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HomeMy WebLinkAbout2025-06-12 Budget Work Session and Agenda Review NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 559 ASSEMBLY The New Hanover County Board of Commissioners met on June 12, 2025, at 2:02 p.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 June 16, 2025 regular meeting agenda. FISCAL YEAR (FY) 2025-2026 BUDGET WORK SESSION PRIORITIES DISCUSSION County Manager Coudriet stated that staff had been preparing the budget files since Monday and, while there were no technical errors, some language may need clarification. He confirmed that staff were available to answer questions and manage the details of the proposal effectively, though some granular parts of the plan may still lack full detail. He noted that the information being presented reflects a tax rate of 30.6 cents per $100 of assessed value and that the accompanying slide deck, sent earlier in the day, helps organize the related tab sheets. He noted that Chief Finance Officer Eric Credle and Chief Human Resources Officer Mark Francolini were available to provide answers or context as needed. He then asked Budget Officer Amanda Kostusiak to begin the presentation.  FY 2025-2026 Budget Work Session:  FY2025-2026 Revised Budget – 30.6 Cents:  Budget at Property Tax Rate of 30.6 Cents:  Achieves $36 million in property tax savings versus recommended budget of 35.0 cents  No changes to New Hanover County Schools, CFCC, or Public Safety market adjustments  $180,000: two (2) full-time employees (FTEs) for Senior Resource Center and one (1) FTE for Veterans Services retained from 33.9 cents proposal  $3 million Workforce Housing allocation eliminated as a permanent change in policy  $1.6 million Non-County Agency Funding proposed funding by the New Hanover Community Endowment (Endowment) and a permanent change in policy  $975,000: six (6) Pre-K classrooms expanded during COVID eliminated as a change in policy  $875,000: Merit of 0.5% for high performers eliminated  $965,000: all contingency eliminated  $3.7 million: funding of school nurses to be from the Mental Health and Substance Use Disorder (MHSUD) Fund and scaled state school health nursing standard  $2.3 million: delay Public Safety Technology Enhancement  $8.1 million of Fund Balance usage and a change in policy to set a minimum of 16.7 percent  $250,000: Justice Center Rent eliminated  $350,000: Second Chance Legal Aid eliminated and a permanent change in policy  $318,000: Courts Video Equipment (CRAVE) removed  $13.7 million for reductions to previously recommended enhancements and operational savings:  $850,000 in previously recommended enhancements eliminated:  $266,000: Board of Elections: adjusted budget is $467,000 or 26% above FY25  $18,000: Health and Human Services: conversion of part-time to full-time position removed  $110,000: Information Technology Engineer removed  $25,000: Museum – conversion of two part-time positions to full time  $328,000: Parks and Gardens – crew leader and various projects removed  $35,000: Passport Agent removed  $41,000: Planning – Floodplain Software removed  $35,000: Soil & Water part-time coordinator removed  $750,000: modify Northchase Library service model  $1.15 million: reduce the number of social workers to state service standards (11 FTE reduction)  $548,000: increase salary lag (Vacancy Savings) from $3.0 million to $3.55 million – based on FY25 realization  $500,000: reduce discretionary budgets  $9.86 million: permanent reduction in operational department spending:  $9.86 million in operations budget savings:  No personnel or operating reductions applied to the Sheriff’s Office  82 position equivalency affected for General Fund - position savings in most departments via a combination of planned reductions and attrition: Civic Engagement Office, Communications, Community Justice Services, County NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 560 Managers Office, Engineering, Facilities Management, Finance, Health and Human Services, Human Resources, Information Technology, Library, NCSU Extension, Parks and Gardens, Planning and Land Use, Social Services, Strategy, and Tax  Other operational reductions:  Art at Project Grace, Northchase, Smith Creek Park removed $650,000 to maintain the rate at 30.6 cents  Film internships reduced from $200,000 to $100,000  Greater Wilmington Chamber of Commerce increased to $203,582  New Hanover County General Assistance Payments  Casual Part Time  Cell Phone Allowances  Department of Social Services Vendor Contracts  Economic Development Contracts  Mileage Reimbursements  Overtime  Subscriptions  Supplies reduced by 50 percent, generally enterprise wide  Training and Travel reduced by 75 percent, generally enterprise wide  Other:  Wilmington Business Development: no change from $357,000 recommended budget  No change to CFCC from Recommended Budget (increase from FY25 of $1.5 million)  Echo Farms tennis courts expansion capital project returned ($400,000 bid overage assumed in the form of a grant from USTA and Greater Wilmington Tennis Association)  Preserve MHSUD Fund by eliminating the Family Support Specialist program at the schools: $548,000  Recap of funded enhancements in 30.6 cent budget:  $223,000: three (3) FTEs for Facilities Management related to Project Grace  $180,000: two (2) FTEs for Senior Resource Center (insurance specialist and social work position)  $55,000: Veterans Outreach Position  $391,000: Sheriff equipment (in-car cameras, security camera upgrade, security system for CSI, more cameras at Detention)  $118,000: Sheriff – Deputy Corporal  $1.1 million: Northchase Library staffing, operations, materials  $299,000: Museum items primarily related to Project Grace (four \[4\] FTE’s, Planetarium films, Altru Point of Sale system)  $96,000: Board of Elections Education and Communications Coordinator (funded with existing county position)  Total = $2.46 million A brief discussion ensued regarding the Public Safety technology software. County Manager Coudriet responded to questions stating that during the first budget work session, he shared that the Public Safety Technology Enhancement project was the one item he preferred not to be removed. However, to achieve the desired tax rate while balancing policy priorities, he recommended a one-year delay in the project's implementation. He clarified that the project is not being canceled, only postponed. The 911 center will continue to operate and accept calls as usual. He noted that while the current software is still functional, it is no longer a priority for the vendor to support. Although the County will forgo some modern functionality during the delay, the core system remains reliable, and there are no limitations to processing or dispatching 911 calls. He acknowledged the contradiction in his initial stance but underscored the recommendation as a necessary compromise to meet budget goals. Commissioner Zapple stated that the proposed delay of the 911 system upgrade is one of several budget items with which he strongly disagrees, emphasizing that a fully functioning and modern emergency system is a core service essential to the nearly 250,000 residents of the County. He described the decision to delay the upgrade as irresponsible, especially given vendor warnings that the current software will no longer be supported. While he appreciated the county manager’s acknowledgment that the 911 system was “the last thing out,” he stressed that it remains excluded from the budget and urged the Board not to accept that outcome. In response, Commissioner Scalise characterized Commissioner Zapple’s remarks as inflammatory and noted that the current 911 system is still functional and can be delayed for a year. He recommended that the Board revisit prior policy decisions that may no longer be necessary, suggesting that funds previously allocated elsewhere could be redirected to support projects like the 911 upgrade. He emphasized the importance of reviewing long-standing commitments and expressed concern that framing the delay as life-threatening was reckless. Commissioner Zapple countered that Board decisions are made collectively and often on a bipartisan basis, not by individuals. He cited the Affordable and Workforce Housing Fund, previously approved by the Board, as an example of a policy decision that Commissioner Scalise has questioned, adding that while policy discussions are appropriate, they should be conducted as a Board. Commissioner Scalise agreed that the Board functions collectively but noted that it is composed of individuals whose decisions are determined by majority vote. He stated that no Board is bound by the actions of a prior one and argued for a comprehensive review of long-standing policies to identify potential cost savings that could support priorities NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 561 like the 911 system. Commissioner Zapple supported periodic policy review but stated that budget season is not the appropriate time to undertake such an effort. He objected to the proposal to eliminate up to 68 positions, which he believes targets employees who are simply doing their jobs, to serve a political agenda. He praised the performance of staff and the leadership of the county manager, crediting their efforts with making New Hanover County one of the most economically vital counties in the state. He warned that such staffing cuts could destabilize the organization and send the wrong message to both employees and the public. In response, Commissioner Scalise emphasized that priorities should begin with taxpayers, not employees. While he acknowledged the hard work of staff, he stated that the County must evaluate its revenues and economic pressures and focus first on the needs of its constituents. He concluded that this represented a fundamental point of disagreement between himself and Commissioner Zapple. Commissioner Zapple agreed that taxpayers are the foundation of county government but reiterated that employees are performing well and that operations are running lean. He rejected the implication that over 70 employees should be terminated, calling it harmful and inaccurate, and warned that such actions could open the door to further destabilizing cuts. Commissioner Scalise clarified that many of the referenced positions are vacant or expected to be vacated through attrition, noting that the numbers cited had grown beyond what is actually under consideration. He explained that eliminating unfilled positions is different from firing existing employees. Commissioner Zapple responded that just because a position is unfilled does not mean it is unnecessary, and that vacancies may instead reflect the broader challenges in hiring. Vice-Chair Pierce stated that eliminating unfilled positions differs from firing someone and that it cannot be both. She commented that the county manager and his team made the decision to propose those cuts. She redirected the discussion back to the current topic, asking whether there are failures in the 911 system that warrant immediate concern. County Manager Coudriet acknowledged that there are technology-related failures, such as issues with feed lines from AT&T and occasional power surges, even when operating on generator power. However, there is no operational risk in delaying the transition. He explained that the transition involves more than the 911 center; it includes jail management and fire response software. While the existing system is outdated, at nearly 30 years old, and a transition is ultimately necessary. He confirmed that 911 calls will continue to be answered and dispatched correctly with or without the new software. He noted that with finite resources and a different funding direction than what he and staff have recommended, decisions must be made to achieve certain outcomes. Vice- Chair Pierce reiterated her point, questioning why the 911 system upgrade would be proposed for delay if it is truly such a critical need. She asked why it would be among the cuts rather than prioritized for immediate funding. County Manager Coudriet stated he was asked to take $36 million of recurring revenue out of the equation, and the number of people is associated with the reduction of service asked for by the Board. About 70 filled positions would be impacted with this model and there are 29 vacancies. He emphasized that the proposed budget reflects what the majority of the Board has expressed, which is a 30.6 cent tax rate, not higher than 30.9 cents, along with a 5% reduction in operating expenses. With 75% of the County’s budget tied to personnel, he cannot achieve that without reducing the number of positions. Vice-Chair Pierce noted that the Board made a similar request to the school system, asking them to review unfilled positions and to eliminate staff who were added on. County Manager Coudriet stated that if the goal is a permanent 5% reduction, eliminating vacant positions is a necessary step, as personnel costs recur annually. If it is a policy objective, there must be a contraction in the head count, as there is no other way to achieve it mathematically. Vice-Chair Pierce commented that discussions about growing government must also include the responsibility to scale back when circumstances demand it, such as in the current budget situation. County Manager Coudriet responded that he is not disagreeing with it. What the information reflects are the policy changes identified by the Board to him, and when policy changes, it is reasonable to assume there will be contractions. Vice-Chair Pierce returned to the discussion of the 911 system, stating that while staff chose which positions to cut, she did not believe they would have proposed removing funding for the 911 center if it posed an immediate risk of failure. She emphasized that if the system were truly at risk of breaking down, staff should have insisted on keeping it in the budget regardless of direction. She stated she needed confirmation that the system remains operational. County Manager Coudriet confirmed that there is no risk to the 911 system’s operational response. Vice-Chair Pierce reiterated that she could not believe the system would have been cut if public safety were truly at risk. County Manager Coudriet responded that it was the last item removed during the budgeting process. Vice-Chair Pierce agreed and stated she wanted assurance that the calls would go through. Commissioner Zapple agreed and reiterated that the County relies on a 30-year-old system that vendors have repeatedly warned is outdated. Vice- Chair Pierce asked how long the County had known about the issue. County Manager Coudriet explained that the software has not kept pace with new versions, like outdated editions of Microsoft Office, and that while calls will still be answered and dispatched appropriately, the County has not transitioned to the newer generation of the system. He emphasized that staff are responsible for planning ahead and positioning the County for the best available technology, which the current system does not represent. Commissioner Walker stated that being 30 years behind in technology is unacceptable, noting that even a five-year gap is problematic. She added that uncertainty about whether lives will be lost should not be a reason to delay action on upgrading the 911 system. County Manager Coudriet stated that if the Board wants to fund the 911 upgrade, it will cost $2.3 million, which equates to two- tenths of a cent. He said that the amount does not address the tax rate at a macro level. He added that if a majority of the Board says to fund it, staff will go to other places and find the equivalent of that money. He explained that he is reacting to a defined