BC 2010 05 25 Recessed Meeting - Laserfiche WebLink

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May 25, 2010 (Recessed Meeting) Page 1937 over the coming years. These measures achieve a new equilibrium - a new state of normalcy - matched to the new economy. FY 2011 The property tax rate for FY 2011 remains unchanged at 63 cents and General Fund expenditures are projected at $194.7 million, nearly unchanged from the original budget adopted last June. It is important to note, however, that property tax revenues are expected to decline by nearly $3 million, due primarily to the closing of the Philip Morris cigarette manufacturing plant. Sales tax revenue is also expected to decline due to state Medicaid reform efforts and a change in the state's method of distribution. The decline in revenue is offset by savings from the reduction in staffing levels made in FY 2010, reductions in operating costs (including a 50% reduction in contributions to nongovernmental agencies), the use of capital reserves for some capital outlay expenses and proceeds from the capitalization of interest payments on debt service for new school construction. Despite these cutbacks, current expense funding for the public school systems goes up by $1.5 million, the Board - approved personnel management plan, suspended in FY 2010, is reinstated and 77 new positions are added near the end of the fiscal year to operate the new detention center. Admittedly austere, the FY 2011 budget establishes a new sense of normalcy and arguably meets the essential needs of our community. Additional summary and statistical information concerning revenues and expenditures for FY 2011 are found in the Budget Summary, beginning on page 39. FY 2012 - FY 2015 The remaining four years of the five -year planning period are projected to be equally austere, but some spending increases will be necessary to meet the essential needs of our community. A complete narrative summary and year by year revenue and expense figures for the Five -Year Financial Plan begin on page 77. Expenses The fully annualized cost of the detention officers (plus some additional related positions) added near the end of FY 2011 are felt in FY 2012, adding about $3 million in expenses. Additional debt service costs approaching $5 million for schools currently under construction also hits in FY 2012. Other additional expenses in the planning period include an increase of $840,000 each year for public school current expense spending, an average of $2.8 million each year to fund the personnel management plan, a new expense of $1.3 million beginning in FY 2013 for improvements in and around the North Carolina Research Campus and a new expense of $900,000 beginning in FY 2014 to service the debt for a public parking deck in downtown Concord to serve the courthouse. Other than the increases already described, operational expenses remain flat. Some small capital projects are funded through the capital reserve fund, as seen the Capital Improvement Plan beginning on page 85. P PN7P7111 P.4 While slow growth is expected in sales tax receipts and in revenues related to development during the planning period, the value of property (for purposes of taxation) is expected to decline in FY 2013 when a revaluation takes effect. This decline in valuation results, of course, from the Great Recession. Two options are offered to address the shortfall in revenues. Both options anticipate the adoption of a new 1/ percent sales tax by referendum in FY 2012 and the use of lottery proceeds to assist in meeting debt service obligations associated with new schools. Both options also employ the judicious use of fund balance, consistent with Board - adopted policies. Option A shows a total of $10.5 million of fund balance appropriated for two years - FY 2012 and FY 2013. Option B uses a total of about $5.7 million from fund balance over three years - FY 2012, FY 2014 and FY 2015. Finally, both options also rely on an increase in the property tax rate, but in differing years and amounts. Option A retains the current tax rate of 63 cents in FY 2013, the year of