BC 2009 05 19 Recessed - Budget Meeting

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May 19, 2009 (Recessed Meeting) Page 1387 Conservative projections suggest general fund revenues will not reach the original FY 2009 forecast until FY 2012. Obviously, a reordering of the county's five year financial plan is required. 1f the projections hold true, it will not be possible to avoid a property tax rate increase in FY 2011 without an unfavorable impact on service delivery. Further, the amount of the tax increase will be higher if current plans are realized to finance the construction of four new schools and a high school classroom addition in June, 2009. Two alternative five year financial plans are presented for the Board's consideration, both with emphasis placed on minimizing property tax rate increases while the recession drags on. Continuation of the operational reductions proposed for FY 2010 left school construction financing and other capital projects as the only significant and controllable variables affecting the tax rate. One alternative (option A, page 66) calls for financing the construction of two middle schools and a high school classroom addition in June 2009 and financing the construction of two elementary schools in June, 2012. This financing plan calls for capitalizing interest payments for 2.5 years and using cash from the state's school capital improvement fund (approximately $2.9 million), lottery proceeds (approximately $2.7 million) and from mitigation payments from the adequate public facilities ordinance (approximately $3.9 million. This scenario requires a 1.5 cents tax increase in FY 2011 and another 1.5 cents increase in FY 2012. This plan then holds the tax rate at 66 cents through the FY 2013 revaluation and in FY 2019, allowing for the financing of an additional $33 million in school construction projects in FY 2013. The second alternative (option B, page 67) proposes financing all five school construction projects in June, 2009 (again, capitalizing interest for 2.5 years and contributing cash from the same three sources as in the first alternative). This plan results in tax increases of 2 cents in FY 2011 and another 2.5 cents, to 67.5, in FY 2012. The tax rate is then reduced by a penny to 66.5 cents in the revaluation year of FY 2013 and in FY 2014, producing enough revenue to finance school construction projects totaling $54 million in FY 2013. With the exception of the school construction projects described above, the two plans include the same five-year capital improvement programs (reduced in scope from the FY 2009 CIP due to funding limitations), found on page 73. Of course, many other scenarios can be developed during the course of the Board's budget deliberations, each with varying results and costs. The staff and I are pleased to assist in developing and reviewing various options proposed by the Board. Opportunity in Crisis The financial crisis we find ourselves in demands a reassessment, at all levels, of the way we have conducted business and of the way we have governed. One might argue our national business model has been the Ponzi scheme. And as is true with all Ponzi schemes, they eventually collapse because they depend on ever-increasing levels or growth; that is, they are unsustainable. We in Cabarrus County are very fortunate that our Board of Commissioners had the foresight and leadership to abandon the Ponzi scheme model before the world financial crisis began and instead embrace a model based on the three balanced principles of sustainability: a healthy environment; a sound, conservative financial position; and social equity. This triple-bottom-line approach tempers the value previously placed upon growth and instead emphasizes conservation and prosperity. The Board of Commissioners' initiative to build a sustainable community consists of many efforts. Among them are programs in the county organization and retrofits of county facilities to conserve energy and water. Other organizational efforts include