STATE OF NORTH CAROLINA BOARD OF COMMISSIONERS
COUNTY OF HENDERSON AUGUST 15, 2002
The Henderson County Board of Commissioners met for a special called meeting at 3:00 p.m. in the Commissioners= Conference Room of the Henderson County Office Building at 100 North King Street, Hendersonville, North Carolina.
Those present were: Chairman Bill Moyer, Vice-Chair Marilyn Gordon, Commissioner Grady Hawkins, Commissioner Don Ward, Commissioner Charlie Messer, County Manager David E. Nicholson, County Attorney Angela S. Beeker, Finance Director J. Carey McLelland, Assistant to the County Manager Selena Coffey, and Deputy Clerk to the Board Amy R. Brantley.
CALL TO ORDER/WELCOME
Chairman Moyer called the meeting to order, stating that the purpose of the meeting was a workshop on the FY 2002-2003 budget.
FY 2002-2003 BUDGET
Chairman Moyer stated that when the county=s budget was initially passed, it was contemplated that there would have been action by the state to deal with the additional sales tax one way or the other. Unfortunately, no definitive action had yet been taken, and the Board decided to go back into the budget and determine how to deal with the probable monetary shortfall.
David Nicholson reminded the Board that when the budget was passed, the Board had used Article 44 Sales Tax to balance that budget in the amount of $2,446,005. Depending on what the state ultimately does, this amount could vary.
Commissioner Hawkins asked Mr. Nicholson to go through the amount budgeted versus the amount spent for the previous fiscal year. At this time, the projected revenues from FY 2001- 2002 were $73,076,768 and the projected expenditures were $72,800,680, leaving a positive balance of $276,088. Though these were just the projected figures, he felt that at least this amount would be returned to the unappropriated fund balance.
Chairman Moyer asked the Board if there were any specific items they wished to bring up for discussion. Commissioner Ward stated that he had had several questions answered by staff shortly after the budget was passed, and felt that at this time the Board should begin looking at where to come up with $2.4 million dollars. Commissioner Gordon questioned part of the contingency allotment in the budget, which Mr. Nicholson stated were revenues for FY 2002-2003 and did not affect the aforementioned balance of $276,088.
Commissioner Gordon stated that she had spent most of her life learning how to work with cash flow. She felt the Board should go back and look at what had been proposed during budget deliberations as Plan B, update it with more current figures, and get a feel for exactly how to adequately fund what was approved. She felt that it was very important to recognize that Mr. Nicholson had initially presented a very flat budget which did not include new programs or initiatives. She spoke to the fund balance, stating that she was pleased that the Board had been able to increase it, but that it was important not to collect more tax than was necessary to provide services. If the money is available, the services should be provided. She had tried to determine exactly how much fund balance the county needed to ensure security, the bond rating, and to stay within state guidelines for fund balances.
To maintain an 8% fund balance, which is the state minimum recommendation, there would be about $3 million dollars available. To retain it=s current bond rating, the county would need to maintain a 10% fund balance, making about $1.5 million dollars available. In the approved budget, $708,494 had been allocated. Commissioner Gordon proposed the following adjustments for the FY 2002-2003 budget:
Need to offset Article 44 Sales Tax $2,446,005
(est. for 9 months included in approved budget)
Apply remainder school capital fund available - 742,526
Appropriate excess savings available - 550,000
(Retain greater than 10% Fund Balance to preserve bond
rating , exceed state recommended base level by est. 1.5 million)
Temporarily remove budgeted contingency line item - 906,668
(Pending corrected figures from school budget and
receivable sales tax revenue, any refund or excess to
be placed in contingency fund)
Amount necessary to balance budget 246,811
County Manager Budget Reductions - 246,811
Budget Balanced 0
Chairman Moyer questioned whether the amount of sales tax revenue budgeted appeared to still be a good figure to use. Mr. Nicholson stated that the sales tax number had just arrived, and it appeared to be a little flatter than in the past. For the previous year, there had been a 4.4% growth in sales tax. For the current budget he had programmed an additional 3.1%, and felt that number would still be a reasonable starting point.
