BC 2005 05 23 REGULAR - Laserfiche WebLink

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May 23, 2005 - Regular Meeting Page 196 o Notification by State regulators that the County must develop an interim solution to the severe overcrowding in the existing jail, since the new one will not open until late 2007 or early 2008. The Board agreed to construct a permanent Jail Annex on the Corban Avenue site. . SMG, the world's largest arena management firm, was hired to run the Cabarrus Arena and Event Center. o The Board entered into agreements with the county's municipalities to revise its land use development standards and to institute growth management strategies. New Demands and Obligations for Fiscal 2006 o The 2006 annual budget is accompanied by a five-year financial plan and a five-year capital improvement program (CIP). Total spending in all funds next year is projected at $152,697,092, up 6.8% over the current year. The general fund accounts for most of that; at $147,535,837, it represents an increase from 2005 of 6.9%. Overall revenue growth, projected at 3.1%, is insufficient to overcome this year's dependence on reserves and meet demands for both service and debt obligations, necessitating a property tax rate of 63 cents, an increase of 10 cents. o New spending demands (70% of which are related to public safety and education), and the corresponding effect on the property tax rate may be characterized in the following manner: Cost Tax Rate Equivalent* 18 law enforcement officers (full year)/increased operational cost for jail Increase in education current expense funding New debt service - Jail interest / school bonds Increase in Public Assistance (primarily Medicaid) Increase in school capital outlay Estimated revenue shortfall for FY 05 (use of Fund Balance) $1,006,529 2,959,184 5,290,950 580,039 371,995 $0.007 0.022 0.039 0.004 0.003 3,529,422 $13,738,119 0.025 $0.1000 *rounded numbers . Nearly $3 million increase in non-capital education expenses are related to the opening of new facilities, enrollment growth and increased maintenance costs. Overall, education spending increases nearly 11.5%. . Public assistance spending, mostly Medicaid, increases by nearly $600,000. Cabarrus County's total Medicaid burden is expected to be $5,937,417 in 2006, the equivalent of 4.3 cents on the tax rate. o One-quarter of the recommended tax increase, Or $3.5 million, results from the use of reserves or one-time revenues in 2005 to pay for recurring operating expenses. This practice has developed into a trend over the last few years and is known as a structural imbalance or deficit. It is the reason Cabarrus County received a "negative outlook" from Moody's Inves'tors Service in February when $50 million in school bonds were sold. o The budget does not rely on reserves to fund recurring operating expenses now or anytime during the next five-year planning period, thus returning the budget to structural balance. o The budget addresses future school construction needs in the CIP and provides a related funding strategy in the five-year financial plan. The financial plan shows the tax rate leveling off at a moderate 68 cents, providing an additional $7.9 million for school construction debt service in 2009 and accumulating $13.5 million in the capital reserve fund by 2010. The unreserved fund balance during that period does not dip below 15% of general fund expenditures, consistent with Board policy. o The CIP and five year financial plan provide a conservative, but realistic, spending plan that adequately addresses the provision of County services. Property Tax Assistance Grant o Recommendation to establish a grant program that will extend the benefits of the Homestead Act to all county homeowners who meet its income guideline, but limiting the grant formula to a maximum reduction in property tax value of $75,000. (A more detailed description of the proposed grant program will be provided during the budget work session.) The Program FundinqMatrix A program funding matrix divides county programs into three categories to clearly illustrate the County's obligations and options: