AG 2002 04 15 (Regular) - Laserfiche WebLink

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BUDGET MESSAGE TO: Cabarrus County Citizens and Taxpayers Board of County Commissioners FROM: Frank W. Clifton, Jr. County Manager DATE: April 15, 2002 SUBJECT: Proposed FY 2003 County Budget The proposed county general fund budget for FY 2003 is $127,607,147 which represents a 7.5% decrease from the amended budget of FY 2002 (as of March 31, 2002) which totals $137,984,899. Significant documentation within this budget properly highlights revenue and expenditure changes by function. The proposed tax rate of $.56 remains at the same level as FY 2002. Each one cent on the tax rate generates $1,084,936 in property tax revenue based on a collection rate of 96.87%. The budget as submitted meets the County Commission's objectives of maintaining a low tax rate, placing importance on education and completion of the EXPO project scheduled to host the Cabarms County Fair in September 2002. This budget does reflect the realities of a State Government that does not meet its financial obligations to county government and the citizens of Cabarms County. This budget cast difficult decisions upon County Commissioners imposed by elements outside the realm of the county's control. The County Commission retains fmal authority, discretion and responsibility for adoption of the budget. This budget contains projects and initiatives from prior 'years along with proposals recommended to the County Commission for consideration. Primary among the county manager's assigned responsibilities is the preparation and submission to the County Commission annually a balanced budget document inclusive of a capital improvements program (CIP). The budget process involves the input and assistance of county staff, administrators of the county's two school systems, local and state government agencies supported by the county along with private sector partners in service to the public. FY 2003 BUDGET HIGHLIGHTS 1. State of North Carolina Fiscal Issues During the last two fiscal years, the State has seen significant revenue shortfalls. In both years the Governor has withheld county revenues defined as reimbursements. Those funds amounting to $1,300,000 in each fiscal period are state obligations to the county. The FY 2001 funds were paid late during the first quarter of 2002. At this point, it is uncertain when, or if the Governor will release currently held county funds. To address the shortfall of 2001, the North Carolina Legislature increased the state sales tax by % cent effective October 1, 2001. On July 1, 2003 (FY 2004) the authority for the ½ cent sales tax shifis to county government IF the County Commission acts to do so. This will NOT be new revenue, only a different source. The North Carolina Legislature deleted further reimbursement payments to local governments in the extension of the ~ cent sales tax. Over the long-term the ½ cent sales tax (not applied to grocery sales) will produce as much (possibly more) as the previous commitment to reimbursements. The bottom line is that the County Commission must adopt the ½ cent sales tax in order for the county (and cities in the county) to recover revenues roughly equal to the previous state reimbursement funds. This represents a $3.7 million decision for FY04 for county government alone. While action on this issue is not a requirement for adoption of the FY 2003 budget, it does have budgetary implications. Proposed issuance of new debt to occur after July 2002 and January 2003 will dictate those revenues for repaying the added debt service be identified. The county has two primary sources of revenue, property taxes and sales taxes. The new debt, discussed later within this budget memorandum will amount to approximately $1 million new debt service in FY 2003 climbing to $6 million in FY2004. The FY 2003 budget assumes the county will receive its allocation of state reimbursement revenues for this fiscal period of $3.7 million. Because of the state's fiscal crisis and the Governor's tendency to see these reimbursements to local governments as the state's rainy day fund, specific expenditures are tied to the receipt and scheduled payment of