rate and policy considerations, which he acknowledged is a reasonable position to take. However, he stated that he must reflect back, and he is going to take exception to that. He picked the employees he did based on the fact that the parameters given to him require the selection of employees. Commissioner Scalise stated that, at a macro level, the budget reflects exactly what three members of the Board directed the county manager to do. That is the reality, and this budget is what the county manager was asked NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 562 to do and what he delivered. He acknowledged that there is clear disagreement on the matter, not just potential disagreement, and acknowledged that he and Commissioner Zapple have also disagreed on past budgets. However, at some point, everyone needs to express their views on what should or should not be included in the budget, and then the Board will vote and move forward. He concluded by reminding members that this meeting was called specifically for this discussion and that, following differing views and work sessions, the Board is now addressing those differences. Commissioner Walker stated that while it is reasonable to review policies as a Board, the current process amounted to a wholesale change in policy through the budget, excluding two commissioners from real discussion. She objected to the lack of dialogue around cuts to the Workforce Housing Fund, a five-year commitment, and asked who proposed removing 100 children from Pre-K. Commissioner Scalise responded that this was the discussion and that three members directed the budget decisions, like previous processes. Commissioner Walker responded that she had not participated in any conversation about cutting those items and emphasized Commissioner Scalise had previously advocated for policy discussions as a full Board. Commissioner Scalise noted they were discussing it now and added that during the prior budget cycle, he had not been included either, yet he always responded when Commissioner Walker reached out. Commissioner Walker replied that he only responded when she initiated contact and that his stance on revenue neutrality had been clear from the start. She questioned why others were included in discussions while she was not, despite her work on the budget and willingness to collaborate. Commissioner Scalise maintained that he had responded to her outreach and noted she seemed to draw a distinction between phone calls and texts, offering to read a message inviting her to reach out by any method. Commissioner Walker concluded by saying she had attended a meeting with another official who appeared better informed than she was on the very budget she was helping craft, which she found disappointing. Vice-Chair Pierce commented that she and Commissioner Walker had not discussed the budget directly and suggested this may be their first such conversation. She noted that while she had spoken with other commissioners, she understood Commissioner Walker’s position to be 38 cents, while hers was 29.2 cents, acknowledging that the two positions were unlikely to align. Commissioner Walker clarified that her position was not 38 cents. Vice-Chair Pierce reiterated her support for 29.2 cents, reflecting the input of hundreds of constituents who had reached out by phone and email. She added that she was willing to compromise above that rate to fund key priorities but clarified that she would not support anything above 35 cents. Commissioner Zapple responded that this is the point he is trying to make and believes the 30.6 cent tax rate is an arbitrary number. He expressed appreciation that Vice-Chair Pierce was open to discussing specific priorities like the 911 system and noted other items in the budget also deserve focused consideration. He stated that instead of continuing to look for additional cuts, the Board could raise the tax rate incrementally to fund priorities supported by the majority. He emphasized that maintaining a stable and reliable 911 system, especially one that is not nearly 30 years old, should be among those priorities. He asked why the decision to set the rate at 30.6 was made arbitrarily and why it could not be 31.6 instead. Commissioner Scalise responded that the 30.6 cent rate was not arbitrary; it resulted from discussions among three commissioners. He acknowledged setting an upper limit of 30.9 cents and expressed a desire to get as close to 29.2 cents as possible. The final rate reflected the priorities communicated by the majority. He emphasized that this is the practical reality of operating within a governing board. Addressing the 911 system discussion, he noted that although the system is nearly 30 years old, the county manager confirmed it could be delayed by a year without operational risk, and he accepted that guidance. He pointed out that commissioners have served varying lengths of time and questioned why this issue has only recently become urgent for Commissioner Zapple. He agreed with the idea of reviewing other policy decisions that may no longer be necessary and noted that the Board had already reallocated funding from an over-budget park project. He encouraged the Board to begin that review process after the budget is adopted, rather than waiting until the next budget cycle. Commissioner Zapple stated that reviewing policy works both ways and may reveal underfunded or overlooked areas, such as the affordable and workforce housing policy. He emphasized that housing remains a serious issue in the County and cautioned against dismissing or cutting the modest funding allocated to address it. He supported having a full discussion on how to strengthen the program, which he described as a sound plan that kept the County’s involvement minimal while generating meaningful data over a five-year period. He explained that the intent was to identify where to focus long-term efforts without immediately pursuing a large bond. He noted that the program had already helped leverage over $150 million in private investment and challenged others to identify another County initiative with comparable results. Vice-Chair Pierce noted that the County had made its affordable housing policy before the Endowment contributed approximately $20 million to the issue. She acknowledged and appreciated that contribution, stating that the Endowment stepped up to support the effort. She added that the County’s pullback in funding reflects an effort to balance responsibilities and maintain the proposed tax rate. Commissioner Zapple responded that the Board should have a conversation with the Endowment, but there is no clear plan going forward and questioned whether the plan is to abandon support for agencies such as the Domestic Violence Shelter or the Carousel Center. He said he hoped not, and these conversations should be continued with the Endowment. Vice-Chair Pierce responded that, to her understanding, agencies would now apply directly to the Endowment or apply for more than they have already applied for, rather than returning to the County for additional funding. County Manager Coudriet responded to the discussion that, as it relates to the current year, which is not the case. He stated that the Board needs to be explicit about whether the expectation is to exit the outside agency funding process and direct those agencies to seek funding from the Endowment. While noting that no one can speak on behalf of the Endowment, he believes the Endowment is looking for the County to take a position. Commissioner Scalise stated that the County created the Endowment with proceeds from the sale of the public hospital, specifically to fund initiatives the County might not be able to, should not, or could not support directly. He described the Endowment as a unique and valuable vehicle that provides opportunities not available elsewhere. He said it was inaccurate to present the situation as binary, either the County funds outside agencies or does not support them. He clarified that while Commissioner Zapple may not have stated it that way, which was the NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 563 implication. Commissioner Scalise said his position is to support those organizations by directing them to the Endowment, which was created expressly for that purpose. He acknowledged that this approach reflects a shift in policy and affirmed his belief that the Board should move in that direction. Commissioner Walker stated that she disagreed with the shift in policy regarding outside agency funding, noting that the County had made prior commitments and that many organizations rely on that support. She expressed concern that three commissioners were making policy in real time without open public discussion or evaluation of the merits. She also addressed the tax rate issue, pushing back against the narrative around revenue neutral. She stated that while many believe a revenue-neutral rate means they will not see a tax increase, it is not necessarily true and depends on property revaluation. She argued that the narrative in the community about a 29.2 cent rate will not work for the County. She noted that some commissioners had moved up from their original positions, suggesting acknowledgment that the lower rate was unworkable. She called the proposed cuts unacceptable and reiterated her opposition to the revenue-neutral approach. She also clarified that she had never advocated for a 38-cent tax rate, stating that while she was given a number she did not fully agree with, she believed it was fair and had worked in good faith toward that goal. Commissioner Scalise responded by acknowledging that even at a 29.2 cent tax rate, some residents would still see an increase in their tax bills and stated that this is a mathematical reality. He emphasized that in the previously proposed budget, enhancements for New Hanover County Schools, Cape Fear Community College, public safety pay, the Senior Resource Center, and veteran services were already agreed upon at the current funding levels. Cutting in other areas was necessary to preserve those enhancements while also addressing the tax concerns raised by citizens. He noted that it is easy to say yes to everything and pass the cost on to taxpayers, but much harder to say no in their interest. Commissioner Scalise said that saying no to some items is difficult but reflects the priorities expressed by many citizens, which is why those cuts are included in the current proposal. Commissioner Walker stated that while some residents support keeping taxes low, others have told her they understand rising costs and inflation mean government cannot operate on the same dollars year after year. She expressed concern that, if cuts continue, there will be no flexibility next year, especially in an election year when she believes there will be little appetite for a tax increase. Commissioner Scalise responded that he does not let election cycles influence his position on tax policy and has maintained a consistent stance throughout his time on the Board. When asked whether he would support raising taxes next year if needed, Commissioner Scalise replied it was unlikely, and suggested staff should consider the majority’s current direction when developing the budget. Commissioner Walker emphasized that rising costs require investment, particularly as the County grows. She praised improved quality of life and infrastructure over the years and stressed that continued growth demands adequate services. Vice-Chair Pierce noted that even modest cuts add up, citing the proposed $11 million reduction. Commissioner Walker added that increased service demands also raise costs and questioned the decision to cut funding that would affect 100 children in Pre-K, saying she was unaware of the cut until the night before. In response, Commissioner Scalise compared the situation to the schools’ budget the previous year, noting that positions added using temporary American Rescue Plan (ARP) funds could not be absorbed into the County’s budget after those funds expired. Commissioner Walker objected, stating that the result is cutting services for children. Commissioner Zapple added that the school board had been warned not to rely on temporary funding, including by the superintendent at the time, but chose to proceed. When Chair Rivenbark asked who provided that warning, Commissioner Zapple responded that the superintendent had publicly advised against it, including in an open board session. Commissioner Scalise commented that the Board has done some of the same things it previously criticized the school board for, making permanent policy decisions based on temporary funding. He noted that such decisions eventually require reconciliation and acknowledged the differing opinions among commissioners on how to address that. Commissioner Zapple stated that Commissioner Scalise's position did not fully account for the County’s continued growth and the need to maintain and expand services accordingly. He emphasized that as the population increases, the County must scale its services, and that ongoing calls for cuts conflict with the reality of that growth. He noted that while some may support service expansion or tax restraint individually, they often reject one side of that equation, creating pressure on the County’s ability to respond. Vice-Chair Pierce responded that many residents have told her they are cutting back at home and question why the government is asking for more money to provide services they do not personally use. She added that, based on her 30 years in private business, she has always focused on cutting expenses and avoiding waste. She said her preference for revenue neutral stems from that background but acknowledged that the County had already expanded spending by $11 million. She stated that regardless of the year, she will always aim to save money, which is consistent with her personal and professional philosophy. Commissioner Walker expressed concern with how the budget and tax proposals were being characterized, stating that the last proposal represented an 11-cent tax cut, not an increase, and that references to revenue neutral had become overly simplified. Vice-Chair Pierce responded that the current proposal of 30.6 cents, compared to 29.2 cents, represents a $11 million increase over last year’s budget. Commissioner Walker acknowledged the increase but objected to its being labeled as "bloat," stating that she, too, is a business owner who knows how to carefully manage resources. Vice-Chair Pierce reiterated that the budget had grown by $11 million, while Commissioner Walker pointed to inflation and population growth, noting that not all new residents are homeowners and therefore do not contribute directly through property taxes. Vice-Chair Pierce responded that property owners pass those costs along through rent increases, meaning renters also feel the burden. She emphasized that this shift puts pressure on long-time homeowners, particularly seniors, many of whom have reached out saying they cannot afford further tax increases. Commissioner Walker replied that the broader issue is a lack of clarity about what the tax rate means in practice. She noted that although her home value rose by 42%, the NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 564 actual tax increase was modest. She expressed concern that continued cuts could harm the County's ability to serve a growing population, especially if the same pattern is repeated next year. Commissioner Zapple expressed concern about proposed cuts that he said would ultimately cost the County more. He cited the planned upgrade to the Courtroom Audio Visual Experience (CRAVE) video system in the court system, which is intended to