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04-04-2019 Work SessionWORK SESSION OF THE ISLE OF WIGHT COUNTY BOARD OF SUPERVISORS HELD IN THE ROBERT C. CLAUD, SR. BOARD ROOM OF THE ISLE OF WIGHT COUNTY COURTHOUSE LOCATED AT 17090 MONUMENT CIRCLE, ISLE OF WIGHT, VIRGINIA ON THURSDAY, THE FOURTH DAY OF APRIL IN THE YEAR TWO THOUSAND AND NINETEEN PRESENT: William M. McCarty, Newport District, Chairman Joel C. Acree, Windsor District, Vice -Chairman Don G. Rosie, II, Carrsville District Richard L. Grice, Smithfield District Rudolph Jefferson, Hardy District ALSO IN ATTENDANCE: Robert W. Jones, Jr., County Attorney Randy R. Keaton, County Administrator Donald T. Robertson, Assistant County Administrator Carey M. Storm, Clerk CALL TO ORDER Chairman McCarty called the work session to order at 6:00 p.m. APPROVAL OF AGENDAMMENDMENTS Supervisor Jefferson moved that the agenda be adopted as amended with the TRAFFIX Program presentation being moved to the first item under the County Administrator's report. The motion was adopted unanimously (5-0). INVOCATION Pastor Frank, Bethany United Methodist Church, delivered the invocation and led the Pledge of Allegiance to the American flag. COUNTY ADMINISTRATOR'S REPORT Ron Hodges, Director of Business Development, Hampton Roads Transit jHRTj provided an overview of the TRAFFIX program and the services currently being offered, future opportunities to increase usage, and opportunities for partnership with the County. 11 Regarding the subject of the terms and conditions for the transfer of property to the Commonwealth of Virginia for the proposed Department of Juvenile Justice facility, Valerie Boykin introduced herself as the Governor's newly appointed Director of the Department of Juvenile Justice, replacing Andy Block. She further introduced Jamie Patten, Deputy Director of Administration & Finance and Messrs. Joe Damico and Mike Nolen of the Department of General Services. She advised that there has been a major undertaking on the part of that agency to 1 transform juvenile offenders by building new facilities smaller in nature, thus creating a different feel and structure. She stated that the Department of Juvenile Justice is committed to working with the County on building a 60-bed facility and promises to continue to work on its internal practices designed to be more successful with young adults. Ms. Patten advised that the financial impact on the local community for FY2018 for the Bon Air juvenile correctional facility located in Chesterfield County, excluding salaries and items purchased from other government agencies, reflected that $1.6 million had been spent within ten miles of the facility and $2.2 million had been spent within 30 miles of the facility. County Administrator Keaton provided responses received from the State to questions posed by the Board since its previous meeting related to an audible alert system, who will pay for the site work and demolition of the existing structures and wells, how that property will be transferred, and can the County receive a payment in lieu of taxes from the State as a form of cost recovery. Supervisor Acree remarked that a juvenile facility should be in a community that is supportive of it and the Department of Juvenile Justice should be the advocate for this facility, not the County Administrator or the Board. He stated that County Administrator Keaton should never have been placed in the position of giving the public a false perception that he is a proponent for this facility and not just working at the Board's pleasure. He stated that the Department of Juvenile Justice has placed many of its obligations on this Board and County staff, which has resulted in a division of the Board and County citizens. 11 On the issue of the proposed FY2019-20 Operating and Capital Budgets, County Administrator Keaton read the following into the record: The Honorable Board of Supervisors Isle of Wight County, Virginia Honorable Members of the Board: I am pleased to submit the FY 2019-20 budget for Isle of Wight County to the Board of Supervisors and our citizens. This Budget was prepared to meet the needs of a growing community while delivering services efficiently and economically. The team of staff responsible for preparing the budget has attempted to create a document that is more transparent and understandable to every citizen and addresses the basic responsibilities of local government. The FY 2019-20 budget is notable for the fact that for the sixth year in a row, there will be no change in the real estate tax rate of $.85 or the personal property tax rate of $4.50. The Machinery & Tools (M&T) tax rate will also remain at $1.75. Although the real estate tax rate is proposed to remain at $.85, the increase in assessments will generate additional revenue due to higher assessed values for 2 real estate. Countywide, real estate values increased 4.4%, however, individual increases can vary significantly. The increase in revenue above the state -allowed 1% is approximately $1,293,000 or $0.027/$100 in valuation. This number will change as taxpayers file appeals for review of their assessments. One penny of real estate tax is expected to generate $479,000. One of the key priorities for the upcoming fiscal year is to fund the necessary functions of Isle of Wight County while preparing for future needs. The General Fund budget totals $78,582,603. The largest source of these funds is from General Property taxes ($57.6 million) or 73% of the budget. The largest uses of County funds are for Education ($27.5 million, 35%), Public Safety ($11.8 million, 15%), and Debt Service ($12.0 million, 15%). Some of our goals include diversifying our revenue sources to become less dependent on property taxes and reducing debt service as a percentage of our expenditures. Revenue Highlights Real Property Taxes — Housing starts in CY2018 dropped compared with CY2017. There were 158 housing starts in 2018 compared to 172 in 2017; however, commercial development and construction has been nonexistent. Condos and townhouses are representing a larger percentage of the total new housing starts. During the first two months of 2019, condos/townhouses represented nearly two- thirds of all new home permits. A 1.4% change in assessments is forecast for FY 2020 with revenue growth of $546,000 for new construction. A 4.4% increase in assessments due to reassessments is expected to generate new revenue of $1,640,000. Personal Property — Motor Vehicles — The value of used motor vehicles grew by a healthy 2.9% in 2019 according to