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01-10-2012 Special MeetingSPECIAL MEETING OF THE ISLE OF WIGHT COUNTY BOARD OF SUPERVISORS HELD THE TENTH DAY OF JANUARY IN THE YEAR TWO THOUSAND AND TWELVE PRESENT: Alan E. Casteen, Chairman JoAnn W. Hall, Vice - Chairman Rex W. Alphin Byron B. Bailey Delores M. Darden Also Attending: Mark C. Popovich, County Attorney W. Douglas Caskey, County Administrator Carey Mills Storm, Clerk Chairman Casteen called the special meeting to order at 10:00 a.m. Michael W. Terry, Director of Budget and Finance, outlined the timeline associated with the adoption of the 2012 -13 Operating Budget, Capital Budget and Capital Improvements Program (CIP). Supervisor Darden requested that she be provided a report which reflects the various County departments, their budgeted amount, total expenditures and a remaining balance. Donald T. Robertson, Director of Information Resources and Legislative Affairs, distributed a calendar of events highlighting the budget process for the Board's information. He requested direction from the Board regarding how staff should proceed with respect to a Capital Improvements Program (CIP) Subcommittee. Supervisor Darden moved that the Chairman be authorized to appoint a Capital Improvements Program (CIP) Subcommittee. The motion was adopted by a vote of (5 -0) with Supervisors Darden, Bailey, Hall, Alphin and Casteen voting in favor of the motion and no Supervisors voting against the motion. Mr. Robertson advised that he would be contacting Chairman Casteen regarding the individuals who are to serve on the Capital Improvements Program (CIP) Subcommittee. He requested the Board to review the calendar to ensure there are no conflicts with the noted key dates. He advised that by the end of May, 2012, staff hopes to have the Board in a position where it can adopt the School Budget and County Operating and Capital Budgets. He advised that, by law, the School's Budget must be adopted by May 1, 2012 and he called the Board's attention to the fact that May 1St is not a regular Board meeting date. Chairman Casteen commented that historically the first year of the Capital Improvements Plan (CIP) was incorporated into the County's Capital Budget. Mr. Robertson explained that the Capital Improvements Plan (CIP) and the Capital Budget are two (2) separate documents. He stated that if funds are available to do certain projects, the first year of the CIP can represent the Capital Budget; however, in difficult economic times, the two (2) documents may not be identical. He advised that the Board had taken action at its May 125 2011 meeting to appropriate funding for several projects which are part of the Capital Budget. Chairman Casteen commented that the Board had adopted the Capital Improvements Plan (CIP), the Operating Budget and the School Budget. He asked for clarification regarding what the Capital Budget consisted of that had been adopted and funded. Mr. Terry confirmed that the Capital Budget had also been adopted at the Board's May 12, 2011 meeting. He advised that staff had also received authority from the Board at that meeting to go to the bond market. Chairman Casteen stated the Board voted on the Capital Improvement Plan and bonds to support that same venture. He requested clarification if the vote for the bonds was the only funding for the capital for the year. Mr. Terry confirmed that was the only capital funding for the year when the Board voted to issue bonds. Supervisor Darden stated that the Capital Budget reflects that on May 12, 2011, $4.175 million dollars was authorized for bonds to fund certain projects. Chairman Casteen referred to Page 17 of the Capital Budget under "General Operating Revenues" which reflects that $75,000 had been funded, but was not included in the Operating Budget to be funded. He stated all previous budgets have reflected that when funds were provided from operating revenues, those funds were included in the Operating Budget under Capital projects funding. Mr. Robertson stated that in previous years where there was adequate funding coming in on an annual basis, that term was actually a substitute term for the Fund Balance. He noted that staff had advised the Board last year that a best practice was not to use Fund Balance as a revenue source for the County's Operating Budget. Chairman Casteen noted that $75,000 is from operating revenues, but that there is not $75,000 in the Operating Budget to fund this. 2 Mr. Robertson advised that if the funds are not available before June 303 2012, staff will return to the Board to request that those funds be appropriated from the Unassigned Fund Balance. Chairman Casteen, following consensus of the Board, directed that any items to be rolled from the Capital Improvement Plan to the Capital Budget be funded from Operating revenues and included as a line item in the Operating Budget. He stated that he contends that the Board did not adopt a $10.7 million dollar Capital Budget and that the Board will need to make a motion to fund the $75,000 at some point in the current year. He requested staff to provide the Board with a report recapping the projects that are covered in the most recent bond issue. Mr. Robertson stated that this information had previously been provided to the Board and he recommended that the County's financial advisors be invited to address the Board regarding specifics of the bonds. He stated the County's long -term debt is now $145 million, an increase of 25 %. Responsive to Supervisor Hall's suggestion, County Administrator Caskey offered to invite Davenport representatives to the Board's February 16, 2012 meeting to advise how the County plans to handle the large spike in anticipated debt service. Chairman Casteen requested staff to include a right column on Page 45 of the audit document totaling principal and interest and email same to the Board members. Gerald H. Gwaltney, Commissioner of the Revenue, briefed the Board regarding his forecasting role in the budget process. He distributed a handout illustrating property taxes prior to the closure of International Paper which showed that Machinery & Tools represented 15 %; real estate taxes represented 54% and personal property represented 26% of the budget. He advised that FY2012 revenues reflect an increase in real estate taxes, making it a larger portion of the budget, increasing from 54% to 68 %. He stated forecasts show signs of growth in meals tax, business license and sales tax, all of which is based on consumer spending; however, real estate sales /construction and foreclosures are trending downward. He recommended that the Board consider developing a two (2) year budget plan in the future. Judy C. Wells, Treasurer, briefed the Board regarding the process by which her office collects taxes. Responsive to the request of Chairman Casteen, Ms. Wells offered to list anticipated State funds on the report provided to the Board by the Treasurer. 3 Chairman Casteen noted that receiving a report from the Director of Budget and Finance which includes the Treasurer's Statement of Assets would be beneficial in helping the Board to understand the relationship of the County's funds. // Mr. Terry advised that a monthly financial report will be provided to the Board in February which includes the Unassigned Fund balance and recommended roll -over funds. Chairman Casteen requested that the capital report contain a funded section and that it contain the Plan in its entirety. Supervisor Alphin requested that the Board be advised what has been expended in the Capital Plan and what projects have been approved to date. Responsive to Supervisor Darden, County Attorney Popovich advised that the Board had adopted a resolution at its meeting on May 12, 2011 to approve the FY2011 -12 Operating and Special Revenue Budgets which authorizes the Board to go to the bond market and creates the Capital Budget. The Board concurred that, in the future, it would vote specifically on a Capital Budget apart from the funding. Chairman Casteen moved that Supervisor Bailey and he be appointed to serve on the Board's Finance Committee (who also will serve as the Capital Improvements Plan (CIP) Subcommittee members). The motion was adopted by a vote of (5 -0) with Supervisors Darden, Bailey, Hall, Alphin and Casteen voting in favor of the motion and no Supervisors voting against the motion. At 12:15 p.m., Chairman Casteen declared the meeting adjourned. L A01 JJE.,- 41 1 M �A dp�n Carey IN, Storm, Clerk 11 A an E. Casteen, Chairman