replace the current failing setup. Without the upgrade, deputies must continue transporting detainees from the detention center to the courthouse for first appearances, consuming time and resources and potentially overcrowding the detention center. He noted that the jail already houses approximately 550 inmates per night and warned that exceeding 600 could require the County to invest in costly expansion or a new facility. He argued that rejecting the CRAVE system upgrade pushes the County closer to a $100–$200 million bond and questioned how that cut is justifiable. Commissioner Scalise responded that while the CRAVE system may offer benefits, the County cannot fund every technological improvement at once. He emphasized the need to set priorities and determine what is immediately necessary. While acknowledging Commissioner Zapple’s point, he disagreed that the CRAVE upgrade was a critical need in this budget cycle. Commissioner Zapple reiterated that delaying the upgrade would lead to greater expenses and inefficiencies, and that funding it now could help prevent future capital costs and system strain. Commissioner Scalise suggested that items like the CRAVE system and the 911 upgrade could be included in future priorities list for further discussion after the budget is adopted. Commissioner Zapple responded that the point of the current meeting was to review and reconsider such items now, not postpone them. He argued that with more discussion and information, the Board would see the long-term value of funding certain services. Referring to Commissioner Walker’s earlier comments on Pre-K, he stated that cutting services like early childhood education has a ripple effect, noting that studies consistently show investments in Pre-K reduce long- term costs tied to dropouts, arrests, and incarceration. He emphasized the importance of funding programs that provide children with a solid foundation for academic success. Vice-Chair Pierce asked why the school system had cut Pre-K funding. Commissioner Walker responded that it was not cut; the school system lost a Head Start grant, which she described as a devastating loss. She stated that the current reduction would be even more harmful and said she did not understand the source of the proposed cut. Commissioner Scalise clarified that the County is still funding Pre-K but not the proposed expansion. Commissioner Zapple added that the County had been providing a supplement to support Pre-K access so that families in the County could send their children regardless of income, knowing the long-term impact early education has on both the child and their family. He noted that the recent loss of a $5 million grant had already resulted in the closure of seven Pre- K classrooms. Vice-Chair Pierce shared that she had personally paid for her children to attend Pre-K and worked while doing so, indicating that she understood the burden but believed it was manageable. Commissioner Walker asked why Pre-K was now on the chopping block. Commissioner Scalise replied that the expansion had been funded through temporary money, which is no longer available. Commissioner Zapple noted that the County had provided supplemental funding for Pre-K for several years and questioned why that support was now being reduced. County Manager Coudriet responded that during the COVID period, the Board effectively directed a doubling so that the County went from funding six classrooms to 12. The proposal, as presented to him, is to scale back to pre-COVID, which would be six classrooms. The expansion was funded with ARP dollars which are no longer available. This will be withdrawing the cost that has been paid with ARP. In response to Vice-Chair Pierce’s question, he reiterated that it was a policy choice of the Board to double Pre-K. Commissioner Zapple noted that the County’s investment in expanded Pre-K during the COVID period had worked. Commissioner Walker emphasized that the children affected by those investments are real people. Vice-Chair Pierce pointed out that many would never have had access to Pre- K if not for free COVID money from the government relief funding. Commissioner Walker asked whether the Board supports investing in children despite the program’s cost, stating that she did and viewed the proposed cut as unnecessarily harsh. Chair Rivenbark commented on the availability of other funding sources, to which Commissioner Walker responded that she was unsure what was meant. Vice-Chair Pierce noted that the budget returns for Board approval annually, and Commissioner Walker added that its demands will only grow. Commissioner Scalise stated that if the cost of programs continues to increase annually, it reinforces the need for fiscal discipline. He acknowledged major school capital needs on the horizon and stressed that the Board must be cautious with budgeting and tax rates now, particularly with the possibility of a future bond. He noted that a bond would result in a tax increase. Commissioner Walker agreed that a bond is a tax, though voters must approve it. Commissioner Scalise responded that with that possibility in mind, it is prudent to keep the current tax rate as low as possible. Commissioner Zapple asked whether doing so meant abandoning investments in children, including the proposed Pre-K reduction. Commissioner Scalise disagreed with that characterization, but Commissioner Zapple argued that cutting funding for 100 Pre-K students while citing potential future school facility needs was a poor comparison. He added that the County has funded both studies and urgent requests from the school system and that the two issues, school capital needs and early childhood education, should not be equated. Commissioner Scalise asked why the Pre-K program, which had operated under a different funding model from 2014 until the policy change during the COVID era using ARP dollars, was now considered inadequate. He stated it appeared to have worked during that time, including while Commissioner Zapple was on the Board, and questioned why its proposed removal was now a concern. Commissioner Zapple responded that it was not fine during that period, which is why he had advocated every year since 2014 to increase County supplemental funding for Pre-K. He explained that the school board's funding from the state was inadequate and that he wanted to expand access for children in the County. He noted that the Board, without pushbacks, had supported incremental increases each year in a bipartisan manner. He also stated this was not a change of heart, but a continuation of efforts to support the youngest residents and help them succeed. Vice-Chair Pierce asked the County Manager whether Pre-K funding was included in the school board’s funding request to the Endowment, noting that she was aware the school board had made requests for other items. County Manager Coudriet responded that, to his understanding, Pre-K NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 565 was not included in the school board’s request. She then asked whether that indicated it was not a priority. County Manager Coudriet replied that he would not characterize it that way from the school board’s perspective. Vice-Chair Pierce then noted that while the request included 42 new positions, it did not include the Pre-K expansion. County Manager Coudriet clarified that the request was for a new initiative, an enhancement not currently provided, intended to place a special program in each of the County’s 42 schools. Commissioner Walker sought confirmation that the Pre-K expansion was not part of that request. County Manager Coudriet confirmed it was not, and he would say it is a continuation of four years of policy, which was an expansion at the time. The school board’s request to the Endowment focused on launching a separate program. He emphasized that he could not speak on behalf of the school board. Commissioner Walker stated that the school board would not be making a request to the Endowment unless there was a genuine need. She noted that the school system has experienced significant cuts, over 300 positions, since her time on the school board, including through attrition. She emphasized that the impact is real and ongoing, based on conversations with teachers and parents reporting a lack of classroom staffing. While educators are doing what they can, they often have no choice other than to ask for help. She expressed hope that the Endowment will support the request and noted concern that the County has not formally backed it. She questioned why commissioners could not sign a letter of support and said that if the County consistently directs others to seek help from the Endowment, it should also be willing to support those efforts. Discussion ensued about fund balance usage. County Manager Coudriet stated that using one penny on the tax rate to support funding needs would equate to drawing down approximately 2% of the County’s fund balance. He noted that doing so would represent a policy change. If the Board intends to take that approach, he recommended that the Board formally adjust its policy by lowering the required fund balance from 18% to 16.7%. He explained that before adopting the current 18% policy in 2013, the County had an articulated, though informal, goal of maintaining 16.7%, representing two months of operating expenses. He emphasized that the 16.7% figure is not arbitrary, and that it was the previously accepted benchmark before the current policy was adopted. Vice-Chair Pierce asked whether the state’s fund balance requirement is approximately 8%. County Manager Coudriet confirmed that the Local Government Commission (LGC) recommends a minimum of 8%. She then asked for clarification on the County’s available reserves, noting that there are two separate funds: the $300 million Revenue Stabilization Fund (RSF) and the General Fund. County Manager Coudriet confirmed that the County’s current fund balance is $77 million. Vice-Chair Pierce asked whether that meant the County has $300 million plus $77 million available. County Manager Coudriet clarified that, according to the rating agencies, the $300 million in the RSF is not considered available fund balance. He explained that although those funds are held within the County’s idle cash pool, accessing the corpus of the RSF requires a supermajority vote, not a simple majority. He added that the Board's policy, adopted in response to rating agencies' guidance, treats the RSF as separate and not included in the accessible fund balance. In response to questions, he clarified that the actual balance of the RSF is currently at $294 million. Commissioner Walker acknowledged the discussion of using approximately $8 million from the fund balance and emphasized that doing so would draw from the County’s rainy day fund, and she strongly opposed the idea. Referring to past events such as Hurricane Florence and recent flooding in Asheville, she said there will be times when the County needs to access emergency reserves. Spending down the fund balance unnecessarily, particularly when there is no urgent need, does not make sense to her. She also expressed concern about the potential impact on the County’s triple-A bond rating, noting that it reflects years of responsible budgeting and tax policy. She cautioned against using reserves to artificially lower the tax rate and said maintaining a strong fund balance is essential for emergency preparedness and long-term financial stability. Commissioner Zapple explained that the discussion about using fund balance to support the budget may not be fully understood by those in attendance and likened it to prior criticism surrounding the proposed 33.9 cent tax rate, where the County would have considered borrowing $8.1 million. He stated that using $8 million from fund balance to make the numbers work is essentially the same concept as borrowing from County reserves. He expressed concern about the proposal to lower the fund balance policy from 18% to 16.7%, noting that the current policy keeps the fund balance between 18% and 21%, with any amount over 21% automatically moved to capital improvement funds. He stressed that bond rating agencies, such as Standard & Poor’s and Moody’s, closely monitor whether governing boards adhere to their own policies. He warned that changing the policy to justify drawing down fund balance could raise concerns with those agencies. Such a move could result in the County’s triple-A bond rating being downgraded, which would increase borrowing costs and result in taxpayers paying millions more in interest over time. He emphasized that the County is one of fewer than 75 counties in the nation, out of more than 3,000, that hold a triple-A bond rating, which has been maintained for 13 years and is a point of pride. He credited the County’s financial leadership and warned against making policy changes that could jeopardize that standing. Commissioner Walker corrected the use of the word “borrowing” by Commissioner Zapple, stating it is a removal of funds that are not going back into the fund balance and a resetting of the Fund Balance Policy. Commissioner Scalise stated that lowering the fund balance policy to 16.7% would still leave the County with reserves more than double the state’s 8% minimum requirement. He noted that the County also holds $293 million in RSF, which provides added financial security under specific conditions. He acknowledged that opinions may differ on what constitutes a legitimate funding need. Commissioner Walker responded that, from her perspective, it seemed she was being asked not to support certain policy changes while others were willing to make adjustments to meet their objectives. Commissioner Scalise clarified that he did not suggest that and added he had no reason to believe the County was at financial risk. He emphasized that the County’s triple-A bond rating had been reaffirmed the prior week and said he does not believe it is in jeopardy. Commissioner Zapple noted that bond rating agencies do not count the RSF toward the County’s fund balance and reiterated the importance of maintaining a strong reserve. He explained that this practice has allowed the County to respond swiftly during emergencies, such as hurricanes, by funding immediate debris removal and recovery efforts. He argued that while an 8% reserve may NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 566 suffice for other areas, counties regularly impacted by hurricanes, like New Hanover, must maintain higher levels. Vice-Chair Pierce questioned whether the County needs as high a fund balance as the beach towns and the City of Wilmington, which carry 50% in reserves and manage their own services. Commissioner Zapple replied that while those towns may maintain high percentages, their total reserve amounts are much smaller. He emphasized that the County ultimately supports all municipalities, including beach towns and the City of Wilmington, during major emergencies. Commissioner Zapple reiterated his concern that changes to Fund Balance Policy could raise concerns with bond rating agencies. He argued against adjusting the longstanding policy for short-term budget relief, calling the County’s reserve level a point of pride worth protecting. Commissioner Walker asked what additional factors bond rating agencies consider beyond fund balance percentage. She inquired whether agencies evaluate how citizens are taxed, or whether a locality is under- or over- taxing its residents, and noted that more than just fund balance is typically involved in bond rating assessments. County Manager Coudriet responded that while fund balance is a significant factor, “first among equals”, agencies also consider the overall diversity of the tax