Macon County commissioners got their first glimpse at the 2013-14 proposed budget on Monday night during the regularly scheduled monthly meeting of the board of commissioners.
“Macon County continues to maintain a solid financial position compared with many counties in North Carolina,” said County Manager Jack Horton. “The county currently has the lowest ad valorem property rate among all 100 counties in North Carolina at 27.9 cents per $100, and our fund balance remains healthy. This continues to provide a high degree of financial security in terms of being prepared for unexpected emergencies and shortfalls in revenue. The healthy fund balance, a conservative approach to budgeting, along with a consistent tax collection rate, contributes to Macon County's A+ Bond Rating.”
Horton began the budget presentation by touting the county's financial accomplishments during the current fiscal year. “This past year we have continued our commitment to education by seeing the completion of the new K-4 Iotla Valley Elementary School which opened on time and under budget at a cost of $11,300,000 or $118 per square foot,” said Horton. “We also were able to get the windows replaced at Nantahala School and are beginning construction renovations to the Highlands School through QZAB with a net interest of zero percent.”
Other projects completed during the 2012-13 year included the completion of the renovations of the new Sheriff's Office on Palmer Street and the completion of the new state-of-the-art Emergency Communications Center at the old Barrett building.
The county also made public safety a priority by purchasing six new patrol vehicles for the Sheriff's Department, two new ambulances and 12 new defibrillator/monitor machines for each of the ambulances in the Emergency Medical Services Department.
The county's financial accomplishments extend beyond capital improvements to the county for the current fiscal year, as Lori Hall, the county's finance director was able to work with BB&T to save the county $2,700,000 in interest charges through refinancing long-term existing loans.
During his presentation, Horton informed commissioners that on the revenue side of the budget, growth in the tax base can be anticipated as minimal (less than one percent) but sales taxes have begun to increase at a modest two percent. “We have managed to deal effectively with the fiscal challenges, and continue to hope for an improved economy next year,” said Horton. “We started the budget process this year with a mid-year retreat/work session with the board of commissioners. It was the consensus of the board at that time that we would construct a budget without an adjustment to the property tax rate. This proposed budget meets that objective.”
The county's operating budget comes from a variety of revenue sources including property taxes, sales tax, other taxes such as collection of animal taxes, deed stamp excise, 9-1-1 charges. Other revenue streams for the county are sales and services such as parking revenues, rents and royalties, airport revenues and fire protection charges. Intergovernmental sources of funds such as federal, state and local financial assists such as equitable sharing of federally forfeited properties also contribute to the revenue portions. Lastly, miscellaneous sources of funds through building permits, Register of Deeds fees, building inspections and other fees contribute to the county's revenue streams.
On the expenditure side for the county, Macon County is responsible for presenting a balanced budget with appropriate funds to cover expenses in an array of operational expenses. Those expenses include education, an appropriation to school administrative units and to community college systems for current operations and capital outlays, debt services, principal, interest, and fees paid for or accrued on debt, human services needs in the counties such as the Health Department, general government such as elections, revaluations, and court facilities; public safety needs such as the jails and the Sheriff's Department's operations and various expenses such as transportation, solid waste and unallocated fringe benefits.
Macon County has been conscientious about building a healthy fund balance that can be tapped whenever needed in the case of emergency or financial distress. According to Horton, Macon County's fund balance is greater than required, but still within reason.
“We strive to maintain a stable fund balance that meets or exceeds the goals of keeping a fund balance by year's end equal to at least 25 percent of total expenditures,” he said. “This is vitally important in order to keep Macon County financially prepared and fiscally sound. Our policy is to only appropriate fund balance to cover capital and/or one time discretionary expenses.”
The state's Local Government Commission policy requires that, on June 30 of each year, counties maintain a minimum balance of eight percent of the prior year's expenditures, or approximately one month of expenditures. Macon County's fund balance is currently designed to cover three month's worth of expenditures. “North Carolina counties have historically maintained a fund balance at available levels well above the eight percent minimum as a cushion against unexpected expenditures, emergencies or decline in revenues,” stated Horton. “Bond rating agencies reinforce the notion that the fund balance should be above eight percent and that higher levels are required for sound financial management. The higher balance is often necessary because the available fund balance many times includes restricted amounts, such as sales tax that is restricted for school capital outlay and funds set aside for debt services.”
Horton informed commissioners that some counties who have only maintained the eight percent required have found themselves in financial situations that have forced them to raise taxes to continue operations during times of crisis, something Macon County has been able to avoid in the past. “Maintaining a strong fund balance is the prudent course for counties especially during these uncertain economic times,” said Horton. “Depleting the fund balance could result in the county being forced to raise property taxes in order to meet the essential and vital needs of our citizens.
2013-14 budget highlights
Monday night marked the introduction of the budget, several work sessions are also slated to give the board opportunity to provide input on the ins and outs of the budget. Over the next week, before the first budget work session, commissioners will review Horton's proposal.
During the highlights portion of Horton's presentation, he informed the board that the county was gearing up for the tax assessment and the upcoming property revaluation process. The process must be completed and ready for implementation by January 2015, so much of the preparation will be done during the upcoming fiscal year.
