used in FY26 (below)  Enhancements/capital improvement:  Stormwater office renovation  Utilize a portion of the Fund Balance to support Courtney Pines culvert replacement The Board briefly discussed the White Road project, which Mr. Lowe confirmed was completed in August 2024. The Board thanked Mr. Lowe and his team for their work and responsiveness to citizens’ concerns. In response to questions, Mr. Lowe explained that many drainage pipes are owned by the NC Department of Transportation (NCDOT) and that builders are required to assess downstream impacts when proposing new developments, with information provided to engineering. The Board briefly discussed the stormwater fee. County Manager Coudriet stated that staff plan to keep the fee the same for longer than three fiscal years, but they intend for it to be at least three years. Mr. Lowe confirmed that the $6.14 fee is charged per month for a total of $73.68 per year. Mr. Lowe also stated that a 31% discount is applied if the property is covered by a stormwater permit. Recycling and Solid Waste Director Joe Suleyman provided the following information regarding Recycling and Solid Waste:  Recycling and Solid Waste:  Environmental funds:  New Hanover County Recycling and Solid Waste oversees one of the state’s most innovative integrated solid waste disposal systems for the benefit of residents and businesses  The department manages:  A Recycling drop-off collection system  A Household Hazardous Waste and electronic waste collection system  A Resource Conservation and Recovery Act (RCRA) Subtitle D landfill  A Construction and Demolition Debris (C&D) recycling facility  And an in-vessel composting operation  FY2026 Enhancement details:  Demolition of old wastewater treatment plant and filter building:  Structures are original to the site (ca. 1981) and have been replaced with new technologies  Replacement of Construction and Demolition multi-reuse facility (C&D MRF) wind fence:  Fencing was installed in 2016 and has withstood three hurricanes but is compromised and beyond repair  Compost facility painting and repair:  The original structure was built in 2017, the paint has faded, and wood rot has set in  Fee revisions:  Loads determined by visual inspection to contain more than 75% cardboard volume will be assessed a 100% surcharge over the prevailing tipping fee  Incentivizes recycling, which brings revenue to the County and preserves landfill airspace NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 6, 2025 PAGE 442  With the growing popularity of online shopping, disposed waste contains an increasing amount of cardboard  Landfill fee review:  Current tip fee: $52/ton (includes a $2 state surcharge)  Financial analysis:  Budget is $21.8 million in revenue versus $24.1 million in expense:  Fund Balance usage in FY26 of $2.3 million versus plan of $1.2 million in savings for post-closure  Fund Balance at 6/30/24: $8.6 million  Major variances:  Debt Service increase of $650,000 from the prior year  Transfer to Capital Project Funds increase of $1.3 million (to $5,342,000):  Southern property construction for Cells 12B & 13: $3.4 million  Lagoon relining: $0.95 million  New admin building: $1.0 million  Significant cell construction and closure costs over the next three years: ~ $16 million  Recommendation: No tip fee increase for FY26, but anticipated for FY27 The Board briefly discussed litter enforcement near the landfill and thanked Mr. Suleyman and staff for their efforts. In response to questions about the composting program, Mr. Suleyman explained that staff would like to expand the program, but the space limitations present challenges. He reported on a new commercial compost facility in Pender County that will help support local composting needs. Mr. Suleyman explained that the wind fence is an effective and low-cost way to control litter, with a replacement cost of about $25,000 for the needed section. The Board also discussed cardboard fees. Mr. Suleyman clarified that the landfill accepts wooden pallets for free at the wood waste recycling area; however, mixed construction loads containing pallets incur a $10 per pallet fee. He added that staff prioritize educating customers before issuing penalties. A discussion ensued about what would occur if the landfill reached capacity, and the County must haul trash outside the county. Mr. Suleyman explained that unless another county agrees to accept the waste, the County would have no negotiating power and would be forced to pay whatever rate the hauler charges. As a result, consumers could see their garbage fees double, triple, or quadruple. He cites neighboring counties as examples, noting both do operate transfer stations and haul waste out of the county, with tipping fees over $75 per ton. In response to questions about tip fee revenue, Mr. Suleyman states that each $1 increase in the tip fee generates approximately $400,000 in revenue. The Board discussed the possibility of raising the tip fee this year to prepare for future needs. County Manager Coudriet clarified that staff are building the budget with the goal of maintaining current user fees, but the Board sets the final rates. Regarding landfill gas recovery, Mr. Suleyman explained that under the County’s contract with the vendor, once commercial operation begins, the vendor will pay a fixed $300,000 annual fee plus $3.54 per MMBtu of energy delivered to Piedmont Natural Gas. This revenue is projected to generate about $1 million annually, equal to approximately $2.50 per ton on the tip fee, and is expected to come online by May 2026. Fire Chief Donnie Hall provided the following information regarding Fire Rescue:  Fire Rescue:  Fire Rescue (Fire