base. He noted that although the County is often described as a tourist destination, its tax base is diversified and not dependent on a single industry. Additional factors include the rate of personal income growth, population growth, and the County’s financial management policies, which are adopted by the Board. Mr. Credle added that the macroeconomic conditions of the region are very strong, and that the County’s financial standing overall is also strong. While lowering the Fund Balance Policy may have some effect, he did not believe it would be a tipping point. He noted that among the various factors considered, macroeconomic strength tends to carry the most weight with rating agencies. Commissioner Zapple stated his understanding that bond rating agencies also consider whether the governing board is willing to set a tax rate sufficient to maintain fund balance and essential services. He asked staff to confirm whether that was accurate. Mr. Credle responded that it was fair to say that it was one of the factors considered. Commissioner Walker added that, in her view, it would be irresponsible to jeopardize the County’s bond rating by drawing down reserves solely to lower the tax rate. Discussion ensued about items 12 – 15 on slide 2 of the presentation related to the Justice Center rent, Second Chance Legal Aid, CRAVE, and reductions to previously recommended enhancements and operational savings. Commissioner Zapple expressed concern about the proposed elimination of $250,000 in funding for rent at the Community Justice Center (CJC). He explained that the CJC, operated by former District Attorney Ben David and located at the Harrelson Center, provides a centralized location for crime victims to receive services, including investigations, forensic testing, and interviews. He stated that the funding in question supports office space for sheriff’s detectives at the facility, which helps ensure victims do not encounter their alleged assailants during the legal process. Commissioner Zapple emphasized that the County had previously committed to supporting the CJC and that removing this funding would significantly affect its operations and ability to offer a safe and coordinated response for victims. Commissioner Scalise responded that removing this funding would not prevent investigators from working with the CJC or being present there. He stated that the CJC had requested rent support to house investigators full time, but that the Sheriff’s Office could still assign personnel to the facility as needed without incurring additional taxpayer cost. He described the funding as an easy item to remove from the budget. Commissioner Walker noted that during her tour of the CJC, she spoke with Sheriff Office staff and learned that their integrated presence is beneficial to victims and enhances the overall operation. She highlighted the usefulness of on-site services such as video interviews and emphasized the value of having detectives based there. Commissioner Zapple reiterated that the funding covers rent for detectives to maintain a permanent presence at the CJC, which is essential for its continued success. He stated that without the funding, the facility would not have space for detectives. Commissioner Scalise again noted that deputies will respond wherever needed, including the CJC. Chair Rivenbark asked whether the rent for the CJC space had previously been paid. County Manager Coudriet responded that this was a new funding request from the CJC in the current year. He explained that while deputies have previously been assigned to the CJC, this year’s budget request included funding to pay rent for the space occupied by law enforcement personnel. He stated that removing the funding does not mean deputies will be expelled from the facility and that no one has conveyed that outcome to him. However, the request was viewed as a fair contribution during the budget development process. Commissioner Zapple suggested the matter may not be fully resolved, noting that in his conversations, the implication was that the funding decision could affect the County’s presence at the CJC. He emphasized the potential of the CJC, particularly in its early stages, and expressed concern that withdrawing support could undermine its success. He noted that similar centers across the state have demonstrated strong results and community value. County Manager Coudriet added that the recommended budget includes funding for a new corporal position within the Sheriff’s Office to be assigned to CJC in response to demand for increased security at the facility. He stated that if the corporal’s presence were in jeopardy, the sheriff would have communicated that to him. He affirmed that this corporal position reflects the County’s ongoing financial support for the CJC. Commissioner Zapple acknowledged the corporal addition but stated that a security position differs from the presence of trained detectives who work directly with victims. County Manager Coudriet agreed that the roles are different and reiterated that the County remains financially invested in the CJC. Commissioner Zapple asked Ms. Kostusiak for additional details on the $13.7 million in proposed reductions. County Manager Coudriet responded as a reiteration of his earlier statements that there is no way to remove this amount of budget and continue without impacting people, both vacancies and real people. He has selected, at this point, likely the departments that are most capable of giving up personnel based on policy changes. The fact that that is happening is a consequence of the permanent reduction. He has chosen the departments and in some cases the functions based on the clear policy directive governed by a rate and a permanent reduction of $13 million. He reiterated that, while he accepts responsibility for who might be reduced, the reduction is not a decision he has made and recommended to the Board. He wants that to be clear for the Board and the people in the room. Commissioner Zapple responded that while he recognized the county manager was simply following instructions, he NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 567 believed the 30.6 cent tax rate was an arbitrary number. He said that if the tax rate were set at 31 cents, the list of reductions would likely look different. He stated that firing good employees doing excellent work is not a policy choice he would support. County Manager Coudriet responded that the fact that people who are here will have to leave is not a decision that he made. It is a consequence of the parameters given to him. He explained that the positions he selected were in response to policy choices communicated to him, Mr. Credle, and Ms. Kostusiak. He further explained that when policy changes are made, and the majority of the County’s work is done through people, the result is a recommendation to the Board of a scaling down of the size of the workforce. He added that while some vacancies should be filled, others reasonably should not be under the current policy direction. He concluded that the County has always tried to scale its organizational structure and staffing in accordance with the policy choices of the Board. Commissioner Walker stated that she would push back on the idea that the 30.6 cent tax rate is arbitrary. She said revenue neutral might be considered arbitrary, but 30.6 was chosen intentionally as a deliberate attempt to cut as much as possible. She expressed strong concern that this tax rate goes too low and results in an irresponsible budget. She warned of the potential for service degradation, noting that the impact may not be immediately apparent but could become evident over time if the proposal moves forward. She also voiced concern about what next year might look like under these conditions. She noted that she supported the earlier 33.9 cent proposal as a compromise, which she believed avoided these deeper cuts. She emphasized that an 11-cent tax cut was not unreasonable and questioned the push to go even lower. She stressed that, in her view, these cuts were unnecessary and not responsible. She stated that she did not come from wealth and understood the importance of budgeting but also believed that sometimes paying more in taxes is necessary, and as a taxpayer, she was willing to do so. Vice-Chair Pierce commented that 33.9 adds $37 million, almost $38 million to the existing budget. Commissioner Walker stated that her focus has consistently been on identifying community needs, as she had done during previous budget cycles while serving on the school board. She emphasized that she did not view the proposed budget, or the previous one, as frivolous, but rather as reflective of the community’s growth and what makes it a desirable place to live. She expressed concern that residents might view the budget differently if they fully understood how taxes, valuations, and rates interact. She noted that while the average property revaluation increased by 67%, this figure is skewed by the beach properties. Her own property value rose by 42%, which she believed to be closer to the median point. She reiterated her discomfort with lowering the tax rate to such a degree without knowing the long-term impact, particularly on services in the coming year. Vice-Chair Pierce responded that the methodology for determining the tax rate has not changed. Commissioner Walker acknowledged the point. County Manager Coudriet stated that the Board is free to compare figures as it chooses, but he wanted to clarify a point raised previously. He noted that the County’s current budget will end the year at approximately $497.7 million, while the proposed budget is $488 million. He emphasized that there is a reduction, as the Board makes decisions throughout the year to accept revenue and fund various initiatives, some of which are permanent and some one-time, just as the proposed budget contains both permanent and one-time elements. He cautioned against the belief that the budget will be $48 million less on July 1 than on June 30, stating that this is fundamentally untrue. He explained that the budget presented in May, which differs from the earlier 33.9-cent proposal due to subsequent additions, reflects a 35-cent tax rate and is built from continuation budget cuts and one-time items that will roll off the balance sheet. He concluded that it would be unfortunate for him not to clarify that the June 30 budget differs from what was adopted last June. Commissioner Scalise stated that at the core of the discussion is the responsibility to represent citizens and make decisions believed to be in their best interest, even if there is disagreement. He noted that the recent revaluation has significantly increased property values for many, and that even renters are affected, as landlords typically raise rent to offset tax increases. Vice-Chair Pierce added that the property owner raises rent to cover the tax, and the renter ultimately pays that increase. Commissioner Walker responded that this does not mean the renter directly contributes to County revenue. Commissioner Scalise maintained that renters are still paying indirectly. He continued that the current and prior budget proposals reflect different views of what constitutes the right size of government. The proposed budget aims to address rising property values and ongoing inflation while limiting the financial burden on residents. He acknowledged there would always be disagreements on specific items but emphasized that any budget involves prioritization. He stated that the earlier budget, constructed with Commissioners Walker and Zapple and Chair Rivenbark, involved winners and losers as well. He noted that the current proposal does not meet his original goal of revenue neutral or below, but compromises were made to provide funding for schools, the sheriff, and senior services. He expressed a desire for Commissioners Walker and Zapple to support the budget, acknowledging their opposition. Commissioner Walker replied that Commissioner Scalise had previously said he would not vote for the other budget either and confirmed he did not support the 33.9-cent proposal. Commissioner Walker added that she believed she had come to the table and put in significant work to reach a number that was presented to her. She stated that the five commissioners had not all worked together on the budget and felt others were not interested in collaborating. Commissioner Zapple stated that a county’s budget reflects its values and philosophy. He credited the county manager’s leadership over the past 12 years with building a successful framework, attracting new residents, businesses, and nonprofits who want to strengthen the community. He emphasized that County services resulted from years of deliberate decisions by multiple boards, not sudden developments. He argued that the proposed cuts reverse progress, and that the County should continue building on its success. He acknowledged that growth costs more but noted the County will end the year with $497 million in spending, more than $488 million tied to the earlier 33.9-cent proposal, showing revenue remains strong to support services. He called for continued discussion and education, especially on policies and specific line items. He noted hesitation amongst commissioners about cuts to the 911 system and encouraged reconsideration. He urged the Board to recognize Pre-K as essential, not optional. He reiterated his stance on the CRAVE system as a cost-saving investment and how similar items appear throughout the cuts. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 568 Commissioner Zapple questioned the proposed staff reduction at the new North Chase Library, noting that the plan reduces staffing from 13 to 9, and asked what those removed positions represent. County Manager Coudriet responded that while the library will be opening as planned, the service model will rely on nine staff, and that other branches of comparable size will mirror this approach to achieve permanent savings. He stated the facility will remain high-functioning and adequately resourced, though some future programming may not be immediately attainable. Commissioner Zapple asked whether other branches would also experience staff reductions and whether those were included in the $750,000 reduction figure. County Manager Coudriet confirmed that the revised staffing model would extend to the downtown, Pine Valley, and Northeast branches, which was reflected in the overall reduction amount. Commissioner Zapple asked for clarification that the County is cutting librarians and pressed whether any of the eliminated positions were considered wasteful. County Manager Coudriet stated that none of the positions were wasteful and acknowledged that reducing staff would affect libraries' services. He added that while not every staff reduction results in a service cut, permanent contraction often leads to service changes. He noted that the County is not reducing services at departments such as the Senior Resource Center, Veterans Services, the Sheriff’s Office, 911, or Emergency Management. However, departments must find new ways to conduct routine functions to meet policy goals. Commissioner Walker commented that fewer people would mean more work for existing staff. Chair Rivenbark asked staff to be allowed to complete the presentation before the Board asked any further questions. Commissioner Zapple responded that this is new information and expressed concern that, while public demand for library services continues to grow, the County is moving in the opposite direction by cutting resources that directly affect services. He does not believe this is the direction the County should be going. Ms. Kostusiak continued the presentation, covering information regarding the reduction of social workers to state standards. Commissioner Zapple asked whether the social workers being cut were those serving in schools. County Manager Coudriet clarified that the positions in question were within the Department of Social Services. Commissioner Walker followed up, asking why those positions were being eliminated. County Manager Coudriet explained that the decision was part of an effort to permanently reduce operational costs. He noted that the County had previously funded a lower case-per-worker ratio than the state standard, and the proposed adjustment would align the County with the state’s expectations, not fall below them. Commissioner Walker responded that state standards are not always adequate and cited outdated school funding formulas as an example. She stated that cutting social workers is not a good idea. County Manager Coudriet responded that he was not taking a position on the adequacy of the state standard but was identifying a way to reduce permanent costs while continuing to meet mandated service levels. He explained that the budget examines areas with both discretionary and mandated components, and this proposal reflects an effort to meet obligations while scaling back costs. He emphasized that social work services would continue, and that this adjustment is a way to meet the standard without endorsing the reduction itself. Commissioner Zapple asked the county manager to clarify the state standard for the Sheriff’s Department. County Manager Coudriet responded that the state requires only a sheriff and two deputies, along with jail administration. Chair Rivenbark noted that counties are not required to fund fire departments. Commissioner Zapple stated that such a minimal requirement illustrates why state standards are not always appropriate benchmarks for county-level decisions. He agreed with Commissioner Walker’s earlier point that the County should focus on local needs rather than rely on state minimums. He cautioned that eliminating 11 full-time social work positions would significantly increase caseloads and impair the County’s ability to serve the community effectively. Ms. Kostusiak stated that $500,000 would be reduced from departments that are either fully discretionary or have discretionary components. Commissioner Zapple asked for a breakdown of which departments would be affected and the specific impacts. Ms. Kostusiak replied that the reduction is included within the broader $9.86 million in cuts. County Manager Coudriet clarified that the $500,000 is in addition to a 5% operating budget cut across discretionary programs. Commissioner Zapple asked whether those funds are currently being spent and requested specifics on what services would be affected. Mr. Coudriet confirmed the funds are in use and stated that staff are working on providing further details as part of the ongoing presentation. Ms. Kostusiak explained that the next two slides in the presentation would cover all discretionary cuts. She noted that no personnel or operating reductions would affect the Sheriff’s Office. However, the general fund would see the elimination of 82 positions, through a combination of filled and vacant roles, across several departments. Commissioner Zapple asked whether the affected departments could offset reductions through operational cuts rather than eliminating positions. County Manager Coudriet responded that these reductions were necessary to meet permanent operating cost targets, reflecting a policy shift to reorient County operations. Ms. Kostusiak added that, as stated previously by County Manager Coudriet, approximately 75% of the County’s budget is tied to personnel, lasting reductions cannot be achieved solely by cutting supplies, subscriptions, or travel. To have an impact that is multiple years, it will touch personnel at this level. She further confirmed in response to Commissioner Zapple’s questions that slide 4 of the presentation reflects the departments with position savings. County Manager Coudriet reiterated that to exercise and implement the plan, there is a need to address 70 positions that have people in them today, and that assumes meeting the budget over the year with salary lag, which is how attrition is dealt with on a normal basis. He then reiterated that not every department is impacted by this particular strategy. Commissioner Zapple stated that the reductions were being driven by the decision to set the tax rate at 30.6 cents. He argued that the rate should be higher to prevent cuts in key areas, such as Planning and Land Use, which are already under significant pressure. He noted that with expected growth, delays in services, such as building permit processing, could become more common due to reduced staffing. County Manager Coudriet reiterated that the reductions are not indiscriminate but are based on specific policy directives set by the Board. For example, the $3 million reduction to the Workforce Housing Program directly impacts staff assigned to that initiative, and those positions are no longer part of the County’s ongoing operations under the revised policy direction. He noted that in such cases, positions are identified for elimination not because of individual performance but due to the Board’s reprioritization of services. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 569 Additionally, he explained that as the County reduces the number of services it provides, especially those that span departments or serve enterprise-wide functions, the need for related support positions also declines. The departments and positions identified for reduction reflect the resource changes needed to align with the Board’s adopted priorities. Commissioner Zapple replied that this reflects the weakness of doing an across the board 5% cut. County Manager Coudriet responded that this is not applied as a 5% across the board cut. For example, no across the board reductions were applied to the Sheriff’s Office, the Senior Resource Center, or Veterans Services. Additionally, the County’s commitment to the K-12 school system remained intact. He emphasized that reductions were determined first by anticipated policy changes and then by evaluating the secondary and tertiary effects of those changes, recognizing that when certain programs or services are reduced or eliminated, other related functions may no longer be needed at the same level. Commissioner Walker asked how the County would determine when service levels begin to decline because of the proposed cuts. She expressed concern that all current staff serve a purpose and questioned how the impact on services could be measured or evaluated. She asked whether there is a way to gauge when reductions begin to affect the public and what indicators or questions should be considered. County Manager Coudriet responded that service changes are expected because of the proposed reductions, stating that policy changes are intended to shift focus, doing some things more, some less, and discontinuing others entirely. He confirmed that where there has been a clear shift in policy, changes in service delivery will follow. A brief discussion ensued with Vice-Chair Pierce’s request to allow staff to complete the presentation. County Manager Coudriet acknowledged the information was sent the previous evening and took responsibility for the delay. He explained the team had been working hard to ensure the plan was as precise as possible, with input from staff in Budget, Finance, and Strategy. He noted there may still be some technical errors but emphasized that the material reflects what staff believe to be directionally accurate. He clarified that the information was shared only once they felt confident, they could answer questions about it with authority. Clerk to the Board Crowell confirmed that the public notice reflected that the agenda review meeting will occur immediately after the budget work session. During the discussion of operational cuts, Ms. Kostusiak noted that art pieces planned for Project Grace, Northchase, and Smith Creek were removed to help maintain the 30.6 cent tax rate. Film internships were reduced from $200,000 to $100,000, and general assistance payments were also eliminated. Commissioner Zapple questioned the reduction in film internship funding and asked if it was reallocated to the Wilmington Chamber of Commerce. Chair Rivenbark clarified it was going to the District Attorney’s Office, as noted on the slide. County Manager Coudriet added that while both items fell under economic development, the internship cut was not directly reallocated, and the framing may have unintentionally implied a direct tradeoff. Commissioner Scalise stated the funding for the chamber remained unchanged from the 33.9 cent budget proposal. Commissioner Walker noted the allocation had originally come from the chair and was not something she requested. Commissioner Scalise responded that many items from the earlier proposed budget, including for the schools and sheriff, remained intact in the 30.6 cent proposal. Commissioner Zapple remarked on the selectivity of the retained items. Commissioner Walker then asked a technical question about whether contracts had already been signed for the art projects. County Manager Coudriet explained that if the Board chose not to fund public art, the County would still be obliged to pay for any work completed to date. While all contracts include a non-appropriation clause allowing for termination, the County must honor costs incurred thus far. Commissioner Walker expressed concern that removing the public art funding was unfair to those who had presented and received prior Board approval. She stated it felt like the project was being cut solely to reduce the tax rate. Commissioner Zapple added that the funding for public art stemmed from the County’s policy to dedicate 1% of new facility construction costs to public art. He noted this practice reflects the County’s values and enhances public spaces, questioning the justification for cutting it and suggesting that maintaining it could be achieved by slightly increasing the tax rate to 30.7 cents. Commissioner Scalise stated that adding back all previously mentioned items, such as public art and other cuts, would raise the tax rate back to 33.9 or even 35 cents. He acknowledged that there is a difference of opinion on what the rate should be and said that while some commissioners want certain items restored, doing so would require increasing the tax rate, which he does not support. Commissioner Zapple responded that his concern is not about adding new items but about preventing cuts to existing programs, noting that this reflects a shift in policy direction. Commissioner Scalise emphasized that some items being discussed for inclusion are new enhancements not in the current year’s budget. He said the discussion ultimately comes down to differing views on how much the County can and should fund. Commissioner Zapple expressed concern that the level of service reductions proposed is too much. He stated that a 32-cent tax rate could maintain many departmental services currently at risk. He characterized the proposed cuts as a step backward that fails to adequately serve the community. He emphasized that he is not seeking to add new programs but to preserve existing ones that provide essential services. He reiterated the cuts' potential impacts, including permitting delays, risks to public safety if the 911 system upgrade is not funded, and setbacks in the court system if video capabilities are not implemented. He also defended the film internship program, citing its success in employing over 300 people in the past three years and providing opportunities to under-represented communities in the film industry. He feels the proposed 50% reduction in funding for the program is arbitrary and inconsistent with the County’s values. Vice-Chair Pierce stated that at the revenue-neutral rate, the County would have maintained a budget of over $450 million, allowing the continuation of the same services provided in the previous year. She noted that the current budget includes an $11 million increase to help offset inflation but excludes the $38–$39 million in proposed enhancements. Commissioner Zapple countered that the current budget does not maintain the same level of services, even with a 35-cent rate. Vice-Chair Pierce responded that this is due to the removal of new services that have been discussed and added over the past several months, noting that the budget NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 570 is now pulling those additions back out. Commissioner Zapple responded that the conversation is not only about cutting proposed enhancements, but also existing services. He emphasized that while the previous year’s adopted budget was $448 million, the County ultimately spent $497 million to deliver services. He expressed concern that the current plan represents a cut from what was actually needed to maintain those services. Commissioner Pierce shifted the discussion to the County’s public art policy, which allocates up to 1% of a facility’s construction cost for art. She questioned when that policy was established and noted that some policies were unfamiliar to her. She requested a full list of current County policies, expressing concern that policy details often arise piecemeal during discussions. She added that while she supports art, automatically offering 1% could inflate bids, suggesting a more flexible approach to procurement instead. County Manager Coudriet clarified that the Board’s prior intent was the opposite of what Vice-Chair Pierce described. When the policy was adopted, the Board supported including 1% of the project cost specifically to fund the installation of public art as a way to enhance the value of public facilities. He noted that while bids are submitted with that expectation, the Board always retains the authority to decide whether to proceed with the installation. The proposed amounts reflect the original policy direction. Commissioners discussed the use of $8.1 million from fund balance to help achieve the 30.6 cent tax rate. Commissioner Walker pointed out that this amount, equivalent to one cent on the tax rate, was being pulled from what is effectively the County’s emergency fund to make the rate appear lower, rather than representing a true reduction. Commissioner Zapple referred to this as borrowing, while Vice-Chair Pierce clarified it as a removal rather than borrowing. The conversation then shifted back to public art funding. Commissioner Zapple emphasized that the County does not simply offer up 1% of project costs for art without oversight. Rather, a committee issues requests for proposals and carefully assesses submissions. Vice-Chair Pierce then questioned how close the final art bids came to the 1% policy cap, but acknowledged she did not have that information. County Manager Coudriet noted that in August, staff brought a budget amendment to the Board for a $43,000 enhancement to fully fund the public art sphere installation at the government center. The project total was approximately $240,000. He acknowledged that staff recommended approval but emphasized the Board had the option to decline. Vice-Chair Pierce questioned how that figure aligned with the 1% policy and referenced a newspaper article about the project. County Manager Coudriet acknowledged the concern but reiterated that the policy is in place until the Board directs otherwise. Vice- Chair Pierce acknowledged the point and commented that what is being done now is effectively “unrolling” or revisiting such policies. County Manager Coudriet responded that while policies can certainly be