04-15-2013 Budget Work SessionBUDGET WORK SESSION OF THE ISLE OF WIGHT COUNTY BOARD
OF SUPERVISORS HELD ON THE FIFTEENTH DAY OF APRIL IN THE
YEAR TWO THOUSAND AND THIRTEEN
PRESENT: JoAnn W. Hall, Chairman
Byron B. Bailey, Vice - Chairman
Rex W. Alphin
Delores M. Darden
Alan E. Casteen
Also Attending: Mark C. Popovich, County Attorney
W. Douglas Caskey, County Administrator
Michael W. Terry, Director of Budget and Finance
Donald T. Robinson, Director of Information Resources
And Legislative Affairs
Melinda J. Goodwyn, Acting Clerk
Chairman Hall called the budget work session to order at 10:00 a.m.
Supervisor Alphin moved to appoint Melinda Goodwyn as Acting
Clerk. The motion was adopted by a vote of (5 -0) with Supervisors Hall,
Bailey, Alphin, Darden and Casteen voting in favor of the motion and no
Supervisors voting against the motion.
Supervisor Bailey expressed that the Board unanimously asked for a
5% reduction and what has been presented to them is a 1% increase. So, he
does not believe that there is much to talk about since that is not even close to
what the Board directed.
Michael Terry, Budget and Finance Director, advised that they will be
able to show that they have done the 5% overall reduction. He stated that the
work session today is to deal with the roll out, prioritization, revenue and to
examine things in detail. Mr. Terry advised that staff has requested that
Davenport be present at the work session on April 22, 2013 to discuss how to
use proffers to balance off issues and the opportunity that the County may
have for restructuring. Davenport will be giving the County a perspective on
how they can help save the County some funds on the budget. Also, the IOW
County Schools will be present to discuss their position on what they are
proposing. He further advised that staff would like to give the departments
an opportunity to discuss their positions at the April 29, 2013 work session,
and discuss anything else the Board would like addressed.
Regarding the revenue highlights, Mr. Terry explained that in the
current year there was a one -time revenue approach to several items. He
stated that the Board should be aware that this was going to impact the
County for 2014 and 2015 as a result of not addressing these one -time
revenue streams.
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Regarding the assessment, Mr. Terry stated that when they developed
the budget, and the budget that was adopted, it was based on a projected
assessment, and when the actual assessment came in, there was a $1.7 million
shortfall.
Regarding the 5% reduction demand, Mr. Terry stated that they really
had to look at that. He explained that there are some expenditures that the
Board has discretion over and others that it does not. Federal programs and
debt service cannot be reduced. The dollar amount that they could reduce is
roughly $20 million. They have exercised that and the number for the
proposed cut is about $1.3 million, which has been removed from the
proposed budget. He further stated that to go further than the 5% reduction
still will not be enough to close the gap.
Regarding the use of Unassigned Fund Balance, Mr. Terry stated that it
is not as robust as they would like it to be at this point. So, to consider that
they would have a lot to put upon the FY 2013 -14 budget is an unrealistic
expectation.
Donald Robertson, Director of Information Resources and Legislative
Affairs, presented information that was provided by Dr. Mike Chandler
regarding how the budget is comprised of multiple revenue sources, and what
the Board has discretion over. When talking about reducing the County
budget by 5% they have two (2) areas that they can look at. They can look at
the $20 million piece of the pie which accounts for about $1 million, and they
were able to carve out a little more than $1 million. The other piece of the
pie is the portion that encompasses public education. So, they had to carve
out another $1 million plus out of public education in order to meet the
direction that was given from this Board. That is not 5% off of the $94
million; it is 5% off of the local dollars which the County has the discretion
over.
Mr. Terry advised the Board that they found some fresh revenue, about
$400,000, that was not in last year's budget. He advised that they are
recommending not doing the reassessment that is coming up, which is about
$300,000. They could delay that for one (1) year and the County could save
$300,000 for this current year.
Regarding stormwater fees, Mr. Terry stated that some of the staff in
the Engineering Department could be offset if the stormwater fees are
approved and implemented as well as still covering the new positions that
they are seeking. They were able to pick up another $301,000.
Supervisor Casteen requested that a copy of that information be
forwarded to the Board.
Supervisor Alphin inquired if this information was included in the
current budget that they have in their package. He further inquired if the 5%
of the $52 million was included.
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Mr. Terry referred to page 7 of the FY 2013 -14 Proposed General
Operating and Capital Budget -Draft 1 and stated that the column labeled
"Proposed" represents the 5 %.
