County Finance Director Andrew Davenport last week wanted to give county commissioners an optimistic revenue forecast during the commissioners’ annual pre-budget preparation retreat, but the brightest picture he could provide were the colors in his PowerPoint presentation slides, the substance of which sounded more foreboding.

Davenport indicated that non-recurring revenues equivalent to five cents on the tax rate supported the county’s budget for the current year and that none of the options for replacing that revenue are attractive. Those options are:

• Repeat last year’s action and raise the county property tax rate another nickel, to 75 cents per $100 valuation;

• Draw down fund balance, or reserves, which already have dropped to about $9.5 million, or about 19 percent of budget. Heretofore commissioners have agreed to try to hold reserves at 18 percent of budget and earmark revenues in excess of that level to a capital reserve fund. So dipping further into reserves for fiscal 2009, Davenport observed, would go against the county board’s policy, although, Davenport acknowledged, that policy is not binding on commissioners; and

• Spend down money already set aside for capital projects.

The finance director said that in the past he at times was able to find “pockets of money” from which to help balance the budget. But now, he told commissioners, “I’m tapped out.”

He said the forecast for revenue growth via property taxes for fiscal 2009 is only about three percent. A penny of tax rate brings in roughly $380,250.

Person County’s tax base for fiscal 2008 is estimated at $3.9 billion, which, at a 70-cent tax rate, yields $26.6 million, based on a collection rate of 97.5 percent.

Property taxes provide almost 50 percent (49.68) of the revenue that supports the county budget and represent the sole revenue source over which commissioners have full control, Davenport noted.

Sales taxes account for a little more than 16 percent but the sales tax take is determined by prevailing economic conditions. Given the current economy, Davenport speculated, “The best we’ll do is make budget” on sales tax revenue.

Commissioners, he said, could increase fees for certain county services, but fees don’t generate a significant revenue stream, accounting for less than five percent of all revenues. Moreover, he said, EMS fees account for half of those.

Cut spending where?

Davenport also observed that commissioners could cut spending, but, he said, “If you want to reduce expenditures, you need to tell us where to do it.”

The county’s largest expense, he said, is personnel, accounting for $19.5 million of a $55.3 million budget. The consequence of cutting personnel, however, is reduced service, Davenport cautioned, which affects county citizens who may not get agency response as quickly as they would like.

He said the county would have to cut from eight to 10 employees to gain revenue equivalent to a penny of tax rate.

Commissioners could elect to forego any capital spending for the next year, Davenport said, but that action could raise complications for future budgets.

If there is any solace for commissioners as they move forward to prepare the fiscal 2009 budget, Davenport said, it is that “most other boards are facing the same kinds of issues.”

Other commitments

Person County Manager Steve D. Carpenter also reminded commissioners that they already have made some budgetary commitments that will carry over into the next budget year. Among them are the pending lease of the former Maxway building for relocation of the register of deeds and tax departments from the county courthouse, plus expenses related to changes needed at the courthouse to reallocate space to the remaining departments. The latter likely will require rental of temporary offices for some of those to accommodate construction work.

Also, the county has committed to matching money for a North Carolina Recreation Trust Fund grant toward construction of the education center at Mayo Lake. Carpenter said there’s “a good chance” that grant could be funded in May.

Carpenter said the Recreation Arts & Parks Department also is discussing the prospect of a county bond referendum in November on whether to build a recreation center that would include a public swimming pool. Such a vote, he said, would provide a sense of the level of public support for such a facility.

In connection with their recent effort to bring pay of county workers more in line with market rates, commissioners have indicated a desire to upgrade some employees annually. Carpenter is recommending commissioners select about one-third of county workers each year after subdividing the employees into three groups — public safety, human services and everyone else.

Testy exchange

When Carpenter steered the retreat discussion toward how commissioners wanted to proceed toward fulfilling the conditions attached to their 3-2 vote last year approving issuance of a special use permit to Republic Services of N. C. to add a 14-acre waste collection cell at the Upper Piedmont Environmental Landfill, the exchanges among commissioners became a little testy.

Commissioner Kyle Puryear’s motion at the time provided for issuance of the permit only after completion of two studies by professional consultants, one pertaining to the waste disposal alternatives available to the county and secondly a study of how various pollutants impact county citizens and how a larger landfill would bear on that impact.

Carpenter advised commissioners that the county received responses from three of seven engineering firms the county solicited for interest in doing those studies. Garret & Moore Inc., HDR Engineering Inc. and Richardson Smith Gardner & Associates Inc. each indicated they could readily provide evaluations of the alternative waste options. On the other hand, Carpenter said, each wanted more direction and precision as to what the county wanted in the pollutants study.

Regarding the latter, the Garrett & Moore response opined, “Epidemiological studies aimed at attempting to quantify the current health effects associated with solid waste disposal facilities in Person County may not be useful. It is unlikely that sufficient data exists to support a competent analysis capable of discerning between general population health trends, which can be attributable to myriad factors (nutrition, wellness, personal habits, broad population characteristics, regional/natural environmental factors, etc.), and those associated with solid waste facilities.”

Carpenter indicated that the studies could cost about $30,000 but could go higher depending on how involved the pollutants study got. And if the cost were to exceed $30,000, he said, the county, by law, would have to call for competitive bids.

Puryear said he was most interested in concentrating on the economic analysis now to learn the cost of the various waste disposal options and then focus on the health issues later.

Commissioner Jimmy B. Clayton interjected that while the permit issuance was approved contingent on the studies, “If I’ve got $30,000 to spend, I’m probably going to recommend it be spent on the schools or Roots & Wings” or other needs.

Clayton, who, along with Commissioner Larry Bowes, voted against the permit issuance last year, said he wouldn’t support moving forward with a study now.

“We’ve got time,” Clayton said, reminding commissioners that the landfill contract doesn’t expire until 2017.

Puryear queried, “Well, when people come up to you and ask you, ‘Tell me about what it’s going to cost to build a new landfill’….”

Interrupting, Clayton snapped, “You’re not going to build a new landfill,” noting that regulations and high costs make that option cost prohibitive for the county.

Commission Chairman Johnny M. Lunsford then jumped in, saying, “We’re not going to get into this discussion tonight.” Commissioners could take it up in their budget talks he said.

Commissioner Larry Yarborough, however, reminded Lunsford that the manager was asking for direction on the issue.

“I’m not interested in pursuing this study either,” Yarborough said, agreeing with Clayton that 10 years remain on the county’s contract with Republic.

Stand down

Puryear said he disagreed. Because the issue has commanded so much of the board’s time and become so controversial with citizens, he said, “We need to at least listen to these consulting firms and see what they have to offer, how much it’s going to cost and meet with them and then make our decision. I think what we’re doing now is a little bit premature.”

Again, Lunsford allowed that a decision should be left to a budget work session “because it definitely would have to be in the budget. At that time, if a majority of the commissioners say go ahead, we’ll go ahead. But right now I’m not hearing a majority of the commissioners say go ahead.”

Manager Carpenter then asked, “Would you want us to go back to the three [consulting firms] and ask them just about the economic analysis side? Or do you want us just to stand down until further direction?”

“I’d say stand down,” said Yarborough.

“I say the same thing,” said Lunsford.