changed, the implication that staff is keeping the Board in the dark is unfounded. He emphasized that county policy remains in place until an elected body changes it, citing the land use plan as an example. He added that there are established policies guiding matters such as the administration of the Department of Social Services, and when it becomes appropriate to revisit or revise those, staff will bring them forward. Until then, they remain the active policies of the County. Staff do not do anything unless it is a policy adopted by the Board. Vice-Chair Pierce questioned the cost of the public art installation known as “the sphere,” asking if the bid came in at $250,000, and whether that matched the 1% allocation based on the total project cost. County Manager Coudriet confirmed that $250,000 was the price for the art portion and aligned with the Board's policy of allocating up to 1% of construction costs for public art. Vice- Chair Pierce expressed concern that projects always seem to meet the full 1% allocation and argued the County should consider aiming below that amount instead of treating it as a spending target. County Manager Coudriet responded that the County could revise the policy to lower the percentage, but a budget figure must still be included in calls for proposals, so artists understand the parameters. Vice-Chair Pierce replied that it felt like setting a spending ceiling guaranteed the final price and reiterated her desire to see a complete list of the County’s policies. County Manager Coudriet responded that there are hundreds, if not thousands, and staff will put those together for her. He reiterated that every policy has an impact, and the staff does not do anything, unless it is adopted by policy by the Board. The Board continued discussing the County’s public art policy and its application to the Northchase library project. County Manager Coudriet confirmed that the policy allows up to 1% of a new facility’s construction cost to be spent on art. Commissioner Walker asked whether the Northchase artist had already begun work and expressed concern about the County backing out of its commitment. Staff clarified that the artist’s contract totals $83,000, with $16,600 allocated for the design phase. While design is underway, the County has not yet confirmed the artist's progress. County Manager Coudriet noted that any work completed would need to be paid for, but the Board retains discretion on whether to proceed with full installation. Commissioners Walker and Zapple both emphasized the importance of honoring commitments and questioned the fairness of removing approved projects. Commissioner Zapple added that the art funding for the government center sphere came not from added cost but from construction savings. County Manager Coudriet confirmed that this was correct. He noted that the 1% policy was adopted during that project, and savings from coming in under budget allowed for the sphere’s inclusion without raising the project cost. Discussion continued with slide 5 of the presentation concerning other operational reductions. For the County’s general assistance payments, Ms. Kostusiak explained these payments are to assist people with after-hours emergencies and crisis needs (i.e., food assistance or water payments). Commissioner Walker asked for the amount affected. County Manager Coudriet noted that the information is listed in Tab 2 in the documents provided to the Board in today’s meeting, which outline permanent reduction strategies totaling $10.3 million, including the general assistance cuts. Commissioner Zapple sought clarification on whether families experiencing emergencies, such as house fires, would still receive water assistance. County Manager Coudriet responded that assistance would still be available through expected revenue from the City of Wilmington, and other agencies like the Red Cross could also help meet individual needs. Commissioner Zapple noted that some nonprofits were among those whose county funding was recently cut. He then asked if any unspent money remained in the general assistance fund. Ms. Kostusiak commented that she will report back to the Board with the current amount in the general assistance fund. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 571 Discussion ensued about casual part-time personnel reductions. Ms. Kostusiak explained that the budget includes a reduction in funding for casual part-time positions, roles limited to 19 hours per week and not benefits- eligible. Commissioner Rivenbark asked for clarification, and Chief Human Resources Officer Mark Francolini stated the positions are flexible, non-benefitted roles used by departments to support various needs. Commissioner Zapple requested examples, and Mr. Credle noted that MPA fellows and some administrative staff fall into this category. County Manager Coudriet and Mr. Francolini added that library book shelvers and part-time library assistants are also typical examples of casual part-time staff. Discussion ensued about the Department of Social Services vendor contract reductions. Ms. Kostusiak reported that the Department of Social Services will reduce vendor contracts with several nonprofit service providers, including the Carousel Center, Coastal Horizons, Family Promise, Good Shepherd, and the YWCA. These contracts, totaling approximately $396,000, were originally funded through the non-county agency process and later absorbed into the Department of Social Services’ operational budget. She explained that, because these services were not originally provided by the department, and given current fiscal constraints, they were identified for reduction. Commissioner Zapple expressed strong concern about this decision, emphasizing that these organizations provide vital services the County cannot directly deliver, such as trauma care, housing support, addiction recovery, and family stabilization. He warned that defunding them would harm vulnerable populations and likely lead to increased pressure on emergency services and other County systems. Commissioner Walker echoed these concerns, stating that cutting this support would directly hurt people in the community, particularly those struggling with substance use disorders, homelessness, or abuse. Both commissioners characterized the reductions as a step backward in addressing key community health and safety needs. Chair Rivenbark remarked that he thinks Coastal Horizons operates with an annual budget of approximately $70 million. Commissioner Walker responded that she does not think they are a frivolous organization and is facing $6 million in state budget cuts. Commissioner Zapple stated that he cannot express how much he opposes cutting these services that are clearly needed in the community. Vice-Chair Pierce noted that these organizations are in the community. Commissioner Zapple agreed but asked why the funding is being cut. County Manager Coudriet explained that staff did have a reduction to remove, evaluated reductions categorically, and identified $396,000 in vendor contracts as part of the permanent cost reductions. He emphasized that any of these cuts could be substituted with reductions elsewhere at the will of the Board, but it would require $396,000 from somewhere else, as it must be a like-for-like exchange. He noted that, for example, no Board member specifically directed the elimination of general assistance, but in identifying permanent reductions, he had to assess the entire organization. If any of these are not ultimately what the Board chooses to do, the Board directs, and staff will move the dollar amounts elsewhere. This is the reflection of what is necessary to achieve the outcome. County Manager Coudriet explained that the detail is that there were broad policy objectives given, but certainly, as it relates to the upcoming information, the 50% reduction in organizational supplies at $796,000 was not something that any one commissioner said to do. Some policy levers were identified in the constraints, but to create the mechanism, some are based on staff discretion. Commissioner Walker acknowledged the explanation but based on her own experience with social services, cautioned that cuts made to meet financial targets could overlook the real impact on those who depend on these programs. She stressed the importance of recognizing the human effects behind budget reductions. Commissioner Scalise responded that the fundamental disagreements stem from differing views about the role and scope of government. He said the budget aims to reorient the County’s priorities toward core statutory responsibilities and reduce spending that has grown over time, particularly during the COVID era with ARP funds. He acknowledged the difficulty of the decisions but emphasized the need to reevaluate what services are funded moving forward. Commissioner Walker responded that while she understood the need for tough decisions, she remained concerned about the real impact on people who rely on the affected services. Drawing from personal experience, she stressed that social services are not peripheral but essential, and even small reductions would harm vulnerable residents. She cautioned against viewing the budget solely as numbers and emphasized the human consequences. Commissioner Scalise reiterated that the social services are not being eliminated, but there is a need to refocus efforts on the County’s primary obligations. He acknowledged that service impacts would occur but emphasized the importance of aligning spending with long-term fiscal responsibility and statutory duties. Commissioner Walker concluded by expressing concern that the cumulative effect of piecemeal reductions would be significant for the people served, regardless of broader fiscal goals. Commissioner Zapple stated that while the funding level may be arbitrary, the services being considered for reduction are critical. He acknowledged a fundamental disagreement with Commissioner Scalise about the appropriate level of government funding. However, he emphasized that the services under discussion, particularly those provided by the Carousel Center and Coastal Horizons, are essential to public safety when considered more broadly. That difference in viewpoint is why they serve together as a Board to consider multiple perspectives. He expressed concern with holding firmly to a 30.6 cent tax rate and argued that setting such a fixed level and using it to justify service reductions, is an arbitrary decision. Discussion ensued about the tax rate. Vice-Chair Pierce stated that there is a need to address a comment that keeps being repeated, clarifying that no one told the county manager, “The rate will be 30.6—do what you can with it.” Commissioner Scalise stated he did not tell the county manager that rate. County Manager Coudriet responded that the top line measure to him was 30.9, and it is penciled out at 30.6. If the top line is 30.9 then he is channeling back the policy directives as he understood them. Vice-Chair Pierce stated she was at 29.2 and is willing to negotiate. Commissioner Zapple stated he was as well and worked hard throughout this process on a budget at 32.5, which, given the level of detail now under review, seems increasingly reasonable, as it would have allowed for the inclusion of more critical services. He appreciates the discussion as he had been under the impression that 30.6 had been a directive, and it is now clear that was not the case. He suggested the Board consider raising the rate to better capture the services being discussed, noting that the proposed cuts appeared too deep. County Manager NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 572 Coudriet reiterated that his understanding is the top line is 30.9. That is $2.4 million more available to not be higher than 31 cents. Commissioner Zapple proposed revisiting a rate of 32 or 32.5 and urged the Board to examine how much that level could support. In his assessment, based on reactions from various commissioners, he questioned whether the cut to 30.6 went too far. He asked for an honest debate about the impact of a 32 or 32.5 rate. County Manager Coudriet stated he is here to serve the Board. He knows the top-line rate, and there was certainly room to work within it. However, it is not his role to define whether the Board debates 32.5, any more than it was with 33.9. Ms. Kostusiak, in following up on an earlier request during the meeting, reported that 91% of the general assistance payments have been spent and there is approximately $5,000 left with less than 30 days left in the fiscal year. Regarding the economic development contracts, those contracts are for Friends of Fort Fisher, the Highway 17 Transportation Association in NC, and the Cape Fear Council of Governments Continuum of Care. The review of slide 5 of the presentation continued with Ms. Kostusiak explaining that mileage reimbursements for employees using personal vehicles for County business will be reduced over time. Overtime pay was slightly reduced to align with the five-year spending average. Subscriptions and advertisements in the Communications budget were cut, and supplies were reduced by 50% in eligible departments. She noted that while it is a significant enterprise-wide adjustment, not all departments are subject to the reduction. Training and travel expenses were also reduced. County Manager Coudriet added that the hard copy of the tab sheet provided to the Board lists the corresponding reductions: $796,000 for the 50% supply cut and $535,000 for reducing travel to 75% of the five-year average. Commissioner Zapple asked if the travel cuts applied across the board. County Manager Coudriet responded that they did not, and the Sheriff’s Office, Senior Resource Center, Veterans Services, County Attorney’s Office, and Clerk’s Office were largely unaffected by those reductions. In review of “Other” items as reflected on slide 6 of the presentation, Ms. Kostusiak added that Wilmington Business Development remains funded at $357,000, with no change from the recommended budget provided to the Board. It does include a $50,000 increase from last year’s budget. She stated there is no change to the Cape Fear Community College recommendation, which reflects a $1.5 million increase over the current year. The Echo Farms tennis court expansion remains in the budget. To preserve the MHSUD Fund corpus, the Family Support Specialist Program has been removed and is not funded. County Manager Coudriet confirmed the Echo Farms tennis court expansion is back in the budget. Chair Rivenbark noted that the US Tennis Association (USTA) will pay for part of it. County Manager Coudriet explained that the bid for the project was over budget by 40%. He understands that the USTA and Greater Wilmington Tennis Association will meet the overage. This is for five additional courts at Echo Farms, and County Manager Coudriet believes there are some other associated improvements. Commissioner Zapple questioned when this was returned to the budget. County Manager Coudriet responded that most of the Board expressed interest in returning the project to the budget. Vice-Chair Pierce explained that she understood the tennis court project had been part of the Parks and Recreation capital improvement budget for about five years. She shared that the parks director recently spoke with representatives from the USTA, who indicated they may be able to help close the funding gap if the capital improvement funding remained in place. Commissioner Zapple welcomed the possibility of outside support but expressed frustration that this information had not been shared with all Board members earlier in the process. Commissioner Walker noted that while she appreciates recreational