Caroline administrator explains budget process
For immediate release
June 15, 2012
Charles M. Culley, Jr., County Administrator
Board of Supervisors Adopts Fiscal Year 2012/13 Budget
BOWLING GREEN – At its June 12 meeting, the Caroline County Board of Supervisors adopted the County budget for Fiscal Year 2012/2013, which begins July 1, 2012 and ends June 30, 2013. The spending plan was approved on a 5-1 vote with Western Caroline District representative Jeff Black voting no. Bowling Green District representative Jeff Sili voiced his disagreement with the budget, but voted with the majority to ensure that funds were appropriated prior to July 1.
The FY 2013 budget process was very challenging for a variety of reasons, including rising debt service costs for school, general government and utility capital projects, cost increases to provide employee retirement (VRS) and health insurance benefits, the negative impact of the housing slump on the Utilities Fund and flat or declining revenues.
Debt service payments in FY 2013 total $10,280,335, an increase of $2,086,679 over the current fiscal year. Since 2005, the County has invested over $59 million in capital projects for schools and general government. An additional $31 million has been invested in utility related capital projects during this same timeframe. This investment has provided many infrastructure improvements including, but not limited to, construction of the state-of-the-art Lewis & Clark Elementary School, funding for a combined Bowling Green PK-5 school, upgrades to Caroline Middle School, renovations to our primary and elementary schools and system-wide technology improvements to our schools. Fire & Rescue and Sheriff’s vehicles and equipment purchased with these funds have improved public safety. New combined administrative offices for County Administration, the Treasurer, Commissioner of the Revenue and Registrar have provided enhanced services and convenience to the citizens.
Investments in utilities, including doubling the capacity of our wastewater treatment plant, have helped the County accommodate residential growth and positioned us to continue to compete for economic development and the jobs and tax revenue that accompany it.
The YMCA project underway in Ladysmith has no real impact on spending in the budget as no taxpayer’s dollars have been appropriated for repayment of the five (5) million dollar construction loan. The source of funds for the $206,200 in debt service payments due in FY 2013 is a combination of proffer money paid by developers and a private capital fundraising campaign.
The County’s cost to provide employee retirement benefits and group life insurance through the Virginia Retirement System will increase by over $104,648 from the current fiscal year based on a state-mandated formula. The Board opted to begin paying the full certified employer rate in FY 2013, rather than phasing in increases that would result in large cost increases in later years.
The County’s share of the cost to provide employee health and dental insurance will increase by $212,292 in FY 2013.
These rising costs drove the Board’s decision to raise the real estate tax to $0.72 per $100 of assessed value and increase the personal property tax to $3.50 per $100 of value assessed at 100% NADA retail value. The Board made a decision early in the budget process to make accompanying budget cuts in addition to tax increases. The goal of these cuts was to prevent spending $1 million of the fund balance as proposed in then Interim County Administrator Alan Partin’s original budget and improve the County’s financial standing. It was agreed that all departments and agencies would be asked to share the pain to help get through a very challenging budget year.
The Board on a 4-2 vote (Supervisors Black and Sili dissented) directed an additional $955,430 in spending cuts to the FY 2013 budget. These cuts are in addition to reductions included in the original proposed budget, which reduced spending below FY 2012 funding levels by $265,798 in the General Fund and $678,803 in the Utilities Fund.
Included in the cuts was a reduction in the county contribution to the schools from the current fiscal year’s $11,566,270 to $11,216,270 in FY 2013. The FY 2013 county appropriation includes a reduction of $350,000 to the school’s operating budget, but adds a $46,000 transfer to the Utilities Fund for water and sewer availability fees to connect the renovated Bowling Green PK-5 school to the County’s utility system.
The Composite Index of Local Ability to Pay is recalculated by the state every two years based on a formula that attempts to determine a school division’s ability to pay education costs fundamental to the Commonwealth’s Standards of Quality (SOQ). Caroline County’s composite index decreased from .3580 in the FY 2010-2012 biennium to .3306 in the FY 2013-2014 biennium. As a result of this reduction, Caroline will receive $746,641 more from the state in FY 2013 than it did in the in the current fiscal year. This is an indication that the County’s ability to fund its share of the Standards of Quality has dropped due to current economic conditions locally. At the same time, debt service payments for school related capital projects will increase by $553,479 in FY 2013 from the current fiscal year.
In total, the schools will receive an additional $1.88 million from the state in FY 2013. As a result, the majority of the Board believes it is reasonable to ask the schools to cut $350,000 from a total operating budget of approximately $38.4 million.
For the fourth year in a row County employees will see no real increase in take home pay. While a 6% raise for full-time employees was authorized by the Board effective July 1, virtually all of it will be offset by the requirement to pick up the 5% member contribution to VRS previously paid by the County. The Board is expected to consider a small pay increase for part-time employees at an upcoming meeting.