COUNTY OF DURHAM
COUNTY OF DURHAM Michael M. Ruffin County Manager
May 23, 2005 The Honorable Members Durham County Board of Commissioners Durham County Administrative Complex 200 East Main Street Durham, North Carolina 27701 Dear Durham County Commissioners: First, let me say how proud I am of the work we’re doing in Durham County. Your county government is doing some amazing things; and people are calling us from all over the country to learn more about how we’re doing it. For example, last year we implemented a System of Care initiative to make sure that collaboration was in place along the continuum of care that exists for children with mental health, educational, health, and social needs. In fact, we won a state award for it. This initiative integrates families with the work of education, juvenile justice, health, mental health, social services, family court, and other agencies to ensure better results for their children. The bottom line is we have seen a 52% decrease in the number of Durham County children placed in residential treatment facilities, meaning these kids are served from their homes, or in a therapeutic foster home setting ‐ better service at a lower cost. The progress our community has made in reducing the County’s infant mortality rate is equally remarkable. In 1998, the death rate of infants under the age of one per 1,000 live births in Durham County was 11.9. For the last reporting period, 2003, that rate was down to 4.7, a 60% reduction. This reduction has been achieved through another collaboration that has involved a number of different partners, not the least of which is our Public Health Department. Programs like “Back to Sleep” and “Baby Love” are making an important contribution in helping to reduce the County’s infant mortality rate.
Durham County Board of Commissioners May 23, 2005 Page 2
Do you remember when our election process was subjected to intense media scrutiny in 2000? Today, we are touted statewide as an example of how an election should be run ‐ a real credit to the Board of Elections, and particularly to our Elections Director, Mike Ashe, and his employees. What I take the most pride in, however, is that what you have just heard is only the tip of the iceberg. The truth is, we’re doing award‐winning work in every department. There is not one department— not one — where I could not point out an accomplishment that has brought distinction to our County. Of course, what this really means is that our citizens are receiving some of the finest services offered in local government anywhere. That’s why others come here ‐ to learn more about how we do business. Next year’s budget will continue to emphasize high‐quality services provided by thoughtful, caring, committed public officials and employees. In fact, with Results Based Accountability, we are now beginning to see how some of the most important work we are doing is paying off. I want to spend just a moment to illustrate what I mean. Over the last couple of years, this Board and the Durham City Council have adopted eight community‐wide outcomes that have created a vision for Durham. These outcomes were never meant to be an end in and of themselves but rather a means by which we can concentrate on those things that are most important to our community. As such, they have helped us to narrow the conversation, focus on strategies that will produce the best results, and develop indicators to see if these strategies are making any real differences. • • • • • • • •
Durham citizens are safe Durham enjoys a prosperous economy Durham citizens enjoy a healthy environment Durham citizens enjoy a community that is vibrant, rich in aesthetic beauty and embraces and promotes its cultural heritage Children are ready for and succeeding in school Every citizen in Durham has access to adequate, safe and affordable housing Durham citizens are healthy Durham citizens enjoy sustainable, thriving neighborhoods with efficient and well‐maintained infrastructure
Durham County Board of Commissioners May 23, 2005 Page 3
We are making progress in some demonstrable ways. For example, Durham citizens are safer today than they were in 2000. The graph below indicates that Part 1 Violent Crimes (homicide, rape, robbery, and aggravated assault) are down 12% since 2000. What this graph doesn’t say, however, is that assaults have plummeted 20% in that same period of time; and robberies have decreased almost 13% since 2001. Durham citizens are safer today than they were five years ago.
This is just one example of the progress we are making. This fall, citizens from all over Durham County will convene for a county‐wide summit where we will receive our first progress report to see how we’re really doing. That summit will likely conclude that Durham County, just like most other urban counties, has lots of work left to do. The challenge will be to forge the partnerships necessary so that we can marshal the resources to see that each and every one of the eight community‐wide outcomes receives the greatest level of support across the community. Incidentally, these outcomes that you adopted helped shape much of what I have recommended in the way of expanded funding and new initiatives in next year’s budget. The role of the manager in advancing a budget is to weave his board’s priorities into a spending plan that is realistic. I believe I’ve met that expectation and am now ready to brief you regarding what I think is most important about my recommendations. While we have twenty‐two funds that comprise our total budget, the General Fund is the home for most of the County’s services. Next year, I have proposed a $528.1 million General Fund Budget, an increase of 7.31%. A fund‐by‐fund breakdown is shown on the next page.
Durham County Board of Commissioners May 23, 2005 Page 4
Fund 101 – General
Current FY 2004-2005
FY 2005-2006 Requested
FY 2005-2006 Recommended
% Increase/ Decrease
$ 492,163,205
$ 558,964,109
$ 528,161,165
7.31%
1,972,053
2,082,576
2,082,576
5.60%
125 - Capital Finance Plan
34,795,508
38,666,597
39,108,597
12.40%
150 - Cafeteria Plan
11,280,355
12,348,911
12,460,003
10.46%
213 - Bethesda FD Fund
1,053,109
1,236,254
1,236,254
17.39%
214 – Lebanon FD Fund
623,185
836,206
836,206
34.18%
215 - Parkwood FD Fund
1,134,221
1,132,004
1,132,004
-0.20%
216 - Redwood FD Fund
601,212
605,000
605,000
0.63%
217 - New Hope FD Fund
40,481
37,900
37,900
-6.38%
219 - Eno FD Fund
17,742
17,646
17,646
-0.54%
221 – Bahama FD Fund
331,930
453,461
453,461
36.61%
222 - Special Park District Fund
333,184
307,422
307,422
-7.73%
224 - Emerg. Services Tele. Sys.