investments like tennis courts, she believes prioritizing funding for people and essential services is more important. County Manager Coudriet added that while he was not certain how long the project had been in the capital plan, it had appeared in prior budgets. He said he had been informed that a majority of the Board wanted the funding restored and confirmed that approximately $400,000 would be needed to complete the project. He also noted that USTA assistance was expected to help cover the shortfall. Commissioner Walker questioned the proposed elimination of the Family Support Specialist Program, which addresses school truancy. County Manager Coudriet responded that the decision was tied to preserving the MHSUD Fund. He explained that continuing to draw from the fund at the current rate would deplete it by 2029, leaving no flexibility for future community investments. He described the reduction as a management recommendation to preserve the fund’s long-term viability. Commissioner Zapple pointed out that truancy remains a serious problem, with rates reportedly reaching as high as 25% in the public school system. County Manager Coudriet acknowledged the concern, noting that this initiative was part of his original recommendation, but emphasized the need to maintain sufficient revenues to support future needs. Commissioner Zapple stressed the urgency of addressing chronic absenteeism, citing data that up to 40% of students have more than 20 days of absences in a school year. Commissioner Walker added that while this may reflect a broader trend, the example illustrates how cuts to key support services can significantly impact student success. Commissioner Zapple commented on the ripple effect of eliminating support services, noting that the community ultimately bears the cost in other areas. He expressed frustration that the County identifies a problem like truancy, develops a solution, and then abandons it in favor of funding projects like new clay tennis courts. He characterized this as a question of the County’s values, particularly when cutting funding to organizations like the Carousel Center while advancing non-essential capital projects. He acknowledged the debate around how project funds are sourced but maintained that these are the kinds of value- based decisions the Board is responsible for discussing. Ms. Kostusiak concluded the presentation by outlining the enhancements included in the budget at the 30.6 cent tax rate. These include three new full-time positions for Facilities Management related to Project Grace, and two additional positions at the Senior Resource Center (an insurance specialist and a social worker). A Veterans Outreach position is also included. The budget provides funding for the Sheriff’s Office to purchase in-car cameras, upgrade security cameras, add cameras at the detention center, and hire an additional deputy corporal for security. The Northchase Library is allocated $1.1 million for staffing, operations, and materials. The Cape Fear Museum will receive four new positions, primarily tied to Project Grace, along with funding for planetarium films and a new point- NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 573 of-sales system. Lastly, the Board of Elections will add an education and communications coordinator position. County Manager Coudriet stated that the presentation represents what staff have done to this point with many details left to be unworked, but staff are present to take additional questions or directions. BREAK: Chair Rivenbark called for a break at 4:36 p.m. The Board reconvened at 4:49 p.m. Commissioner Scalise stated that during the break, he thought about the various policy preferences that commissioners have previously expressed. The concern raised about the 911 system is a valid one. At the same time, the Board has previously considered using County funds to support a government-run grocery store. In his view, a higher priority for this community would be to invest those resources in public safety. He proposed that the Board reallocate the funds previously designated for the grocery store and instead use them to move forward with the planned 911 system improvements. Vice-Chair Pierce asked if the amounts were the same. Chair Rivenbark responded that they were close, and Commissioner Scalise confirmed that they were nearly identical. County Manager Coudriet stated that his understanding is there is about $2.1 million available. As to whether that was a motion, Commissioner Scalise stated it is a point of consideration, but he is ready to close the work session and move to the agenda review. In further discussion, Commissioner Zapple acknowledged the suggestion to reallocate funding but pushed back on the characterization of the project as a "government-run grocery store." He emphasized that the initiative stemmed from the longstanding food desert on the Northside, where the County had repeatedly engaged with the community to bring relief. After private investment failed to materialize, the County stepped in with a proposal to support a full-scale grocery store. He noted that construction costs later rose significantly, at which point the Endowment agreed to cover the shortfall. He stressed that the effort was a response to a serious and persistent community need, not an arbitrary project. While open to considering the reallocation of funds to the 911 system, which he agreed was vital and countywide in scope, he cautioned that doing so would leave the original problem unaddressed. Vice-Chair Pierce expressed support for funding the 911 system, stating she shares concerns about ensuring it moves forward. Regarding the grocery store, her greater concern was the Endowment’s pullback and the challenges that followed. She noted, however, that the County still has $2.1 million from the Endowment allocated to address food insecurity. County Manager Coudriet commented that he is not sure how aware that is, as he thinks he shared that with the Board informally. Vice-Chair Pierce clarified that the County has not yet received the $2.1 million from the Endowment and acknowledged some hesitation or pullback on their part. She added that the proposed Publix grocery store downtown could help address some food access concerns. She also noted that she has never supported the idea of the County backstopping financial losses for the grocery store. Commissioner Scalise noted that staff had already informed the Board that the grocery store would require County subsidies for at least five years and was still expected to operate at a loss afterward. He said this underscores the need to reconsider that policy. While acknowledging the importance of the 911 center and the option to delay it, he emphasized that shifting policy priorities, specifically reallocating funds from the grocery project, could free up needed resources now. County Manager Coudriet responded to questions, confirming that $2.1 million of the originally appropriated $2.4 million for the grocery store project remains available. He explained that reallocating those funds to the 911 project would not impact the tax rate but would require a formal Board action to close the existing capital project and move the funds into the general fund to support the new priority. Commissioner Walker asked whether the discussion constituted a policy change, expressing concern about whether the Board was taking action outside a properly noticed public process. County Manager Coudriet clarified that no formal action is being taken at that moment, but that the Board’s direction would be reflected when a budget is adopted. Commissioner Scalise responded that they were, in fact, having a public discussion about the potential policy shift, noting he had just raised the idea for the first time. Commissioner Walker questioned whether prior conversations had occurred. Vice-Chair Pierce agreed with the logic of reallocating the funds. Commissioner Scalise clarified that he had not made a formal motion but was proposing, as part of the ongoing budget discussion, that the Board consider reallocating funds from the grocery store project to the 911 system. He acknowledged that while he still believed the 911 upgrades could be delayed, Vice-Chair Pierce and Commissioner Zapple had made compelling points about their importance. He argued that funds are available and that shifting dollars from a project with uncertain long-term viability would be a better use of resources. He emphasized that the Board is doing its job, evaluating priorities in public and making policy decisions transparently, even if some ideas arise during the meeting. th Chair Rivenbark noted that public notice of the hearing was given on June 5. Commissioner Scalise agreed, reiterating that the discussion was being held in an open session and that the Board was actively working through policy decisions in real time. Vice-Chair Pierce noted that if the grocery store project becomes viable later, the Board could revisit the policy and reallocate funds at that time. She emphasized the need to prioritize current critical infrastructure over placeholder funding. Commissioner Walker responded by advocating for reconsideration of Pre-K funding, arguing that it significantly impacts the school system. She expressed concern about making such late-stage budget changes without adequate time for restructuring or outreach, suggesting the decision should not be rushed. Commissioner Zapple agreed and reiterated that the courthouse’s video arraignment system is a concern for him. He explained that the current JurisLink system contract expires at the end of the month, and without replacement, the County would have to revert to transporting up to 45 inmates daily. This would tie up at least five deputies and cost more than $1 million annually. He advocated funding the CRAVE video system instead, which would cost approximately $315,000 with only minimal ongoing licensing fees. He stressed that supporting this upgrade is a practical, cost- saving measure that keeps the judicial process efficient. Vice-Chair Pierce noted that she supported him on the 911 system upgrade. Commissioner Zapple expressed appreciation and stated that the CRAVE system will pay for itself. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 574 Vice-Chair Pierce asked whether there would be ongoing costs associated with the CRAVE video system. Commissioner Zapple responded that aside from some licensing fees, which he did not have a specific figure for, the expense is largely a one-time installation cost. Commissioner Scalise added that while the initial expense is a one- time investment, there are still ongoing costs tied to the system. Commissioner Scalise noted that the Board’s work does not begin or end with this meeting and acknowledged that not every issue or point of contention would be resolved today. However, he stated that the Board had engaged in a robust discussion of the budget as presented, which reflects the direction previously requested by the majority of the Board. 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 JUNE 16, 2025 AGENDA ITEMS Consent Agenda Item #8: Approval of Local Transition Recommendations for the Community Child Protection Team and Child Fatality Prevention Team. Public Health Director Jon Campbell responded to questions explaining that recent legislation requires the Child Fatality Protection Team and the Community Child Protection Team to merge into a single Local Team. Although staff initially planned to bring this item to the Board in December 2024, legislative changes delayed the timeline. Staff now recommend that the Board approve the creation of a single- county team, rather than a multi-county team, as required by law. While counties have the option to form a multi- county team, none have chosen to do so. Both the Health Department and the Department of Social Services recommend forming a local, single-county team. The child fatality team reviewed approximately 20 cases over the past two years. Consent Agenda Item #9: Approval of the Order of denial for Special Use Permit (S25-02). County Attorney Smith stated in response to questions that this request is for the Board to approve the order in connection with the June 2, 2025 matter. Discussion ensued about the continuance request received for the forthcoming public hearing for Special Use Permit (S24-04) - Multi-Family in B-2 - Request by Bayshore Townhomes, LLC, applicant, on behalf of Bee Safe Porters Neck, LLC, property owners, for a special use permit for a 62 unit multi-family development with 1,800 square feet of commercial space in a B-2, Regional Business district on a 3.21-acre parcel of land located at 8138 Market Street and Special Use Permit (S24-05) - Additional Dwelling Allowance - Request by Bayshore Townhomes, LLC, applicant, on behalf of Herbert Parham, property owner, for a special use permit for an Additional Dwelling Allowance for 242 row-style dwelling units in an R-15, Residential district on a 30.22-acre parcel of land located at the 8100 block of Market Street. County Attorney Smith explained that during the April 3, 2025 Agenda Review meeting, the Board approved the continuance of this item until July 21, 2025. He stated that both Gary Shipman, attorney for the applicant, and Grady Richardson, attorney for the opposition, have agreed to continue this case until September 2, 2025. He confirmed in response to questions that this is a joint request from both parties. Hearing no further discussion, Chair Rivenbark asked for Board direction. MOTION: Commissioner Scalise MOVED, SECONDED by Commissioner Zapple to approve the continuance request for Special Use Permits S24-04 and S24-05 based on the request from Gary Shipman, attorney for the applicant, and Grady Richardson, attorney for the opposition, to the September 2, 2025 regular meeting. Upon vote, the MOTION CARRIED UNANIMOUSLY. Regular Agenda Item #11: Consideration of Fiscal Year 2025-2026 Budget Adoption. Commissioner Scalise made a motion to adopt the budget presented during the budget work session to the Board and as discussed with the additional reallocation of funds from the grocery store project to the 911 system upgrade. Vice-Chair Pierce stated she would support that motion. Commissioner Zapple stated that given the number of ongoing changes to the budget, it would be inappropriate to move forward with a vote at this meeting. He emphasized the importance of transparency and public trust, noting that the Board should continue the discussion and take action during the regular meeting on Monday rather than appearing to act outside the public view. Vice-Chair Pierce asked if the meeting had been publicly advertised and was still streaming. Commissioner Scalise confirmed it was a transparent, publicly accessible meeting, noting the Board had just held an almost three-hour open discussion. He added that three commissioners appeared ready to move forward with the proposed budget and his suggested modification. Chair Rivenbark acknowledged that while some concerns, such as funding for pre-K, remain unresolved, the Board could continue exploring solutions. Commissioner Scalise noted that formal steps are required to approve the budget and expressed hope that the necessary materials will be ready. Commissioner Zapple objected to proceeding with a budget vote during agenda review, stating it was the first he had heard of it and that doing so was unfair to the public. He said the proposed budget does not reflect the values of New Hanover County and represents a dismantling of what has been built over time. Vice-Chair Pierce deferred to the county attorney regarding procedure. County Attorney Smith confirmed that the required public hearing on