05/04/10 — Duplin County faces massive cuts in budget

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Duplin County faces massive cuts in budget

By Catharin Shepard
Published in News on May 4, 2010 1:46 PM

KENANSVILLE -- Duplin County department heads "threw the scalpel down and grabbed the ax" Monday, as County Manager Mike Aldridge showed commissioners draft budget cuts that would close the county library, eliminate aging services, end the county cooperative extension and shutter the Duplin County Events Center to address a $5 million deficit in the 2010-11 fiscal year budget.

Aldridge was quick to add he does not think the cuts are realistic or responsible, and this year's budget is still very much "a moving target," he said.

"In January, the board instructed me to prepare a budget with the current 69-cent tax rate. In February, the board instructed me to prepare a budget with no fund balance contribution. That sort of set the stage for where we are," he said.

Other cuts in the still-changing draft version of the budget propose closing the Calypso Sheriff's Office substation, removing $666,125 from the county contingency fund, closing the planning and economic development departments and removing all county-funded nutrition programs. Soil conservation programs would be cut by $756,084 and current expenses and capital outlay for James Sprunt Community College would be reduced by nearly half a million dollars. The county's parks and airport would close, and the museum would be turned over to the Board of Education.

"I don't think the budget is realistic, but I'm giving you what you asked for," Aldridge said.

The bleak scenario is only a very preliminary look at what steps commissioners could choose to take to balance the county's budget, but no decisions will be made until the county commission meets next week to start the budget talks.

Aldridge said the draft did contain funding for the bare bones required by the state, but virtually everything else was removed.

The $5 million general fund shortfall was the largest of the county's economic woes by only a slight margin.

The commissioners also released a statement that county property owners may soon receive a second tax bill this year to collect the more than $4,795,000 required to pay the Duplin County school system as required by the court.

Sharon Edmundson of the finance division of the North Carolina Department of State Treasurer informed County Attorney Wendy Sivori that the county has four options to pay the settlement awarded by the court.

The first option of paying the entire amount owed from the county's fund balance would allow the county to settle the judgment quickly and limit expending any further time or cost toward the settlement, but it would deplete the fund balance to below 8 percent of the county's general fund expenditures. The county could experience cash flow issues in times of decreased receipts and would likely be viewed negatively by bond rating agencies, which would make it more expensive for the county to borrow money, Ms. Edmundson said.

A second option would allow the county to issue general obligation bonds if the issue would be approved through a referendum. However, the total cost of the judgment would increase due to issuance costs and interest costs over the life of the bond.

"Again, if this option is considered, the county must remember that if it advances the funds from fund balance to pay the judgment, it is highly unlikely those funds would be replenished by June 30," Ms. Edmundson said in an electronic communication.

The third option, which the county is currently exploring, allows the county to levy a special tax to generate the funds needed to satisfy the judgment. This option would allow the county to keep its fund balance, but it Ms. Edmundson warned that "given current economic conditions the county may have difficulty collecting this additional tax at the levels it collects its annual tax levy and that should be factored in to the decision-making process."

A fourth way to address the court ruling could be for the county to consider using a combination of fund balance money and money brought in by a tax levy, reducing the amount of the levy but constrained by the amount of money in the county's fund balance.

In the statement released Monday, the commissioners acknowledged that a supplemental tax levy is possible.

"At this time, we, the Duplin County Board of Commissioners, have no other choice but to pay the Board of Education the $4,795,784. We understand that in today's current economic climate many of you are experiencing serious economic crisis, and unfortunately, so is the County. We have investigated all possible options to avoid a supplemental tax but based on our current situation we may have no choice but to issue a supplemental tax. Therefore, in the next few weeks we may be sending you an additional tax bill in the mail," the statement said.

If the supplementary tax is levied, residents would have 120 days to pay the bill before interest began to accrue.

The statement also encouraged residents to contact members of the Board of Education to state their views, informing residents that the board "does have the right to forgive this judgment and/or reduce this judgment."