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HomeMy WebLinkAbout2026-04-30 Budget Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 37 BUDGET WORK SESSION,APRIL 30,2026 PAGE 2 ASSEMBLY The New Hanover County Board of Commissioners met on April 30, 2026, at 12:00 p.m.for a Budget Work Session in Conference Rooms 137-139 at the New Hanover County Government Center, 230 Government Center Drive,Wilmington, North Carolina. Members present:Chair LeAnn Pierce;Vice Chair Dane Scalise;Commissioner Bill Rivenbark;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 Pierce called the meeting to order,stating that the purpose of the meeting is for the Board to discuss budget priorities for the 2026-2027 fiscal year. FISCAL YEAR(FY)2026-2027 BUDGET WORK SESSION PRIORITIES DISCUSSION Budget Officer Amanda Kostusiak presented the following information about the FY 2026-2027 budget: • FY 2026-2027 Budget Work Session 4-Budget Overview and Balancing: • Overview of Funds and Capital: • Fire Services Fund: • FY 2026-2027 Budget: • Enhancements: Quality Assurance Coordinator • Recruitment and retention initiative • Capital Outlay: $2 million, including a replacement engine • FY 2026-2027 Tax Rate: no change to current year rate of 7.25 cents In response to questions, Ms. Kostusiak confirmed that the recruitment and retention initiative was included in the FY 2026-2027 budget. She also confirmed it mirrors what is being done in the Sheriff's Office. • Stormwater Fund: • Stormwater Fee($6.14 per ERU): no changes • Enhancements/Capital Improvement: • Courtney Pines Culvert replacement • Hixon Place and Peters Lane Culvert replacement • Two (2) permanent Stormwater Maintenance Worker positions (replacing two contracted employees) • Environmental Management Fund- Recycling and Solid Waste: • Tip fee increase: $9(from $52 per ton to$61 per ton) • Increase in tip fee due to capital plan for cell closures and extending the life of the landfill • Tip fee history: Fiscal Year Tip Fee/Ton FY 2014 $59 FY 2015 $55 FY 2016 $52 FY 2017 $50 FY 2018-FY 2022 $48 FY 2023-FY 2026 $52 • Neighboring counties: Brunswick($59) and Pender($78) In response to questions, Recycling and Solid Waste Director Joe Suleyman stated that the five-year capital improvement plan was the primary driver of the tipping fee increase. He explained that development of the remaining cells on the southern property will require relocating existing infrastructure, including construction and demolition debris recycling equipment, the administration and maintenance building, and material storage areas. He stated that the department must also continue routine capital projects, including cell closures and new cell construction. He further stated that annual capital costs, which typically average approximately $5 million, are expected to increase to approximately$9 million to$10 million in two of the five years before tapering back down. In response to questions, County Manager Coudriet stated that the proposed tipping fee increase was intended to support the capital plan. He stated that if the Board approved the fee as recommended, there is no expectation of requesting another tipping fee increase for at least five years. If the increase is not approved, the County would still need to identify revenue to cover the capital expenses identified by Mr. Suleyman. In response to additional questions, Mr. Suleyman stated that the County typically budgets approximately $1.18 million annually for the closure/post-closure fund,which supports the closure of landfill acreage every two or three years, and that the landfill has approximately 30 years of remaining life based on the most recent airspace analysis. He stated that staff estimated the $9 tipping fee increase would affect the average household by approximately $2 per month, but emphasized that the County does not control what private haulers charge customers. Discussion ensued regarding the need to clearly communicate that the tipping fee is a user fee that supports landfill operations and management,the potential impact on residents,the possibility that private haulers could increase customer rates beyond the County's actual fee increase, and whether future rate-setting should be NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 37 BUDGET WORK SESSION,APRIL 30,2026 PAGE 3 reviewed more holistically. County Attorney Smith stated that the enabling statute allows some rate-setting authority when granting solid waste franchises, but the County does not currently have that structure in place. He stated that applying rate-setting authority to existing franchises could raise additional questions,while prospective franchises could be addressed if the Board chose to pursue that option.Mr.Suleyman