Commissioners hear about budget shortfall, facility needs at retreat
As it prepares for a difficult fiscal year, commissioners got their first in-depth look at county finances, project needs, state budget issues and the future of economic development incentives. One agenda item was certain: Commissioners will address a projected $4 million county budget gap without raising the county property tax rate, currently at .54 cents per $100 valuation.
Assistant County Manager Zeb Hanner started the morning by addressing that shortcoming to commissioners.
Hanner said about $2 million was lost in sales tax revenue. The construction of the new middle school in the northern end of the county adds about $870,000 to the county's debt service. The county's health insurance is projected to increase about 6 to 8 percent, in large part due to national inflation on insurance rates of around 10 percent.
“We're looking at about a $4 million (deficit) right out of the chute,” Hanner said. “That's if we spent everything we've budgeted for.”
There isn't a figure for the proposed 2011-2012 budget but based on commissioners' insistence that they won't raise property taxes, it won't exceed last year's $119 million budget.
And while county officials will look for ways to curb the shortfall, historically, they don't spend their entire yearly budget. Over the past five years, the county has yet to spend 100 percent of its allotted expenditures. And with talks about raising salaries for county workers, cutting costs will be even more crucial. It's been two years since county workers have seen a pay increase, but at a cost of around $408,000 just to perform a one percent raise, it will still be a difficult decision.
The huge loss in sales tax for the county won't be an easy fix moving forward either. The current point of sale portion of the sales tax — which keeps 1.5 cents of a 2-cent sales tax in the county where a taxable item is purchased — has exposed Davidson County's weak retail market.
In talking with Davidson County Economic Development Executive Director Steve Googe, commissioners were eager to discuss how to boost the retail market in the county. Among major discussion was the need for an industrial or business park in the county. But Googe explained to the board how Davidson County is becoming a less attractive market for major retail chains.
“We have dedicated a fair amount of time in putting together a strategy for retail,” said Googe. “Our dilemma is that every retail establishment … has requirements that have to be met before they'll consider a site. We're trying to assemble information that will tell us what those requirements are.”
According to Googe, retailers focus heavily on an area's per-capita income and residences-per-square-mile demographic information.
“Our per capita income doesn't measure up,” Googe said. “We don't have the people per square mile that meet their requirements.”
Davidson County Board of Commissioner Chairman Sam Watford expressed the same concerns about Davidson County's issues in drawing retail.
“Our per capita income has always been a problem in our county,” Watford said. “Until we get that up, we won't be very attractive.”
This has been true in Midway. The small town has been hoping to lure a grocery store by constructing the town's first sewer line over the few couple of months.
“They don't have a grocery store, and we've had two chains we've brought up there to look at the area,” Googe said. “Both of those, independently, came back and said there's not enough housing per square mile and the per capita income is too low for what we do.”
Googe's explanation of the struggles of the retail market comes on the heels of the N.C. General Assembly's Balanced Budget Act, a proposition to cut economic incentive grants, which if passed, could cripple North Carolina job growth.
“We (North Carolina) will have much less influence,” Googe said.
Googe said in his opinion, the county needs to have a viable product to sell if they hope to continue to progress.
Aside from the actual budget and economic development concerns, the board also delved into three capital projects — the new middle and high schools in the northern end of the county and a new courthouse and jail complex.
Not much progress was made Thursday on a new jail complex. Commissioners have budgeted around $30 million to construct a new facility, but Davidson County Clerk of Court Brian Shipwash told the board those funds would not cover the cost.
“There needs to continue to be capital planning for a new courthouse/jail and sheriff's office and we only ask that be considered in the next five years,” Shipwash said. “I don't know how you're planning on debt funding but I do not think $30 million would cover the needs of both a combined sheriff's office and jail from figures we have received over the last two years.”
A potential site for the jail has yet to be identified. Discussions have been ongoing about whether to expand the current facility or to move the complex elsewhere.
Commissioners don't debate the need for new facilities but said estimates for a new middle school, high school and a jail complex could total close to $120 million.
Projections show the need for a 1.5-cent property tax increase in four years, according to Hanner, to pay for these needs.
“Long range, those are most important things,” Watford said. “But we're just trying to take it year-by-year right now.”
Commissioners took no action on issues discussed. County staff will follow the board's instructions on moving forward and voting on issues during future meetings.