Caroline County proposed FY 2011 budget summary
February 23, 2010
The Honorable Maxie Rozell, Chairman
The Honorable Floyd Thomas, Vice Chairman
The Honorable Wayne Acors
The Honorable Bobby Popowicz
The Honorable Jeff Sili
Dear Chairman Rozell and Members of the Board of Supervisors:
I am pleased to submit to you the official proposed Budget document contained hereto for the 2010-11 fiscal year, which also includes the Capital Improvements Plan.
The Budget is submitted to assist the Board of Supervisors in making policy decisions that are geared to meet the challenges of a growing community, as well as lend itself to public scrutiny through input from taxpayers and the media. The Budget is also designed to incorporate extensive financial controls and pursue goals of efficiency and effectiveness by balancing short-term and longer-term community interests.
Ultimate approval of the annual Budget is seen as the most important action taken by the Board of Supervisors. The Budget serves as a financial roadmap for what programs and services are offered in Caroline County.
We’re An All-America City Award Recipient…
In May of 2009, Caroline County was selected as one of 10 localities in the United States to receive the prestigious “All-America City Award” from the National League of Cities. The award ended over a year of planning and preparation.
Caroline County was the only county selected among the group of winners. The honor raised the awareness of what a great place Caroline County is to work, play and raise a family. It also revisited the discussion as to how much progress the County has made in recent years and how serving the public remains the focal point for all those involved in County government.
We’re Still Growing, Despite the Economy…
According to the Weldon Cooper Center for Public Service, Caroline County currently has 28,245 people. This is an increase over the final 2008 count of 27,941 and even greater than the 2000 Census number of 22,121.
Despite a fledgling economy that continues to be the worst since the Great Depression, people are continuing to migrate to Caroline County to make it their home. Although new construction continued to be down from recent years, there was a spike in building in Ladysmith Village in 2009. That brings some hope that maybe the housing industry may be slightly recovering.
Unemployment in Caroline County has risen to a record 9.6 percent. Only the City of Fredericksburg has a higher number of people out of work in localities in our region. We also continue too see a record number of people utilizing the Social Services Department for various benefits.
It was long predicted the State of Virginia would take a big hit with its revenue picture and those forecasts have come true. Various state officials have said the State must make up for a $2 billion shortfall. This is what greets a new governor, his administration and the General Assembly.
Governor Kaine before he left office proposed a “Caboose Budget,” which contained $514,842 worth of reductions to Caroline County. The “Caboose Budget” is on the table, along with Governor McDonnell’s spending plan for the General Assembly to consider.
This has made it very difficult for localities to propose their spending plans for next fiscal year, so this proposed budget for Caroline County contains County Administration’s best estimate as to what might happen when the state dust clears.
What is certain is that revenue received from recordation taxes is estimated to drop off by 4.2 percent, or approximately $200,000. This is just one of the areas where state revenue is expected to be less than in previous years.
Other areas include:
- Reductions in reimbursements from the Compensation Board for all constitutional offices – $415,586.
- Reductions in grant reimbursements- $83,135.
- Reductions in Electoral Board reimbursements – $8,000.
- Forcing localities to pick up costs for DMV data relative to personal property that the state used to absorb – $5,000.
All of these factors are involved in the proposed makeup of the Budget, and it is quite possible the General Assembly could take even more drastic measures before it completes its work.
Dealing with Now and Then…
Finance Director Fran Hatcher gave her six-month budget report for this fiscal year on January 26. Budget indicators show the County could wind up with a shortfall of $300,000 if revenues and expenditures continue on the same track.
It is obvious we have to watch this very carefully because possible cuts related to the “Caboose Budget” could go into effect in this current year.
Just as a reminder, County government last year reduced the budgets of all departments and agencies by at least 15 percent, except for education. We only filled necessary positions; restructured our capital program to an absolute minimum; and moved personnel around so they can provide support outside of their own department.