further stated that population growth has compressed landfill cell construction and closure timelines, and that hurricane-related waste, including material accepted from Pender County after Hurricane Florence with state approval,affected landfill capacity. • Five-year Capital Plan by Fund: General Fund 800,000 9,617,000 1,100,000 9,500,000 2,485,000 23,502,000 Fire Service Fund 420,000 7,771,265 14,188,989 1,308,262 3,450,000 27,138,516 Environmental Management Fund 5,604,000 11,521,000 8,500,000 8,500,000 5,000,000 39,125,000 In response to questions, Ms. Kostusiak stated that the Wrightsboro Station funding would come from the Fire Service Fund and not the General Fund. • Balancing options: Additional funding for NHCS 836,321 Yes Yes Restore Pre-K funding 916,500 Yes Yes CJCfunding 300,000 No Yes Artsfunding 310,000 No Yes Adjust for lower revenue assumptions 2,500,000 Yes Yes Use RSF for Work Force Housing 2,000,000 No No Adjust for one-time revenues 6,650,000 No Yes Increase borrowing 2,350,000 Yes No Use 1%of GF Fund Balance 3,980,906 Yes No Use of committed fund balance 2,200,000 Yes No Increase DSS Revenue 150,000 Yes Yes Fund Trillium Operating with MHF 432,467 Yes No Reduce Additional Funding for Wave 400,000 No No Discussion ensued regarding the 30.6-cent and 32.6-cent tax rate options,including the use of General Fund balance, one-time revenues, increased borrowing, and recurring revenue. In response to questions, Ms. Kostusiak stated that using approximately$3.98 million in fund balance under the 30.6-cent option would place the County at its minimum fund balance policy level of approximately 16.67%. County Manager Coudriet added that the County would remain in compliance with the policy at that level, but that unanticipated events would reduce flexibility. He stated that the policy allows two years to restore the fund balance if it falls below the minimum due to unanticipated circumstances,citing Hurricane Florence as an example. He confirmed that the 16.67%minimum is a Board-adopted policy and that the state requirement is 8%. Discussion continued regarding whether using fund balance,one-time revenues,or increased borrowing to balance the budget would affect the County's flexibility for emergencies,future opportunities,and recurring service needs.County Manager Coudriet stated that staff had previously considered recommending the use of the RSF, but based on Board discussion,staff did not intend to recommend that option to balance the budget. He stated that the fund would remain available if the Board identified a priority, emergency, or significant opportunity, and that staff would continue refining expenditures to reduce the amount of fund balance required. Discussion ensued about the past practice of using the RSF with unanimous Board support, although the formal policy requires a supermajority.Commissioners shared their views on whether maintaining the 30.6-cent tax rate would provide appropriate tax relief or whether the County needed additional recurring revenue to support ongoing operations and reduce similar budget challenges in future years.Commissioners also discussed the potential impact of a future school bond,which could add an estimated 1.75 cents to the tax rate if voters approve it. • Revenues: FY 2026-2027 Preliminary Budget: 30.6 Rate 32.6 Rate FY25-26 Adopted Ad Valorem 253,417,180 270,040,553 249,899,955 Sales Tax 118,619,645 118,369,645 117,446,172 Other Taxes 6,106,404 6,106,404 5,904,446 Intergovernmental Revenue 40,126,923 39,976,923 40,860,744 Charges for Services 13,736,960 13,736,960 13,726,580 Other Revenues 13,046,004 13,046,004 15,290,885 Transfers 8,038,000 838,000 6,122,203 Debt 13,647,926 9,647,926 - Appropriated Fund Balance General Fund 3,980,906 - 8,372,836 Debt Service Fund 34,549 34,549 2,377,758 Mental Health and Substance Use Fund 9,573,272 9,141,260 8,910,509 Revenue Stabilization Fund - - - Total 480,328,224 480,938,224 468,912,088 NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 37 BUDGET WORK SESSION,APRIL 30,2026 PAGE 4 In response to questions, Ms. Kostusiak stated that the preliminary budget included approximately $9 million in interest earnings from the RSF. During further discussion about the RSF, Mr.Credle noted that the County invested RSF funds when interest rates were low in 2021 and that staff is now reinvesting maturing investments at higher rates. He stated that the current year budget included approximately $6.6 million in interest, while the preliminary budget included approximately$9.1 million. He further stated that if interest rates remain similar to current levels,the County could earn approximately$11 to$12 million, but staff used a more conservative estimate for budget purposes. Discussion