05/28/10 — County will keep tax rate steady

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County will keep tax rate steady

By Steve Herring
Published in News on May 28, 2010 1:46 PM

What is labeled a "nondescript" proposed county budget that has changed little from the current spending plan leaves the tax rate as well as the funding level for county schools intact.

The proposed $156 million budget reflects a decrease of $1,663,967 or 1 percent, compared to the 2009-10 adopted budget.

Education expenditures include about $21.3 million for the public schools and about $3.5 million for Wayne Community College. Combined, these expenditures account for 26 percent of the proposed general fund operating budget.

Along with holding the tax rate at 76.4 cents per $100 of assessed value, the proposal continues the three-year freeze on capital projects and new employees except in the case of shift workers, mandates and areas where there is potential for lost production.

"We are holding back on capital," County Manager Lee Smith said. "By holding and freezing capital this year, we still budget for it. But we have now taken $2.5 million (from the current budget) and placed it in capital reserve. That way we still meet our 12 percent capital reserve policy."

The North Carolina Local Government Commission requires a fund balance of 8 percent, but the county's fiscal policies require an unreserved fund balance of no less than 14 percent and a 12 percent capital appropriation of general fund expenditures. The county currently has $27 million in its unreserved fund balance.

"Stabilization policies such as this are generally recognized as a best practice within governmental financial management and the new AA- (bond) rating is proof that policies adopted and adhered to by the county commissioners are paying off," Smith said.

"Maintaining the fund balance at present levels is critical to the county's financial health because it allows the county to meet minimum cash-flow requirements; maintain our higher bond rating; and provide a prudent level of flexibility to address the routine fluctuations in revenues and expenditures. Maintaining the fund balance threshold continues to be an integral part of our financial strategy moving forward."

There will be no cost-of-living increase or furloughs for employees who can expect to see some changes in their insurance.

One change is a health care saving account option in which employees pay a higher deductible and the drug card is a little different. Employees will be able to put money into the account to use for health care. Unlike some plans, though, if the money is not used, it is not lost. Instead, it is similar to a savings account. The county will pay $500 a year to help get an employee started, Smith said.

Last year, Smith asked commissioners to waive the automatic 5 percent pay increase called for in his contract.

"I have a contract," Smith said when asked about this year. "The contract is what it is. I have not made any changes and the board has not made any changes to the contract."

The county will continue cost-cutting efforts including the four-day work week and vehicle idling policy.

Also, the county has received a $132,284 grant for lighting improvements in four buildings along with room occupancy sensors and heating and air conditioning improvements. The total cost of the project is $199,100.

"We are just kind of holding our own (in the budget)," Smith said. "The big issue is no tax increase in property tax or sales tax and really there is no general fee increase."

Some fees that flow through the county, such as those associated with environmental health, are set by the state and could change, he said.

"Other than that, there are no changes. Our revenue stays the same," he said.

Property taxes along with sales taxes are the main sources of funding for the majority of services directly provided by the county and its related agencies.

Smith will present the budget to commissioners at their upcoming Tuesday session. A public hearing has been set for June 15.

"For years we have really been gearing up in making changes in the budget to get our operational budget prepared for capital and capital needs," Smith said. "By doing that, we trimmed our operations budget. I am not saying there is nothing in the budget that couldn't be changed, but I think we have culled it down to a lean operational budget.

"But then the storm came. The storm was the economy and the economy we were prepared for. We had the reserves if we needed them and fortunately we have not. We have been able to act within the operational budget within the revenues generated presently to deal with issues."

Issues this year include an increase of about a half million dollars in what the county pays toward state employee retirement.

"A half million dollars is a penny on the tax rate," Smith said. "We were able to absorb that in the county budget without seeking additional revenues. A half million is a big hit."

The budget plans not for best case, but for worse case, he said. That is something the county has done over the past eight years, he said.

"By being extremely conservative, in fact budgeting worst case, on issues like revenue, that has made us safe. It put us in a positive position as you know looking at the audit for the past five or six years. We have been in a positive cash position of revenues over expenditures by year's end. That allows us to build fund balance."

No changes are anticipated in county service levels.

"If the economy was to go down more, you are going to see longer lines at the Health Department," Smith said. "I do have some concerns about emergency services. Our demand for emergency services is growing tremendously."

A 10th EMS station is needed, but for now Smith plans to wait.

"I plan to go through six months to see where we are and if we can generate revenues sufficient that the county can pick up additional people and an additional ambulance," he said.

Response time is still below the eight-minute average, commissioners have established. If it goes over that limit, one option would be for commissioners to increase that initial response, he said. Another would be to add personnel and a truck.