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04-05-2012 Budget Work SessionBUDGET WORK SESSION OF THE ISLE OF WIGHT COUNTY BOARD OF SUPERVISORS HELD THE FIFTH DAY OF APRIL 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 Michael W. Terry, Director of Budget and Finance Donald T. Robertson, Director of Information Resources and Legislative Affairs Carey Mills Storm, Clerk Chairman Casteen called the budget work session to order at 4:00 p.m. Supervisor Alphin delivered the invocation. The Pledge of Allegiance was conducted. Sheriff Marshall addressed the Board regarding a one -time monetary request in the amount of $80,000 for the following items related to officer safety: OC spray and supplies; ballistic vests; firearms upgrade; 9 mm handgun to a 40 caliber weapon; fire extinguishers; fire aid /biohazard PPE; Special Response Team startup; crime scene equipment; and, uniform duty gear. He stated that he would not be requesting funding for these items in subsequent years if his request is approved today. Responsive to liability issues associated with Officer safety, Supervisor Bailey moved to appropriate $80,000 to the Sheriff's office from the FY2012 Unassigned Fund Balance. 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. Michael W. Terry, Director of Budget and Finance, advised that, following direction from the Board today, staff will develop a proposed budget recognizing that it will be preliminary until final information is received from State. He further advised that a representative will be present at the Board's April 19, 2012 meeting to brief it on proposed health and dental costs for County employees. Donald T. Robertson, Director of Information Resources and Legislative Affairs, distributed copies of the County's CIP as recommended by the Planning Commission. Jimmy Sanderson, Davenport and Company, briefed the Board regarding the County's debt service. He advised that the utility note due March 1, 2013 is currently callable with no penalty as the plan when that note was originally issued was that it would be short term and the County would refinance it on a permanent long -term basis prior to its being due. He stated that he still recommends that the note be taken out in advance in the fall of this calendar year. He advised that the note due on April 1, 2014 for the second utility band is in the amount of $6,460,000 and can be permanently refinanced now or wait until 2014. He advised that the last band is a school note associated with the new middle school in Windsor which would not be taken out until later with bonds that the County would issue through a Literary Fund Program with the Commonwealth. He stated with respect to debt service, the County's actual debt service for FY2012 will be 1.7 million, which is lower than originally budgeted, and the expectation is that the Board would reappropriate those savings for debt service in FY2013 to address the variance referred to by the Director of Budget and Finance. He stated with respect to borrowing plans, the County's debt expectations for its Capital Improvement Plan, in 2013, is that the County would borrow $15.4 million and allocate $12.4 million for utilities and $3 million to any General Fund project to cover projects for FY2013 and FY2014. He advised that the next borrowed debt is planned for 2015 in the amount of $8.7 million, with an anticipated $5.7 million for utilities and $3 million for General Fund projects, which would cover the cost of the County in FY2015 and FY2016. He recommended that the Board go to the bond market around audit time during the budget process. Supervisor Bailey questioned what the best method would be for the Board to pay for its recently approved Isle of Wight Volunteer Rescue Squad facility. Mr. Sanderson advised that public markets are typically the best way to proceed. He stated if the County is already borrowing $7.7 million, it should go ahead and any other obligation for the next fiscal years in the market. Supervisor Alphin inquired if Davenport and Company has any ideas for additional revenue on the debt payment side. Mr. Sanderson replied that the County's debt is monitored weekly with respect to refunding opportunities. He advised another option is for the County to refinance debt, although that makes less sense from an economic 1) perspective. He advised that the expectation is that money borrowed will be spent within a three (3) year period. H Mr. Robertson briefed the Board regarding options and associated impacts, as listed below, for the Board's consideration: 1. All options assume the Debt Service will be refinanced in CY2012; 2. Schools and Public Safety (including Sheriff's Office) are deemed priorities per Board feedback on 3/29/12 Option Tax Rate/Fees New Priority Impact Revenues Addressed Generated No adjustments No adjustments $0 None Inability to address State from FY2011- in tax rates, mandates; RIF/ severe 12; Internal fees, etc. reduction in services across Reductions the board; Elimination of School programs; degradation of public safety services; potential liability and litigation concerns Adjust Utility 15% increase Approx. Sheriff s Impact on utility customers Rates in rates $200,000 Office Land /Timber Sale of assets $425,000 Sheriff's Loss of assets; One -time sales per list Office, only infusion of revenue; from