ensued regarding whether earnings above the budgeted amount should be used to replenish the RSF until it returns to$300 million. County Manager Coudriet stated that current policy directs annual interest earnings to the General Fund, but the Board could consider revisiting that approach during future budget discussions. Mr.Credle added that the RSF balance was projected to be approximately $291.7 million after previously approved expenses and that earnings above the budgeted amount could potentially restore the balance to approximately $300 million within two years. • Expenditures: FY 2026-2027 Preliminary Budget: 30.6 Rate 32.6 Rate FY25-26 Adopted General Government 77,759,971 77,759,971 75,222,796 Human Services 79,474,082 79,474,082 76,891,159 Public Safety 120,422,501 120,422,501 114,321,811 Economic and Physical Development 3,093,880 3,403,880 2,084,124 Culture and Recreation 18,427,757 18,427,757 19,123,903 Education 127,263,217 127,263,217 122,480,584 Education Debt 25,108,992 25,108,992 29,666,076 Debt Service 28,777,824 28,777,824 29,121,633 Total 480,328,224 480,938,224 468,912,088 • 2.6%expense increase from FY 2025-2026 adopted budget In response to questions, Ms. Kostusiak stated that the transfer line item included transfers to capital projects,debt service,the emergency telephone system fund,and the Cape Fear Museum fund.She also stated that special revenue fund transfers are limited to specific purposes. • Budget timeline: Joint Department FY26-27 Budget Kickoff& En hencement Review February 25 Belan Public Department Request Decisions Budget Work Engagement Opens Cl p Committee Review Session M4 Ma Board Meeting November 19 February 6&February 13 Public Late March April 30 y June 1 Engagement March Budget Work Bud t Work Budget Work Ir Board Meeting ge Session M3 June 15 Request Period Closes Session 02 ques Session B1 February l2 March 12 Aprill Vetting end Review Begins Board Meeting January 23 ITGC Committee May 18 Review February 19 Potential Public Hearing Dates We are here May 18 or June 1 GENERAL DISCUSSION In response to questions,County Manager Coudriet stated that if the Board reached consensus on a budget model, staff could transmit a recommended budget early the following week and schedule the public hearing for May 18. If there was no consensus, he stated that he would still bring a recommended budget on May 18,with the public hearing to follow in June. Vice Chair Scalise stated that he supported the 30.6-cent option because it did not increase the tax rate and, as confirmed by staff during the discussion, would increase funding for K-12 schools, restore pre-K funding, increase funding for the District Attorney, and increase funding for WAVE Transit. Commissioner Zapple stated that the 30.6-cent option also used General Fund balance and committed fund balance. He asked staff to provide information on what a 1.5-cent tax rate adjustment would generate,stating that the Board should not limit itself to only the two-cent option. County Manager Coudriet stated that staff could provide that information, but that he needed to focus staff on preparing his recommended budget,which would include the 30.6 cent rate.Commissioner Walker stated that she remained concerned about using one-time revenues for recurring expenses and requested additional information on recurring versus one-time costs in the proposed budget.Chair Pierce stated that the Board would continue to have annual budget discussions regarding tax rates, spending levels, and priorities, and that the Board appeared to agree on schools as a priority. Based on the Board's further discussion, Chair Pierce directed County Manager Coudriet to schedule the public hearing for May 181h to allow the Board to hear from residents, noting that the Board would not necessarily vote that day.County Manager Coudriet stated that staff would transmit a recommended budget early the following week to meet the 10-day requirement before the public hearing, and that the recommendation would include the 30.6-cent tax rate and use of fund balance as discussed. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 37 BUDGET WORK SESSION,APRIL 30,2026 PAGE 5 The Board continued discussing the budget process and remaining items for consideration before adoption, including the economic development category, arts funding, and support for nonprofit and cultural organizations. The Board also acknowledged that it would have additional opportunities to review, discuss, and adjust the budget before the final vote,and that the County must adopt a budget before the end of June. ADJOURNMENT There being no further discussion, Chair Pierce adjourned the meeting at 1:38 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.