AG 2002 04 15 (Regular) - Laserfiche WebLink

Home Browse Search

the state reimbursements. Those expenditures should not occur unless the state meets its financial obligation to county government. State government must get its fiscal policies in order or services to the public will be severely and adversely impacted. 2. Revenue Shortfalls and Forecasts The budget process requires estimates (educated guesses) based upon known and unknown factors. No one could have predicted the impact that a 9/11/01 event would have on local governments and the national economy. The state revenue crisis as previously identified has had a tumble down impact on the county. At the local level, we have seen a 'fall off' in sales tax revenues and a flattening of real estate values. The Pillowtex bankruptcy, ensuing layoffs and the decline of the textile industry have had a souring impact on industrial real estate values. The short-term cease of production and delay of construction expansion at Coming has also chilled property valuations. In all, property tax revenue is projected at the same level budgeted for FY02 and sales tax receipts of $1.2 million less than FY02. Even though the budgeted FY02 levels were not achieved as projected, it is felt that FY03 should see those expectations as obtainable. Continued commercial valuation growth and retail sales are expected to help offset losses in other uses. Residential development within the county has continued to grow even with the negative impact of drought restrictions limiting the number of new water/sewer connections available. Efforts by cities and WSACC to pursue additional water supply resources will gain in significance as drought conditions extend. Limited growth in the tax base or retail sales leaves the county limited options for additional revenue to meet increasing demands except to increase the property tax rate. It is the stated policy of the County Commission to avoid increasing the tax rate. The alternative to increasing revenues is to reduce expenditures wherever possible. That means making difficult choices and setting priorities that will not meet every demand fully or address every concern completely. Within this FY03 budget these issues are addressed. FY04 (beginning July 2003) will be the year that the County Commission will be faced with limited options other than increasing the local property tax rate. The FY03 budget contains $4.3 million of"onetime" revenues fi.om the sale of land assets. There will be $5 million of added school debt service beginning in FY04. Combined these two factors create approximately $10 million annual gap between revenues and expenditures going forward. Some of that gap may be covered by normal growth. However, reality forecasts that normal revenue growth will not cover most of the revenue shortfall. 3. Educational Funding The County Commission has authorized additional debt funding 'of new school construction projects in both the Cabarrus County and Kannapolis City School System. The impact of that decision creates and increase in annual debt service requirement for FY03 of an additional $1 million (approximately). That impact swells by another $5 million in FY04. The result is a need for an allocation of revenues to cover the increase in debt service payments. For FY03, educational current expense is recommended for funding at an increase to the current ADM rate of $1,186.78 by 1.6% (CPI) to be distributed as follows: a. A CPI allocation based on $1,186.78 x 1.6% = $18.99 x 24336 students = $462,141. The distribution of these funds to be delayed until the State makes its scheduled payment of county reimbursement revenues set for September 28, 2002. b. The student growth of an estimated 1196 (1128 Cabarrus County and 68 Kannapolis) is budgeted at the $1,186.78 and creates an increase in education funding for FY03 of $1,419,388~88. This increase is budgeted. c. Based on prior agreement between the County Commission and the two School Boards, the ADM amounts for FY02 were applied as noted: Unrestricted Use = $961.11/pupil Buildings Maintenance -- $188/pupil Grounds Maintenance = $37.67/pupil Total = $1,186.78 After the CPI adjustment tied to the September 28th 2002 State reimbursement payments would become: Unrestricted Use = $976.49/pupil Building Maintenance = $191.00/pupil Grounds Maintenance = $38.27/pupil Total -- $1,205.76