Services Fund):  Internationally accredited agency focused on continuous improvement  Gordon Road Station construction  Castle Hayne Station construction  Updated strategic plan  Looking forward:  Preparing for an insurance rating in the first quarter of 2026  Preparing for reaccreditation in Spring 2027  Opening Gordon Road Station: pilot 4-person company  Opening Castle Hayne Station  Strategic staffing requests  FY25 adopted budget: $25.4 million NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 6, 2025 PAGE 443  132 Positions  Eight fire stations throughout the County (Gordon Road will make nine stations)  Provides fire protection and rescue services mainly in the unincorporated areas of New Hanover County  Fire Rescue tax base analysis: Chief Hall explained in response to questions about companies versus stations that "companies" refer to engine, ladder, or rescue companies, each staffed with a crew of three. Every station has a fire engine, while Myrtle Grove and Murrayville Stations also have ladder trucks, and Wrightsboro Station has a rescue company. As to foster care home inspections, Chief Hall explained that the request is to eliminate the inspection fee. Although inspections will continue, removing the fee for private agencies, since DSS foster homes are already exempt, will reduce confusion and barriers within the program. Regarding PFAS in turnout gear, Chief Hall explained that research is ongoing to find alternative materials that provide the same level of protection as gear containing PFAS, but a solution is not yet available. He then discussed the wide range of services Fire Services provides, from initial building inspections to end-of-life assessments. On accreditation versus insurance ratings, he clarified that they are often confused: the insurance rating reflects fire protection capabilities, while accreditation is an in-depth review of the department’s policies, procedures, structure, facilities, and equipment, measured against industry best practices. Regarding response times, Chief Hall states the goal is to have units enroute within 90 seconds of notification and to arrive on scene within five minutes of departure. County Manager Coudriet adds that, like solid waste discussions, no final decisions on rates have been made, but this discussion provides context for understanding the scale of operations and policy choices. BREAK: Chair Rivenbark called for a break at 10:55 a.m. The Board reconvened at 11:04 a.m. Mr. Credle continued the presentation:  Hospital Fund escrows:  Revenue Stabilization Fund:  Projected 6/30/25 balance: $296.5 million (excluding unrealized losses)  Budgeted FY25 interest earnings of $6.1 million: transfer to General Fund  Mental Health and Substance Use Fund:  Projected 6/30/25 Balance: $41.7 million (excluding unrealized losses)  All interest earnings and $9 million in Fund Balance budgeted in FY25:  Mental Health and Substance Use Disorder Strategies: $1.9 Million  NHCS School Nurses: $3.7 million  NHCS School Therapists: $4.4 million  Getting Home: $0.5 million  All funds in government guaranteed investments  Mental Health and Substance Use Disorder Funding plan:  Funded with $50 million hospital sale escrow  Funds 14 Mental Health and Substance Use Disorder programs  Five providers, 911, HHS, HR, Office of Strategy  Escrow: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 6, 2025 PAGE 444 County Manager Coudriet explained that the Family Support Specialist program is a new initiative and the only new recommendation at this time. Staff are following the Memorandum of Understanding between the City and County, which calls for a group of three elected officials, two County Commissioners and one City Council member, to meet and develop recommendations for opioid fund use. The group met recently and recommended the program, and unless the Board objects, staff will include it in the funding plan. Ms. Kostusiak added that the program is a pilot between DSS and the school district to place additional social workers in schools to address truancy and related mental health issues. The program is recommended for three years and would be funded through mental health funds. It was also confirmed that there is a plan to track the program’s effectiveness and ensure a return on investment. County Manager Coudriet added that the program would assign family caregivers to work with schools on attendance issues. While attendance is improving, it is not rebounding as quickly as needed. He responded to questions clarifying that the Family Support Specialist program is not funded by opioid settlement funds but through the County’s $50 million escrow fund.  Opioid funds:  Wave 1 settlements (July 2021):  McKesson, Cardinal Health, AmerisourceBergen  Payable over 18 years  Wave 2 Settlements (December 2022):  CVS, Walgreens, Walmart  Payable over 15 years  Additional Settlements:  Kroger, Mallinckrodt, Endo, Purdue (pending court approval), Publicis  15 Opioid settlement funded programs  Nine (9) providers, Sheriff’s Office, WPD, HHS Street Outreach, Office of Strategy  Public meeting held on January 17th to outline program successes  Joint Staff and Joint Elected Official meetings held on FY26 recommended spending plan The Board briefly discussed the opioid settlements. Commissioner Scalise clarified in response to questions that all funds are used to benefit New Hanover County residents, and the funds come from private company settlements, not property taxes. In response to questions about timing, County Manager Coudriet explained that the funds will be distributed to the County over approximately 18 years, with staff planning to allocate the funds dollar-for-dollar during that period. He emphasized that this is a long-term funding source, and the Board can evaluate the effectiveness of funded initiatives to determine future funding needs, possibly drawing from other sources like the $50 million mental health escrow fund if available. He responded to further questions that the City will receive about $2 million over the same period and has turned those funds over to the joint effort, which is why the Joint Commission includes one City Council member and two County Commissioners.  