Supervisor Alphin asked who came up with the numbers for the
"Proposed ".
Mr. Terry responded Budget and Finance and the County
Administrator. He further stated that the departments were given the same
charge guidelines requested by the Board.
Gerald Gwaltney, Commissioner of the Revenue, addressed the Board
concerning an inquiry from the Smithfield Times in which he was requested
to compile data reflecting what taxes were for homes built ten (10) years ago
versus now. He advised that homes in the Smithfield Times reading area
were selected to include Aspen Woods, Cypress Creek, Eagle Harbor,
Gatling Point, Moone Plantation and Waterford Oaks. He advised that Eagle
Harbor had showed the biggest decline. He advised that the sample home
built in Eagle Harbor is actually paying about $180 less this year than when
originally built; Cypress Creek is basically flat, no changes; Gatling Pointe is
6 %; and Aspen Woods, Moone Plantation and Waterford Oaks were at an
18% increase over a 10 -year period. He advised that while the following was
not included in the Smithfield Times study, he did conduct a sample from the
Courthouse to the southern end of the County, which showed Carrsville at
23 %; Mill Creek -Zuni at 25 %; Walters Highway- Stevens Drive at 26 %; and
Windsor Woods at 26 %. He advised that that real estate taxes in some areas
were actually less than they were ten (10) years ago. He concluded that
inflation during the last ten (10) years is at 25% and almost all the property
samples have taxes at or below that inflation rate.
County Attorney Popovich arrived at 10:30 a.m.
Chairman Hall declared a break at 10:50 a.m.
The Board returned to open session at 11:00 a.m.
Mr. Terry distributed a memorandum dated January 28, 2013 which
was sent to the Schools based on the guidance received from the Board which
stated very clearly that budget requests for FY2013 -14 should reflect a 5%
decrease for operations and, if appropriate, , include a narrative outlining any
negative impacts on operations resulting from the 5% budgetary decrease;
provide information based on categorical funding with line item details
attached; look for additional opportunities to reduce line items where
appropriate without negatively impacting core services; and if there are
operational critical needs that require additional funding, please provide the
appropriate documentation to explain /support your request. He distributed
and explained the analysis sheet he prepared for the schools. He advised that
the local appropriation adopted in FY12 -13 was $27,693,445. He stated that
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the Schools submitted a budget for the local portion at $32,625,558, which is
a net change of $12,046,336. He further stated that staff believes that they
can identify of that $12 million the inclusion of $3,631,106 for Debt Service,
$1,900,000 for VRS and $300,000 for Unassigned Fund Balance, which
leaves $6,215,230 that he is not able to address. He stated that staff
recommends that the Board allow the Schools to be at the next work session
to discuss and address their expectations. He advised that he would forward
this analysis to the Schools with the request that they discuss the $12,046,336
or at least the $6,215,230 that he is not able to identify.
Mr. Robertson stated that he thinks that it is important to note that what
is proposed in some respects represents the only way that staff could get to
the 5% mandate that the Board has placed in front of them. The Schools'
number is so much larger in terms of the amount of local revenue that is
contributed to schools, that if they did not do that they could have not even
gotten close in terms of the 5% on the discretionary dollars discussed about
earlier.
Brian Obal, Vice President, Wells Fargo Insurance Services, addressed
the Board regarding the Health and Dental Renewal program. He presented
the document entitled "Isle of Wight County -2013 Employee Benefits
Strategy/Planning Meeting" and provided a historical breakdown of the three
(3) renewal periods beginning in 2011. Mr. Obal stated that at the last Board
meeting, the Healthcare renewal for July 1, 2013 was presented for approval
by the Board with a combined medical and dental overall negotiated increase
to Isle of Wight County of $200,916. He discussed the proposed four (4)
options to mitigate that expense: Market to Insurance Companies
(Procurement); Premium Contribution Strategy; Benefit Design
Modifications; and Employee Education/Behavior Modification; benefit
design.
Brandy Day, Human Resource Director distributed and discussed
information on The Local Choice (TLC) health benefits program, which is a
state prepared health insurance program through the Department of Human
Resource Management of the Commonwealth of Virginia. Mrs. Day
explained that it is a health benefits program that was created by the General
Assembly in 1989 and has been providing health coverage to local
jurisdictions since 1990. They used the state's significant purchasing power
to reduce the administrative cost and shared claim experience, which offers
financial protection for local governments. Mrs. Day stated that she would
recommend the Key Advantage Expanded and the Key Advantage 250. She
provided a 2013 -14 Cost Projections for Anthem (current insurance) and
2013 -14 Cost Projections for TLC. She stated that the annual savings would
be $138,852.72 for health insurance. The dental would be $14,663. There
will not be a cost increase to the employees.