Commissioner Hawkins questioned the use of the budgeted contingency line item in the amount of $906,668. There was much discussion of whether this amount had already been included to balance the original budget, and if it could be used in Commissioner Gordon=s budget scenario. Commissioner Gordon explained that the bottom line was that additional budget reductions in the amount of $246,811 would produce a balanced budget. She recommended that the County Manager have the discretion to decide where those cuts would go, using strategies such as delaying hiring and capital spending.
Commissioner Gordon reminded the Board that it was important to remember that if the state legislature does the right thing and gets the Article 44 Sales Tax straightened out effective January 1, 2003, the county would receive a minimum of $1.5 million dollars that is not in the budget. If that happens, the money would be put back in the fund balance. As the legislation stands currently, the sales tax will definitely begin on July 1, 2003. She stated that there will be some cuts made, but that the county should be able to retain all the services that are currently available.
David Nicholson stated that if the Board does adopt Commissioner Gordon=s plan, the following items in the Budget Ordinance would be changed.
General Fund Revenues:
1. Local Option Sales Tax - reduced by $2,446,005 to $15,203,451.
2. Transfers - increased from $627,797 to $1,370,323.
3. Appropriated Fund Balance - increased from $708,494 to $1,258,494
4. General Fund Budget - lowered to $75,900,269
General Fund Appropriations:
1. Contingencies - reduced from $906,668 to $0.
Those changes would result in the budget being out of balance by $246,811. Mr. Nicholson stated that there were several options of what would need to happen before the Board could make that adjustment.
1. Mr. Nicholson would need to come back to the Board with the cuts.
2. The Board would need to appropriate additional fund balance.
3. A portion of the sales tax would be left in to keep the budget in balance.
Commissioner Hawkins questioned what the fund balance amount would be at the beginning of the fiscal year and at the end of the fiscal year if the Board proceeded with Commissioner Gordon=s recommendation. Mr. Nicholson stated that the county had gone into the Fiscal Year 2001-2002 budget with about $8.5 million dollars in undesignated fund balance. He believed that number would go down to roughly $7.5 million dollars, leaving the fund balance at around 10%-11%.
Commissioner Hawkins confirmed that the overall budget would be cut by approximately $250,000, and the rest of it would be made up out of the fund balance. Mr. Nicholson stated that the money would be transferred from the fund balance, and the school capital funds.
Chairman Moyer asked if any of the Commissioners had recommendations for the $246,811 reduction. Commissioner Messer asked Mr. Nicholson what kind of time frame he expected with respect to positions within various departments. Mr. Nicholson stated that he would do his best to have the $246,811 reduction back to the Board by August 21st.
There was additional discussion of the various impacts of the Article 44 Sales Tax, and the possible outcome at the end of the fiscal year.
Commissioner Hawkins expressed concern that the Board was too quick to dip into the fund balance. He felt the county would end up getting some money back from the schools in the form of the state reducing unfunded positions. He also felt that capital outlay in the form of technology could be reduced. He questioned the $122,000 grant for the Automated ID System. Mr. Nicholson stated that if the grant is not received, the system would not be purchased. Commissioner Hawkins also questioned $148,000 for replacement of desktops and notebooks. Mr. Nicholson stated that he would take that item into consideration.
Commissioner Ward stated that the decision of buying versus leasing vehicles for the Sheriff=s Department could be a major budgetary item in the next budget. Mr. Nicholson had planned to bring information back to the Board on that issue in October.
Commissioner Hawkins requested Mr. Nicholson bring information back to the Board on his plan for unfilled positions, and an update on buying versus leasing vehicles. Mr. Nicholson stated that he would try to bring some preliminary information back to the Board at their next meeting.
Commissioner Hawkins made the motion to adjourn the meeting at 3:55 p.m. All voted in favor and the motion carried.
______________________________________ ______ ____________________________
Amy R. Brantley, Deputy Clerk to the Board William L. Moyer, Chairman