National overdose death trends:  Payment schedules: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 6, 2025 PAGE 445  Opioid funds – projected cash flow:  FY2025-26 Recommended Budget – Opioid Settlement Funds:  FY26 Recommended items in bold reflect requested increases from FY25  Education:  New Hanover County Schools (NHCS) expected FY26 request:  Budget priorities:  School Safety ($1 million):  Save and Civil Schools classroom teaching – learning acceptable behavior  Safety officers at each of the four high schools  One additional support specialist at each school: $4 million:  Based on the needs of each school as determined by the principal:  Examples are academic specialist, graduation specialist, behavior specialist  A two-year commitment is requested while the state is lobbied to assume the cost  The plan is to request the New Hanover Community Endowment to fund  Cost of Living Inflation Adjustment: $3 million  Total: $8 million The Board briefly discussed the $4 million request for additional support specialists at each school. Commissioner Scalise noted that the funds may not be recurring if the State assumes responsibility in the future. County Manager Coudriet confirmed that this would represent an $8 million increase over last year’s funding, though some costs might be covered by other sources. Regarding school capital needs, County Manager Coudriet stated that the Board has prioritized New Hanover High School (NHHS), but NHCS has not provided clarity on additional capital requests. The Board also briefly discussed metal detectors for high schools. Also, staff currently do not have an estimate for next year’s average daily membership (ADM) or projected student enrollment.  Other:  Pre-K request expected to be $2.07 million, a 3% increase from FY25:  Red Light Program being discontinued: $1.4 million in annual revenue (NHHS will absorb this through vacancies and other savings opportunities, not being requested from the County) A brief discussion about the red light program. In the past, the program split proceeds between the city and the school system and the City Council voted to end that program, which is going to reduce the overall amount of money that the school might receive by $1.4 million. There is also a cost of $250,000 for the program, which will no longer need to be funded by the City. Wilmington is the last city in the state to operate the red light program.  Cape Fear Community College (CFCC):  Requested operational funding - $14,912,831:  $2.99 million above FY24-25 funding  Requested capital allocation - $2,121,000:  $2 million for roof replacement  $119,000 to replace vehicle/equipment  $201,000 above FY24-25 funding  County funding for CFCC operating budget: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 6, 2025 PAGE 446  The County also pays $9-10 million annually in debt service on the 2008 $164 million general obligation bonds  County funding for CFCC capital outlay:  Budget timeline: Hearing no further discussion, Chair Rivenbark stated the Board will move to the Agenda Review portion of the meeting to review and discuss items for the March 10, 2025 Regular Meeting agenda. DISCUSSION OF MARCH 10, 2025 AGENDA ITEMS Consent Agenda Item #5: Adoption of a Resolution to Award Bid for the Purchase of Two (2) 2025 Chevrolet Silverado Trucks. Chief Deputy Jonathan Hart stated in response to questions that the vehicles are configured with the police package. The vehicles are budgeted for, but because they were not under state contract, the Sheriff’s office had to go out for bids, and Jeff Gordon Chevrolet submitted a bid for the state contract price. Regular Agenda Item #7: Consideration of Approval for the Recommended Public Art at Northchase Library. Chief Facilities Officer Sara Warmuth stated in response to questions that the selected artist will be present on Monday to present his design concept and seek approval. The vision and theme for this work is “The Sky’s The Limit.” Regular Agenda Item #8: Consideration of Approval for Bid Award and Associated Budget Amendment for the Expansion Construction at Northern Regional Park. Assistant Parks and Gardens Director Andy Johnson explained that due to permitting issues with septic, staff plan to purchase a modular restroom facility for approximately $125,000. Staff will also complete minor landscaping and conduct soil testing through a soil engineer. During the discussion about sewer and potable water access at the park, Mr. Johnson commented that the desire is to connect the park to Cape Fear Public Utility Authority within five to 10 years. In response to questions about timing, he clarified that this is an expansion of an existing park, driven by community demand for additional playing fields. He also confirmed that the railroad track running through part of the property presents a challenge. ADJOURNMENT There being no further discussion, Chair Rivenbark adjourned the meeting at 11:52 p.m. Respectfully submitted, Kymberleigh G. Crowell Clerk to the Board Please note that the above minutes are not a verbatim record of the New Hanover County Board of Commissioners meeting. The entire proceedings are available online at www.nhcgov.com.