In early February 2009, the County announced the reduction of six positions in the Department of Planning and Community Development. This resulted in lay offs of five people and one being transferred to another department that already had a vacancy.
All of that kept us above water entering into this fiscal year, but the economy has not picked up.
Trying to Rebuild the Fund Balance…….
As I explained last year during the Budget presentation, good financial practices and responsible budgeting allowed the County to build a Fund Balance by 2005 that would weather most financial storms.
However, state and federal mandates required upgrades to components of the Utility system, and investments in infrastructure established long-term debt that user rates were not able to support. As a result, the General Fund began to subsidize the Utility Fund with the anticipation that new housing connections would pay the loan back in a reasonable amount of time.
As the new housing industry has struggled and continues to struggle, reliance on General Fund transfers has created just less than a $5 million deficit in the County’s Fund Balance. Those are funds that could be used today to offset deep cuts in operations and personnel.
This has severely cramped cash flow and made it very challenging for both the Finance Department and County Treasurer to handle the day-to-day finances of the County.
Addressing the County’s Long-Term Debt…….
Governments far and wide establish debt in order to pay for major projects. It is not uncommon for a government the size of Caroline to carry the debt it does. The key is to have a plan to pay off the debt in accordance to what the tax rate can bear.
Current County debt as of December 31, 2009 includes:
§ General Fund – $27,054,606
§ Public Schools - $33,650,994
§ Utilities – $20,723,800
§ Dawn – $3,281,477
§ Revenue Anticipation Note – $6 Million for cash flow
Proposed in this Budget is $6,646,013 in debt retirement payments for all funds.
Uncertain County Revenue Picture……..
In addition to the reduction in revenue that could come down from the State, the County revenue picture is very uncertain and hard to project.
Collections of permits, fees and licenses are projected to be down approximately $190,000. Revenue from the Use of Money and Property is down approximately $85,000 and Recovered costs are estimated to be approximately $185,000 less than that of FY 2010.
Property taxes, both personal and real, are projected to be close to current year collections. There is no increase proposed in the Real Property Tax Rate. It will remain at $0.53 per $100. However, the revenues are based on the Board of Supervisors’ equalizing the tax rate in line with the outcome of the current Property Reappraisal Program, which costs the County a one-time amount of $200,000 in the proposed Budget.
One positive in revenue was the additional turbine project in Cedon by Dominion Power that generates approximately $600,000 above the FY ’10 amount.
Proposed for the Utility Fund is a five percent increase on user rates for those customers using public water and sewer. This is expected to generate approximately $320,000 and will continue the financial plan of making the Utility Fund self-supportive for operations. Utility Debt Service continues to be paid by General Fund transfer.
Increased Fixed Costs
Even in a time with sagging revenues and major cut backs on expenses, certain fixed costs continue to rise within Caroline County government.
Matching premium payments for health insurance of those paid by employees is estimated to increase $121,000 for FY 2011.
Picking up contributions to retirement and life insurance is projected to increase $165,000.
Increases are also seen in General Property expenses because additional buildings are being served such as the Visitor Center and County Administration Building. These additional expenses are in utilities and general maintenance, which also includes a private contract to daily clean the buildings.
Another major increase is shown in the fixed costs related to contributions to Regional Correctional Institutions. Proposed is $217,605 in increases. This number is still about $100,000 less than what was requested by the institutions.
Proposed Reductions to Meet Revenue Shortfalls……
Beginning with the 15 percent cuts last year, the County will have to continue to downsize its operations to meet the steady decline in revenues and steady costs in debt service. Considerable cuts were made to balance the FY 2009 and FY 2010 Budgets, and additional cuts are proposed to balance the budget for FY 2011.
Reductions to the 2011 Budget include:
· Decreasing personnel costs through attrition, reductions in force and across-the-board salary reductions – $995,000 savings. This includes a 14 full-time positions and cuts in salary of one percent for those employees making $40,000 or less and two percent for those employees making over $40,000.