J.D. Power. Used vehicle values represent 85% of the county's vehicle values. The taxable fleet in Isle of Wight County is composed of 57% trucks and 43% cars. In 2018, the median sale price of new trucks in Isle of Wight County was $35,476 compared with new cars at $24,900. A 6.4% growth is forecast for FY 2020 with revenue growth of $510,000. Machinery & Tools Tax — Modest growth in the amount of 1% of assessments for the M&T tax is expected to generate an additional $52,000. Public Service Corporation Taxes — Public Service assessments are adjusted annually based on the real estate sales ratio as determined by the Department of Taxation. As real estate sale prices exceed assessments, the county's sales ratio declines. Last year, our public service revenue decreased 7%. It is anticipated that the assessments will decline 10% in the next fiscal year which will result in a revenue decrease of $153,000. Meals Tax — The meals tax has increased each year since the recession of 2007 began with the one exception in 2014 when the revenue was unchanged from 2013. The 2018 reporting period increased 15% over the previous period and 2017 experienced growth of 8% over the previous year. This growth is strong and a 15% increase or $90,000 is forecast for FY20. 3 Utilities Fund — A 5% increase in water and sewer rates has been included in the budget. The 5% increase, in lieu of the projected 9.5% increase is to continue the County"s efforts to make the Utility Fund more self-sustaining and less reliant on subsidies from the General Fund while also remaining mindful of affordability for our citizens. We also plan to begin monthly billing for utilities which will help our citizens with their household budgeting. Expenditure Highlights Public Schools — There is an increase of $1,048,106 in local funds for the Isle of Wight County Public Schools. A $948,106 increase is proposed for the operating budget and a $100,000 increase is proposed for the capital maintenance fund. $715,830 is also included in debt service to finance $7.9 million in improvements at Smithfield High School and Windsor High School for enhanced Career & Technical Program options for students. Public Safety — The budget continues the replacement schedule for Sheriff's Office vehicles by leasing 8 new vehicles. The new E911 radio system is complete and will be under warranty until April 2020. Three months of maintenance cost for the new system has been included in the E911 budget. Assessment — A $202,000 decrease is due to the completion of the general re- assessment of real estate for FY 20. Gerald Gwaltney and I are proposing level funding of $102,000/year for reassessment costs with the funds to be placed in a reserve fund to avoid a large increase for the next reassessment. Fire and Rescue Response — In response to requests from the Fire Rescue Association, the State funding for Aid to Localities has been placed back in the individual Volunteer Fire Department budgets. $16,800 has been included in each budget on a reimbursement basis. Another priority for the Association was equity among all departments for Workers Compensation and Accident and Sickness Supplemental insurance. All departments will now have the same coverage with no increase in the overall cost to the County. Public Works — Tipping fees for disposal of the County's solid waste dropped to $57/ton which resulted in savings, however, an increase in the volume of solid waste resulted in an increase of $61,500. An increase in part-time staff will also allow us to staff the Jones Creek Refuse and Recycling Center with 2 staff each day Debt Service — Debt service payments have stabilized and will gradually start declining in FY21. Our total debt payments in FY20 will be $12.6 million. $7.4 million of the payments will be principal. Personnel Isle of Wight County competes for employees across the Hampton Roads region. The Board of Supervisors made a significant investment in our personnel in 2015 with a compensation study to address inequities and to make Isle of Wight County an attractive place to work. To maintain our competitiveness, I have included a 11 2% general wage increase to keep us from falling behind our peer jurisdictions as we compete for the best and brightest. The County Health Plan experienced an increase of 4.5% in total costs. Given the salary increase that is proposed, we are continuing the same County/Employee cost sharing plan for health insurance established last year. Employee premiums for FY20 will include an average of up to 3% increase in health insurance costs for the base health plan (Key Advantage 500 with Comprehensive Dental). Fleet Upgrades In addition to new vehicles for the Sheriff's department, a total of 9 other vehicles are proposed to replace aging or high mileage vehicles in the following departments: Public Works, Emergency Services, Information Technology, and Public Utilities. Capital Budget Consistent with the Board's adoption of the FY2019-28 Capital Improvements Program, a Capital Budget of $5.8 million is included to move various capital projects forward. Significant capital expenditures include HVAC upgrades at Smithfield High School and planning for renovations to Hardy Elementary School ($1.95 million); and construction of a new Route 10 water line ($1.7 million). Additionally, the Capital Budget provides continued support for the County's volunteer emergency response organizations. It is noteworthy that the Capital Budget is fully funded with no additional borrowing required. Acknowledgements I would like to thank all the Constitutional Officers, Department Heads and staff for submitting conservative and well -researched budget requests. I have been impressed with the creativity and cost -saving suggestions from all our staff. 1 would especially like to thank Don Robertson, Stephanie Humphries, and Teresa Morgan for organizing the budget requests and preparing countless budget scenarios. This has truly been a team effort. Regarding the Capital Budget, Supervisor Grice recommended that an independent study like that done for the Georgie Tyler Middle School be conducted comparing the cost of renovation versus replacement of the Hardy Elementary School. County Administrator Keaton offered to obtain an estimate of the cost associated with the previous study from the School Superintendent. County Administrator Keaton requested that the Board forward any questions on the budget to him. ADJOURNMENT At 8:30 p.m., Chairman McCarty declared the work session adjourned. 0. illiam M. McCarty, Chairman S Carey ' s Storm, Clerk 0