A new revenue source is expected to kick in during the upcoming fiscal year, with the implementation of the new License Plate Renewal laws. “Beginning July 1 this year, there will be a new process in place by the North Carolina Department of Motor Vehicles,” explained Horton. “Vehicles subject to property tax (city and county) will be paid at the time of license plate renewal. This will obviously take some time to adjust to but the net effect will be that eventually local governments will collect 100 percent of property taxes due on motor vehicles. Our current collection rate is below 90 percent, so this will mean more revenue.”
Horton informed commissioners that the proposed budget reflects a commitment to technology in regards to expanding the county's capabilities to retrieve and retain data associated with all departments through an investment in new hardware and software.
Like last year, public safety remains a concern with the proposal of two new ambulances for the Emergency Medical Services (EMS) and five new patrol cars for the Sheriff's Department. One item not mentioned in the budget is the funding for School Resource Officers at school sites within the district.
Sheriff Robbie Holland had previously stated that while he believes SROs are needed at every school, he wanted to begin by adding two officers next year. While federal and state legislation are still in the works to provide counties with funds to provide those positions, the county did not provide funds for the positions.
The Sheriff's Office was not the only department denied requested positions for 2013-14. A total of 16 new positions were requested for various county departments, none of which were fulfilled, with Horton's budget citing limited resources.
With a specific allocation for the Macon County Economic Development Commission each year, Horton decided to add a line item for the Cowee School Project which is listed separately to better identify the expenditures related to that project.
“The budget does include a new heating and cooling system for the building,” he said. “The new system will reduce energy cost and pay back can be realized in two to three years depending on the rising cost of fuel and oil.”
Horton informed commissioners, that at the request of community members, next year's budget reflects an increase in the transit budget to allow elderly and handicapped transportation to be adequately funded.
The Community Care Clinic requested $50,000 from the county, but due to limited resources, is slated to receive $10,000. The Fontana Regional Library system which operates Macon County and Hudson Libraries is budgeted for an increase of 3.15 percent in funds for next year.
In addition to the annual appropriation for recreation for the Town of Highlands in the amount of $495,000, the budget reflects an additional $250,000, which represents a joint effort between the town and county for renovations to Highlands' swimming pool facility.
Next year's budget may be altered to include a 10 percent local match to a $2.9 million state grant for the Macon County Airport. The airport was able to secure FAA funding for expansion and additional improvements to the airport. “When it is made official, it will be brought to the board of commissioners for consideration,” Horton informed commissioners. “It is not reflected in the proposed budget.”
Challenges for the coming year
Horton informed commissioners that his draft budget was carefully constructed after several meetings with department heads to discuss the needs for the upcoming fiscal year.
“In order to fund essential county services, meet the county's debt service obligation on capital projects, and maintain critical needs in education and public safety, we have made decisions and recommendations that prioritize, and in many cases, reduce departmental and agency budget requests this year,” he said. “There are many worthwhile and commendable projects, programs and services that have merit and still need to be funded or implemented, but have not been included in this proposal due to lack of additional revenue sources.”
When Horton began the budget process, he looked at the originally approved general fund budget for the current year (2012- 13) which began at $44,391,193. Because of continuing contracts, grants and additional revenue throughout the year, the current revised budget sits at $48,007,997. Based on those figures, Horton established a 2013-14 fiscal year budget weighing in at $46,643,716.
“We have reduced requests for capital outlay and trimmed other expenses where feasible,” explained Horton. “Our goal over the past five years has been to maintain the current level of service without additional staff. We have been able to do that by leaving non-critical positions unfilled throughout county departments. We continue to fill only essential positions when they become vacant. Our county employees have worked hard to do their job as they continue to help us hold the line on spending while delivering essential county services.”
Horton informed commissioners that the county's self funded health insurance program continues to remain strong, and rates have not been increased in several years due to the fact that the county's claims experience has been favorable and that he is not proposing an increase in employee contribution at this time.
“To do this would sacrifice Macon County's grandfather status and result in total higher cost for coverage because of tenets of the Affordable Care Act,” said Horton. “This will be needing review by January 2014 and adjustments can be considered at that time as a result of full implementation of the Federal Governments Affordable Care Act.”
The general fund operating budget has been balanced within existing revenue streams as presented to the county Monday night. Although county commissioners unanimously decided during their mid-year review to not only avoid raising taxes next year, but to develop a budget that reflects tax rates remaining unchanged altogether, Commissioner Ron Haven informed the board that over the next few budget work sessions, he would like to have an open discussion with board members about the possibilities of reducing taxes and lowering the county's fund balance.
“I think Jack did a very thorough job putting together a budget from what I have seen,” said Commission Chair Kevin Corbin. “The first time I saw the budget was Monday night so I have not had a chance to fully review it yet. I do appreciate the fact that he respected our wishes of not raising taxes even though we do have a lot of requests this year. With all the state and federal budget cuts, this has been a very difficult year to put together a budget. Now, we will begin discussing the budget and have several budget work sessions scheduled to determine exactly where to go with this. It is certainly tough to have the lowest tax rate in the state and still meet all the county obligations … but we will do it.”
The budget can be found online at Maconnc.org and other locations throughout the county which can be identified by contacting the county manager's office.
Budget work sessions are scheduled for Tuesday, May 28, Thursday, May 30, and Tuesday, June 4, all beginning at 5:30 p.m. at the Macon County courthouse. Public comment on the proposed budget is scheduled for the commissioners’ next meeting on Tuesday, June 11, at 6 p.m. at the courthouse.