County Fire /Rescue Replacement revenue Atty* necessary in FYI Create special Tax on $850,000 Fire /Rescue Impact on County taxing districts assessed value households/businesses for Fire /Rescue of all real and Funding can only be used to (Code of VA 27- personal address Fire /Rescue 23.1) property Reimburse Reallocate $1,350,000 Public One -time only infusion of General Fund unused Safety, revenue; replacement for interest Principal & Schools revenue necessary in FYI 4; payments for Interest from Requires consultation w/ bonds bond proceeds Bond Counsel Adjust real $0.69/$100 $1,709,300 Schools $0.83 /$100,000 /month per estate tax rate, Real Estate penny impact on County create special Tax Rate households; Home valued at taxing districts $250,000, increase would be for Fire /Rescue $8.33 /month or $100/ ear) * Should any portion of revenues not be realized, expenditures would fall to Unassigned Fund Balance H Responsive to Supervisor Darden's request, County Attorney Popovich requested a closed meeting pursuant to Section 2.2- 3711.A.1 of the Code of Virginia concerning a personnel matter. Supervisor Bailey moved that the Board take a break, followed by a closed meeting for the reason stated by County Attorney Popovich. 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. Supervisor Hall moved that the Board return to open session. 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. Chairman Casteen moved that the following Resolution be adopted. CERTIFICATION OF CLOSED MEETING WHEREAS, the Board of Supervisors has convened a closed meeting on this date pursuant to an affirmative recorded vote and in accordance with the provisions of the Virginia Freedom of Information Act; and, WHEREAS, Section 2.2- 3712.1) of the Code of Virginia requires a certification by this Board of Supervisors that such closed meeting was conducted in conformity with Virginia law; NOW, THEREFORE, BE IT RESOLVED that the Board of Supervisors hereby certifies that, to the best of each member's knowledge, (i) only public business matters lawfully exempted from open meeting requirements by Virginia law were discussed in the closed meeting to which this certification resolution applies, and (ii) only such public business matters as were identified in the motion convening the closed meeting were heard, discussed or considered by the Board of Supervisors. VOTE AYES: Bailey, Darden, Hall, Alphin and Casteen NAYS: 0 ABSENT DURING VOTE: 0 ABSENT DURING MEETING: 0 Chairman Casteen commented that the recordation taxes for wills looks low and $5301000 is a more appropriate amount than the $150,000 that Mr. Terry has proposed. 4 Phillip A. Bradshaw, CFO, Isle of Wight County Public Schools, addressed the Board regarding a decrease in Federal funds in the amount of $1.25 million. The Board provided the following direction to Mr. Terry relative to the proposed FY2012 budget. With respect to the $500,000 growth under general government, Chairman Casteen expressed a concern with the proposed 21% increase for the Budget and Finance Department, the 11 % increased for the Board of Supervisors; 30% increase for the Human Resources Department; 13% for the Treasurer; and, 5% for the Commissioner of Revenue. Supervisor Hall requested an explanation for any department reflecting a significant increase. Responsive to the suggestion of Chairman Casteen, it was the consensus of the Board to adjust the utility rates by 15 %. Responsive to an inquiry by Supervisor Bailey to sell timber, Mr. Robertson advised that the County does not have a sufficient amount to sell. Responsive to an inquiry by Supervisor Darden, Mr. Robertson advised that the 13 acres in hazard mitigation sellable properties, but because the County acquired them through hazard mitigation, insurable structures can never be put on those properties, so the chance of selling them to anyone other than a farmer is slim. Chairman Casteen recommended that the hazard mitigation properties be included in the list of other properties to be considered for sale. He advised that the Building, Grounds and Transportation Committee met prior to this meeting and will be recommending to the full Board at its next regular meeting that the Stoup and Health Department properties be sold. Supervisor Bailey spoke in favor of creating a special tax for fire and rescue in the amount of $.02 in order to support the County's fire and rescue organizations. Recognizing that revenue is not available to do what all needs to be accomplished, Chairman Casteen and Supervisor Darden reluctantly agreed with consideration of a special tax of $02. Chairman Casteen commented that he would have to be completely convinced that there is no other way to balance the budget. Supervisors Hall and Alphin were not in favor of a special tax. 5 The Board members concurred with considering reimbursement of the General Funds for interest payments on bonds. The Board members were not interested in a real estate tax increase. The Board members agreed with Chairman Casteen's preference to have the budget tightened and not increase taxes, recognizing and taking the risk that mid -year the County's Reserve Fund may have to be dipped into or another revenue source found. At 7:30 p.m., Chairman Casteen declared the budget work session adjourned. Carey Milig Storm, Clerk It Alan E. Casteen, Chairman