Mr. Obal commented that a lot of the points that Mrs. Day made are very
true. One thing to consider with TLC is the exit liability. He explained that
it is a self- insured program, so they track your specific experience in
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utilization. If you agree that if you were to exit you pay back the loss
incurred by your group. That is a non funded liability. So, you would want
to have a reserve fund to prepare for that potential exit if that would ever
happen. A lot of organizations do stay in because of the fear of leaving.
There are no negotiations to the renewal rate. It is what it is. There probably
are some clients who have had some great renewal experiences and other
who have had average increases from 12 to 14 percent. The County is at 7%
increase, which is below an average trend of 12 to 14 percent. He further
stated that another point of consideration is that the TLC only offers the
following plan designs to choose from: $250 deductible, $500 deductible,
$1,000 deductible and the HSA.
Supervisor Casteen commented that before he can consider casting an
opinion about tax increases they have to be sure of what the revenues and the
expenses are going to be. When we came up with the 5% number we thought
it was 5% of the total budget, and then we realized that we should have asked
for three times that.
Supervisor Alphin expressed that they dug a pretty big hole last year
and they have to deal with it. He thinks that it is incumbent upon the Board
to see the situation that they are in. In this proposed budget, they cut Schools
5% from last year, and a number of departments have been cut 5%. When
you add all those cuts and the additional revenue, according to staff, we still
have to increase real estate taxes 10¢ just to balance the budget. In addition
to that, we are looking at a stormwater management fee that is included in
this budget, which is another 3¢. That is 13¢. That is exactly a 20% rise in
real estate taxes. That is distasteful to him. He would not like to go down
that route. He would not like to make such a drastic change. He would like
to shy away from these one -time things if possible.
Supervisor Darden stated that they did look at some one -time things
last year and maybe they should not have but they did. In hindsight maybe
they should have adjusted the tax rate earlier. She would entertain a small tax
increase on the rate; maybe 4 to 5 cents, somewhere she could and the
citizens could be comfortable with. She is not comfortable with 10¢. She
still wants to dig deep and find any more cuts that can possibly be made to
keep the tax rate adjustment as low as possible.
Supervisor Bailey expressed that he cannot see a tax increase when
people are not making as much money as they used to. He wants to see the
revenue side and as many cuts as can be made, and as little as possible tax
increase. He is a no tax person. He does not feel at this time that he would
increase taxes.
Chairman Hall stated she does not know if she could go for 10¢ either.
She thinks that they are going to have to find something somewhere between
zero and 10¢. That means going back and figure out what else can come out.
She has been getting deluged with emails from School supporters asking for
full funding of the Schools' budget, and she writes every one of them back
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stating that it is not going to happen. If the Board has to start looking at cuts
and the 10¢ to even balance out with a 5% school cut, how are they possibly
going to come up with more money. She just does not know what the answer
is. She would like to ask that everyone go back and take another look at this
and see what can come out.
County Attorney Popovich requested a closed meeting pursuant to
Section 2.2 -371 LA.7 of the Code of Virginia for the limited purpose of
consultation with legal counsel requiring the position of legal advice
pertaining to school appropriations.
Supervisor Bailey moved that the Board enter the closed meeting for
the reasons stated by the County Attorney. The motion was adopted by a
vote of (5 -0) with Supervisors Hall, Darden, Bailey, Alphin and Casteen
voting in favor of the motion and no Supervisors voting against the motion.
Supervisor Alphin moved to return to open session. The motion was
adopted by a vote of (4 -0) with Supervisors Hall, Darden, Bailey and Alphin
voting in favor of the motion and Supervisor Casteen absent for the vote.
Supervisor Alphin 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 of 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 convening the closed meeting were heard, discussed
or considered by the Board of Supervisors.
VOTE
AYES: Hall, Darden, Bailey and Alphin
NAYS: 0
ABSENT DURING VOTE: Casteen
ABSENT DURING MEETING: 0
At 12:30 p.m., Chairman Hall declared the budget work session
adjourned.
Byron 9.1ailey, Chairman
Carey Mil Storm, Clerk