· Reduction in contributions to outside agencies – $57,500 savings.
· Elimination of Summer Jobs Program – $10,000 savings.
· Closing of the Cannery – $17,000 savings.
· Reduction in contribution to County Health Department. – $27,000 savings.
· Reducing hours at certain Solid Waste Convenience sites – $95,000 savings.
Revamped Capital Program……
Finance Director Hatcher has made it a priority to revamp the County’s Capital Program. This is done by placing certain capital projects in department budgets that used to be in the overall Capital Improvements Program.
Those projects in the proposed General Fund Budget include:
- Repairs to Knuckleboom Truck – $60,000.
- Repairs to Fire Engine for Port Royal – $60,000
- Roof replacement at Public Works Building – $13,000
- Victory Park – $75,000
Those projects in the proposed Utility Fund Budget include:
- Funding to continue the process of obtaining a permit to withdraw water from the Rappahannock River – $462,500.
- Funding for the interim water plan and drilling and maintaining new wells – $554,500
- Expansion of the Wastewater Treatment Plant – $2 million
- Utility Equipment – $140,000
Greater Financial Efficiencies in Fire and Rescue Operations……
When the County moved to hire a Fire-EMS Chief last August, reaching greater financial accountability was one of the goals.
This Budget funds the Fire and Rescue Department and its nine volunteer companies at levels where the companies no longer have to use their own money to fund operations. Some of the financial functions have been shifted directly under the chief’s supervision in order to create efficiency in spending and reduce duplication of service.
Funding is being balanced in volunteer companies to properly direct funds to those operations which are answering the most calls. Chief Layman has also put in a system of rotating equipment when necessary to support the workload at individual stations.
The overall Budget proposed is $89,188,378 which is 4.3 percent more than the Budget document adopted for fiscal year 2010. The Operating Budget is $85,956,378, which is 0.5 percent more than the adopted amount for fiscal year 2010. The General Fund Budget is $34,565,856, which is .28 percent less than the adopted amount for fiscal year 2010.
The proposed local share contribution for the Caroline County Public School Division is $10,900,000, which is $442,281 less than the adopted Budget of FY 2010.
On behalf of the School Board, Dr. Greg Killough and his staff are expected to present the School Budget to the Board of Supervisors on March 9.
General Fund Transfers…..
Transfers from the General Fund in the proposed Budget include:
- Debt Retirement – $1,889,904
- Social Services – $407,073
- Public Schools – $10,900,000
- Comprehensive Services Act – $405,356
- Dedicated to debt retirement from Personal Property Tax – $1,574,999
Proposed is funding for 173 full-time and 60 part-time employees. This is 13 less full-time positions than funded in FY 2010 and takes the County back to near 2007 staffing levels. There is one new position requested. The creation of a County Attorney as an employee of the County is proposed. This would replace the contracted services currently provided by Sands, Anderson, Marks & Miller.
The Utility Fund will continue to be self-supporting in regards to its operations.
The County will continue to receive $20,000 per month to provide water to Lake Caroline. Also restored is $62,000 to provide water and sewer to the VDOT rest areas along I-95.
Caroline County has been somewhat insulated from the financial mess on the state and national levels. However, it is in FY 2011 that reality will set in.
In order to balance the budget and pay back short-term debt in order to start realizing a General Fund Balance, deep cuts in personnel and salaries are proposed. These and other cuts should prepare us to continue government operations at our normal pace, although employees will be asked to do more.
This Budget proposal stands as estimates for revenue and expenditures. Once sorted out and approved by the Board of Supervisors, it will take close monitoring on a monthly basis to ensure that trends are progressing as estimated.
Thanks go out to the various department heads, agency heads and Constitutional Officers that have worked so hard to assist with the preparation of this proposal. Special thanks to Fran Hatcher, Director of Finance.
The Staff looks forward to the dialogue on the proposed Budget that will follow in the coming weeks.
Percy C. Ashcraft