BC 2004 05 31 RECESSED - Laserfiche WebLink

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May 31, 2004 Page 479 increases by almost 9 percent, or $4.3 million The increase in education spending was achieved by decreasing spending in every other service area. These reductions will affect the way we do business, but we will strive to shield our citizens from any potential ill-effects as a result. Last year's budget message described the fiscal 2004 spending plan within the context of several Board-approved goals from a January, 2003 work session. In the following pages, some of those goals will be revisited. I'll describe our pro~ress toward meeting them, related efforts in the fiscal 2005 budget, and new Board approved goals from its January 2004 planning retreat Retain the current property tax rate of 56 cents per $100 of value Last year, the Board decided a property tax rate of 56 cents was fair and reasonable and that current and future county expenditures and levels of service should be based on the amount of revenue that rate produces. The 5-Year Financial Plan, first instituted last year, relies upon that tax rate, as does the proposed budget for fiscal 2005. Using a statutory formula, in fiscal 2005, normal growth in the tax base accounts for a 4.8 percent increase. Additionally, a countywide property revaluation becomes effective this year, boosting the total tax base by another 12.6 percent. Consequently, maintaining the 56 cents tax rate is the equivalent of a 6.27 cents tax increase over the current year's rate. It is important to note, however, that property tax values for each year since the last revaluation in 1999 are based on 1999 market rates. Increases in property tax revenue during those years were the result of new construction only, since the tax rate was reduced to 59 cents in 1999, 56 cents in 2000, and remained unchanged since then. In fact, comparing inflation adjusted dollars, tax payers have paid less each year in property taxes since 1999. Maintain the county's sound fiscal condition The county's sound fiscal condition was acknowledged by the 3 major bond rating agencies last March when they announced its AA rating had been maintained despite local economic hardships like the closing of Pillowtex Good management practices and the county's conservative financial and budgetary policies are the foundation of its long-standing sound fiscal condition. Chief among those policies is one that establishes a goal of retaining an undesignated fund balance equal to at least 15 percent of general fund expenditures. A fund balance, or "cash reserve," at that level assures adequate cash-flow, generates interest income, assists in maintainin9 an investment-grade bond rating and sustains operations during emergencies and disasters. Fund balance accumulates by spending less money than is collected through the various revenue sources. A sizable fund balance was accumulated in fiscal 1999 due to a tax settlement with a large corporate tax payer. The money in excess of the 15 percent fund balance guideline was used to balance the budget in fiscal years 2002 ($13.7 million) and 2004 ($12.9 million) The use of excess fund balance those years prevented tax increases of 12.71 cents and 11.38 cents, respectively. For fiscal 2005, the fund balance will equal about 15% of expenditures, leaving none available to spend. Maintaining the current tax rate of 56 cents balances revenues and expenses and ensures obligations will be met and county services will be delivered without interruption, at levels generally the same as those being delivered now. Reducing the tax rate below 56 cents will result in laying off about 33 employees for each penny reduction and the likely closing of one or more county departments. Five Year Financial Plan Retaining the current property tax rate of 56 cents and maintaining the county's sound fiscal condition year after year requires planning and discipline. Accordingly, the proposed 2005 budget includes a Five Year Financial Plan created specifically for that purpose This Plan includes projections for the General Fund as well as the Solid Waste Enterprise Fund and Arena and Events Center Special Revenue Fund. The Five Year Financial Plan addresses the Board's priorities and goals, including providing adequate resources for educational operatin~ expenses, continuing all existing county pro~rams at or near current service levels, opening 3 new schools in the next 18 months and constructing and operating a new jail (slated to open in 2007), all the while maintainin~ a property tax rate of 56 cents. Capital spending, shown in each year of the Five Year Financial Plan as a lump sum, is described in the Capital Improvements Plan (CIP) beginning on page 296. With the exception of the 3 schools and the jail mentioned above, capital spending within the five year planning period is quite meager. Also, it is important to note that the Five Year Financial Plan only provides funding for projects to which the Board has already committed. The addition of new projects, such as those currently being considered by the Board-appointed Community Committee on Education Capital Planning and Financing, will require an increase in the property tax rate. The committee's recommendation is expected to be presented in June. Throughout the 5 year planning period, fund balance fluctuates very little, remaining within an acceptable range. Starting out the first year at 15.2 percent, it dips just slightly below 15 percent in years 2, 3 and 4. In year 5 it returns to 15 percent. Plan and construct a jail and justice center to meet the county's current and future needs. In May 2002, a study commissioned by the Board projected space requirements for the sheriff's office and jail for a 15-year period. Because of continuing steep growth trends, current site constraints and the sizable public investment to construct a new facility, the study was expanded in fiscal 2004 to consider Sheriff's Office and jail space requirements for a 40 to 50 year period. To make