the budget had already been held. Commissioner Walker objected to taking a vote during the agenda review session, saying it may be technically allowed but was not appropriate and contradicted what she had been told, that the vote would happen during a regular meeting. Commissioner Scalise emphasized that a public hearing had taken place and that a motion and a second were already on the floor. Commissioner Zapple interjected that NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 575 moving forward now was unfair to the public and employees, citing concerns about layoffs. He also pushed back against the suggestion that adjustments could be made later. Chair Rivenbark stated that there could still be efforts to address the remaining concerns. Commissioner Walker questioned why the Board could not simply wait until Monday’s meeting. Commissioner Scalise reiterated that the vote was in order and that the discussion was ongoing. County Attorney Smith clarified that if the Board chose to act on the budget now, the recommended procedure would be to first vote on recusals related to nonprofit and economic development appropriations before taking the final budget vote, and he confirmed a script was prepared if the Board wanted to proceed. Commissioner Scalise stated that the chair had the authority to call the vote and move forward with the required formalities. He emphasized that the Board had debated the budget for more than three hours and acknowledged that while some commissioners disagreed, a majority had requested the budget presented. Commissioner Walker asked what others were afraid of. Commissioner Zapple asked why there was hesitation to wait until the regular board meeting to hold the vote in front of the public. Commissioner Scalise responded that this was a public meeting, and the discussion was occurring openly. Commissioner Zapple clarified that he never said it was not public, but believed the regular meeting was the appropriate place for a vote of this importance. Commissioner Scalise said he was not afraid and was ready to vote. Commissioner Zapple remarked that Commissioner Scalise was trying to keep the vote out of public view. Commissioner Scalise replied that it was not true, noting the meeting was being recorded. Vice-Chair Pierce asked again if the meeting was being livestreamed, and County Manager Coudriet confirmed it was. Commissioner Zapple stated that livestreaming is different from holding the vote at the regular meeting. Commissioner Scalise said he understood the disagreement. Chair Rivenbark stated that North Carolina General Statute 14-234.3 prohibits public officials who also serve as directors, officers, or governing board members for non-profits from participating in making or administering any contracts, including any award of money, with those non-profits. It is recommended that the Board vote to excuse certain commissioners from deliberation and vote on specific appropriations and expenditures for the non-county and economic development agencies due to a conflict of interest. It specifically excuses Chair Rivenbark from the Greater Wilmington Chamber of Commerce, Wilmington Business Development and Wilmington Regional Film Commission; Commissioner Walker from the Southeastern Economic Development Commission, The Southeastern Partnership, Inc., and Wilmington Downtown, Inc.; and Commissioner Zapple from Leading into New Communities, Inc. and Thalian Hall Center for the Performing Arts, Inc. Chair Rivenbark asked for direction from the Board. MOTION: Commissioner Scalise MOVED, SECONDED by Vice-Chair Pierce to recuse each board member from deliberation and voting on appropriations and expenditures for the non-county, economic development, and social impact agencies due to a conflict of interest as listed by the chair. Upon vote, the MOTION CARRIED UNANIMOUSLY. Chair Rivenbark stated that a vote is needed to appropriate and administer a contract for individual non- county, economic development (based on the determination by this approval that the appropriations and expenditures will increase the population, taxable property, agricultural industries, employment, industrial output, or business prospects of the County) and social impact agencies. The Board must take a separate vote for each agency. Chair Rivenbark asked for direction on the following agencies:  Greater Wilmington Chamber of Commerce (excludes Chair Rivenbark):  MOTION: Commissioner Scalise MOVED, SECONDED by Vice-Chair Pierce to approve the appropriation, and administer a contract for Greater Wilmington Chamber of Commerce. Upon vote, the MOTION FAILED 2 TO 2 for lack of a majority, with Commissioners Walker and Zapple dissenting.  Wilmington Business Development (excludes Chair Rivenbark):  MOTION: Commissioner Scalise MOVED, SECONDED by Vice-Chair Pierce to approve the appropriation, and administer a contract for Wilmington Business Development. Upon vote, the MOTION FAILED 2 TO 2 for lack of a majority, with Commissioners Walker and Zapple dissenting.  Wilmington Regional Film Commission (excludes Chair Rivenbark):  MOTION: Commissioner Scalise MOVED, SECONDED by Vice-Chair Pierce to approve the appropriation, and administer a contract for Wilmington Regional Film Commission. Upon vote, the MOTION FAILED 2 TO 2 for lack of a majority, with Commissioners Walker and Zapple dissenting.  Southeastern Economic Development Commission (excludes Commissioner Walker):  MOTION: Commissioner Scalise MOVED, SECONDED by Vice-Chair Pierce to approve the appropriation, and administer a contract for Southeastern Economic Development Commission. Upon vote, the MOTION PASSED 3 TO 1, with Commissioner Zapple dissenting.  The Southeastern Partnership, Inc. (excludes Commissioner Walker):  MOTION: Vice-Chair Pierce MOVED, SECONDED by Commissioner Scalise to approve the appropriation, and administer a contract for Southeastern Partnership, Inc. Upon vote, the MOTION PASSED 3 TO 1, with Commissioner Zapple dissenting.  Wilmington Downtown, Inc. (excludes Commissioner Walker):  MOTION: Vice-Chair Pierce MOVED, SECONDED by Commissioner Scalise to approve the appropriation, and administer a contract for Wilmington Downtown, Inc. Upon vote, the MOTION PASSED 3 TO 1, with Commissioner Zapple dissenting.  Leading Into New Communities, Inc. (excludes Commissioner Rob Zapple):  MOTION: Commissioner Scalise MOVED, SECONDED by Vice-Chair Pierce to approve the appropriation, and administer a contract for Leading Into New Communities, Inc. Upon vote, the MOTION PASSED 3 TO 1, with Commissioner Walker dissenting. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 576  Thalian Hall Center for the Performing Arts, Inc. (excludes Commissioner Zapple):  MOTION: Commissioner Scalise MOVED, SECONDED by Vice-Chair Pierce to approve the appropriation, and administer a contract for Thalian Hall Center for the Performing Arts, Inc. Upon vote, the MOTION PASSED 3 TO 1, with Commissioner Walker dissenting. Chair Rivenbark asked for a motion and a second, exclusive of the appropriations voted on for non- county/economic development and economic incentives appropriations, recusing commissioners with conflicts of interest, to adopt the Fiscal Year 2025-2026 Budget Ordinance, inclusive of capital projects and opioid expenditures. MOTION: Commissioner Scalise MOVED, SECONDED by Vice-Chair Pierce, exclusive of the appropriations voted on for non-county/economic development and economic incentives appropriations, recusing commissioners with conflicts of interest, to adopt the Fiscal Year 2025-2026 Budget Ordinance inclusive of capital projects and opioid expenditures and with the modification being the swapping of the grocery store allotted funds for the 911 center upgrades (Public Safety technology enhancement). In discussion, Commissioner Zapple stated it would be a mistake to move forward with a vote at that time, arguing that several issues discussed during the prior three-hour conversation had varying levels of support and warranted further consideration. He criticized the move as politically motivated and harmful to the County and community. While acknowledging the meeting was properly noticed, he emphasized that it was not equivalent to holding a vote at a regularly scheduled public meeting and said proceeding in this manner appeared to be an attempt to act outside full public view. Vice-Chair Pierce responded that the vote is not outside the public view. Commissioner Zapple responded that the public expects the Board to conduct its business with full transparency, which would be better achieved at the regularly scheduled meeting. He said moving forward based on material received less than 24 hours earlier was not only rushed but irresponsible, especially given the significant policy changes being proposed. He called the process a miserable way to do business and warned of long-term consequences, including staff reductions and diminished service delivery. He concluded by questioning why the vote could not wait until Monday. Commissioner Scalise stated that there is nothing wrong with it, but there is also nothing wrong with voting today. Commissioner Walker stated her opposition to the proposed budget, agreeing with Commissioner Zapple that cutting six Pre-K classrooms would eliminate access for over 100 children and result in the loss of teaching positions. She said the cuts disproportionately affect working families and vulnerable children at a time when early education is critical. She noted that a 5% across-the-board reduction would impact essential services and jeopardize the County’s triple-A bond rating, increasing future borrowing costs. She also criticized the decision to reduce funding for partners like the Carousel Center, the Domestic Violence Shelter, and workforce housing, and said the process appeared predetermined, lacking transparency. She voiced concern about not having adequate time to review the revised proposal and felt excluded from discussions. She reiterated her support for the earlier compromise proposal with an 11-cent tax cut, which she felt was more balanced and protective of core services. She concluded by stating she would vote against the budget. Commissioner Zapple stated that the budget under consideration represents a retreat from the core services residents rely on. He warned it would lead to delays in services like building permits and risks to the 911 system, despite steps being taken to restore that funding. He described it as denying the realities of the County’s prosperity and growth. He noted that the County is among the state’s wealthiest counties and could still maintain one of the lowest tax rates with a slightly higher rate. He credited the county manager and staff for helping the County grow and hire strong employees to meet demand, and noted the Board regularly recognizes their service. However, this budget, backed by the Board’s Republican majority, would cut departments across the board and eliminate up to 70 positions, not due to poor performance or lack of need, but because of ideology. He said his colleagues point to waste, fraud, or abuse, yet have identified none, and instead pursued broad layoffs. As a result, residents will receive fewer services while valued staff lose their jobs. He argued that inflation’s impact on the County cannot be acknowledged while firing employees who have kept services running through limited resources. He recalled that at the last meeting, the chair listed the harms of a revenue-neutral budget; he warned that the current 30.6-cent proposal, though not revenue neutral, would cause similar damage. He also objected to the $8.1 million withdrawal from fund balance to deepen cuts, comparing it to borrowing money to make the budget work. He pointed out that the same action was criticized when proposed by the county manager at a higher rate and warned it would lower the fund balance below policy thresholds, threatening the triple-A bond rating. He also opposed cuts to Pre-K classrooms that would affect over 100 children, noting the long-term harm of denying early education. He argued that cutting investments in youth results in higher costs later through dropouts, crime, and incarceration. He reiterated that the $975,000 funding for Pre-K is a smart investment in the County’s future. He also rejected the decision to cut funding for courthouse video equipment, which he had previously addressed. He concluded by stating that none of these items constitute waste, fraud, or abuse. Instead, they are critical services that have been sacrificed to reach an arbitrary target. He urged the Board not to damage the community’s quality of life for the sake of political ideology. Vice-Chair Pierce expressed that she found it unusual and concerning that the two commissioners who insisted there would be no vote during the meeting had prepared statements ready. She said that suggested a contradiction, as it indicated they anticipated a vote despite their public comments to the contrary. She stated that she does not view her colleagues through a partisan lens and was disappointed by efforts to divide the Board along political lines. She emphasized that she considers all her fellow commissioners to be friends, even when they disagree, and that she would never label anyone based on party affiliation. She then stated that she did not engage in extensive discussions with any individual commissioner leading up to the meeting. Most of her questions were NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 BUDGET WORK SESSION AND AGENDA REVIEW, JUNE 12, 2025 PAGE 577 directed to Mr. Credle, whom she called directly when she needed information. She also said she had some conversations with the county manager but did not overwhelmingly consult with any specific person more than another. She explained that her support for a revenue-neutral tax rate was grounded in the consistent feedback she received from constituents and the emails she had read, though she was willing to come off that position as the discussion evolved. Vice-Chair Pierce rejected the idea that there had been any prearranged plan or coordinated effort among board members to push the vote through, pointing out that the entire discussion was being livestreamed and recorded, making the process fully visible to the public. She concluded by reiterating that she had not come prepared with a written statement and that, in her view, everything had been done openly and transparently. She said she was ready to vote. Commissioner Scalise asked that Chair Rivenbark call the vote. County Manager Coudriet apologized for interjecting but explained that, due to the 2–2 votes on economic development functions, the $724,250 allocated for those functions will be assigned to an administrative reserve. Staff will proceed with executing the contracts as originally proposed, with the funding drawn from that reserve. Commissioner Scalise stated that it was good with him and asked for Chair Rivenbark to call the vote. County Manager Coudriet stated in response to questions that no one has been asked to leave the organization at this point. Commissioner Zapple stated there is no plan to bring employees back. County Manager Coudriet stated he would describe it as a reduction in force. Commissioner Zapple responded that it is a firing. Hearing no further discussion, Chair Rivenbark called for a vote on the motion on the floor. Upon vote, the MOTION PASSED 3 TO 2. Commissioners Walker and Zapple dissenting. A copy of the budget ordinance is hereby incorporated as part of the minutes and contained in Exhibit Book XLVI, Page 12.1. ADJOURNMENT There being no further discussion, Chair Rivenbark adjourned the meeting at 5:34 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.