AG 2002 08 19 (Regular) - Laserfiche WebLink

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08/09/2002 14:19 ET REF: NOOD7193.0000 FR:MOODYS T0:7049202881 Page 2 of 4 13.6% average annual increases in taxable value over the last five years (including a revaluation in fiscal 2000, which yielded a 24.3% increase to taxable values). Traditionally dominated by textiles, the county has endeavored to diversify its industrial base through aggressive economic' development initiatives, including fiberoptic cable manufacturing as well as a gro~ing distribution, warehousing, and shipping industry. Ongoing expansions to existing plants and the recruitment-of new industry have resulted in increasing capital investment and job creation in the county. The location of Corning, Inc., a fiberoptics manufacturing company, in the county has placed it as the second largest, taxpayers, replacing Fieldcrest Cannon, a textile manufacturer. Phillip Morris continues to constitute approximately 10Z of the taxbase, though diversification has resulted in the decline of that concentration since 1995. Income indices are above state levels, and full value per capita is high at $75,094. SOLID FINAN. CIAL PERFOE/~ANCE EXPECTED DESPITE PRESSURE FROM STATE BUDGET CUTS AND SLOWED SALES TAX Moody's expects the county's financial performance to remain solid despite recent strain from state budget cuts and below-bUdgeted sales tax results for fiscal 2002. The county ended fiscal 2001 with a total General Fund balance of $55.37 million, or 48.8Z of annual operating revenues, with 21.9Z undesignated. Following several years of annual operating surpluses, Cabarrus County anticipates a significant reduction in reserves ($19 million) in fiscal 2002 following a $11 million allocation to construction of the Expo Center (to be reimbursed at approximately $8,2 million from bond proceeds), approximately $6 million for one-time capital projects and a $2 million fund balance appropriation needed to balance the budget after sales tax revenues failed to meet budget expectations (llZ reduction from original budget). Despite this reduction, unaudited, fiscal 2002 results reflect a 33Z total General Fund balance with almost all of these funds (29Z) held as. undesginated, well in excess of the county's self-imposed 15Z undesignated target. In addition, officials maintain approximately $7.5 million in an Undesignated Capital Reserve, originally funded in fiscal 1999 with excess property tax revenues, into which officials budget a $1 million annual transfer. While the county eliminated that transfer in fiscal 2003 to partially address a possible $3.7 million state budget cut, officials plan to reinstate the transfer in fiscal 2004. Due to pressure on the state budget, state officials targeted certain local reimbursements and local revenues collected by the state for withholding in fiscal 2002, similar to fiscal 2001 withholding of the municipalities' reimbursement under the inventory tax. The state has broadened the cuts in the current year, however, by suspending local government reimbursements under the state collected utility franchise fees, beer and wine tax and funds allocated under the homestead exemption. The total impact for Cabarrus County for fiscal 2002 totaled $1.3 million. Officials responded by instituting cuts in certain social service programs, reducing capital outlay and eliminating 220 part-time positions. It is unclear at this point whether local officials will ultimately receive reimbursement for these funds as they did in FY01. In addition, state officials have indicated that they intend to withhold all reimbursements in fiscal 2003, approximately $3.7 million for Cabarrus County in fiscal 2003. The county's 2003 budget includes the $3.7 million in reimbursements tied to certain expenditures ($2.4 million of which is tied to additional school funding) that remain contingency items until the reimbursements or alternate revenues are released. Additionally, the county's 2003 budget includes a conservative sales tax estimate budgeted at modest growth off the 2002 actual. It is worth noting that a 1/2 cent sales tax, currently levied at the state