3,929,654
3,536,241
3,536,241
-10.01%
11,702
11,450
11,450
-2.15%
134,267
279,860
71,705
-46.60%
34,586,815
36,887,554
37,462,554
8.31%
660 - Water and Sewer Fund
7,562,912
10,003,753
10,003,753
32.27%
662 - W & S Debt Service Fund
3,293,961
3,612,373
3,612,373
9.67%
250
250
250
0.00%
1,310,000
132,664
1,534,455
17.13%
132,488
159,500
159,500
20.39%
1,011,453
0
0
-100.00%
$596,319,687
$671,311,731
$642,830,515
7.80%
102 - Risk Management
225 - Special Butner Fund 250 - Reappraisal Reserve Fund 304 - Debt Service Fund
705 - Geo. R. Linder Mem. Fund 708 - Comm. Health Trust Fund 770 - L.E.O. Ret. Trust Fund 868 - Equipment Leasing Fund
Grand Total
So why is the County’s proposed General Fund Budget up more than 7%? The reason is pass‐through funding, largely in the form of Medicaid and Food Stamps, has increased by $35.7 million. We have no control over public assistance program expenditures like Medicaid. In fact, only $13 million of the $250 million total appropriation for pass‐ through funding next year is County money. I’ll have more to say about that later. I do want to highlight and underscore what I consider to be the more important features of my proposed budget: ¾ Durham Public Schools (DPS): I have recommended an increase of $4,407,999 for DPS next year, a 5.65% increase. This amount represents what the
Durham County Board of Commissioners May 23, 2005 Page 5
Superintendent and Board of Education believe is needed for continuation funding plus the per pupil expenditure increase for the additional 555 students that are expected during the 2005‐2006 academic year.
Largely due to the media, the public will be told that I have recommended a reduction in school funding. Nothing could be farther from the truth. My recommendation for current expense next year represents a $4.4 million increase, equivalent to more than a two‐cents increase in our property tax rate. Keep in mind that Durham County is second among North Carolina’s ten most populous counties in per pupil spending for public schools and fourth among all school systems in North Carolina. Last year, we ranked eleventh in per pupil funding among all school systems. I have provided a table below that shows how we rank with the other nine largest county school systems in the state. Notice the great variance from top to bottom in per pupil spending.
County
Rank
Total Per Pupil Spending
Mecklenburg
1
$2,403
Durham
2
$2,264
New Hanover
3
$2,163
Wake
4
$1,849
Guilford
5
$1,801
Forsyth
6
$1,720
Buncombe
7
$1,479
Cumberland
8
$1,110
Gaston
9
$ 992
Onslow
10
$ 906
Here’s an interesting statistic for those who want to argue that Durham Public Schools should receive more funding. If we gave our school system the same per pupil appropriation that Wake County provides to its school system, we could reduce our annual appropriation for current expense to the Durham Public Schools by more than $12 million. To put it another way, Wake County would
Durham County Board of Commissioners May 23, 2005 Page 6
have to increase its funding for its school system by over $47 million to match what we give on a per‐pupil basis to the Durham Public Schools. I think it is also important to point out just how much property tax is pledged next year for the Durham Public Schools. What follows is an illustration that emphasizes the commitment that we are making for our public school system compared to other County services. As you can see, 59.5 cents from every property tax dollar we collect will be needed to fund current expense, capital outlay and debt service for the Durham Public Schools. FY 2005-2006 Property Tax Expenditures (Per $1 Dollar) Other County Exp. 40.5 cents
School Exp. 59.5 cents
¾ Pre‐Trial Services: This is an initiative that has emerged over the last year from working with the Durham Crime Cabinet, the Sheriff’s Office, the Criminal Justice Resource Center, the District Attorney, District and Superior Court judges, other court system representatives, and citizens, all of whom want to make sure jail space is reserved for our worst offenders. Again, it emphasizes just how important the role of community collaboration is for problem‐solving. I have proposed a $235,951 appropriation to create a pre‐trial services program in our Criminal Justice Resource Center. Three additional positions will be required as well as contracts with the Administrative Office of the Courts for one additional position for the Clerk of Court’s Office, and a private provider for the implementation of an electronic house arrest program. This program will reduce our daily jail population, saving us at least $90,000 a year, and provide the resources to our magistrates and judges to make sure accurate, up‐to‐date information is available for bond hearings. In short, we will have more bed space for those who will be unable to afford the higher bonds that their records deserve.
Durham County Board of Commissioners May 23, 2005 Page 7
¾ Misdemeanant Fingerprinting: Again, in our efforts to ensure that Durham citizens are safe, I have recommended an appropriation of $159,209 for misdemeanant fingerprinting. The first nine months of the fiscal year will be used to complete improvements necessary to house the function so that service can begin in earnest on April 1 of next year. While the equipment is already available, five additional detention officers will be required.
¾ Vehicle Fleet Replacement: We have struggled over the last several years to find the money to replace vehicles in our fleet. Scores of county vehicles have exceeded their useful life as evidenced by significant increases in the annual cost to maintain them over the last several years. Many of these vehicles are used in critical public safety and maintenance functions and must be ready to roll on an everyday basis. This year our Finance Director has shown us how we can purchase the vehicles we need for less money than we are currently spending. The fleet replacement schedule I have proposed will completely resolve over‐due needs for vehicles even though our annual cost for vehicles next year is $416,453 less than what we are currently spending and for more vehicles—how’s that for a more efficient way of doing business?
¾ East Regional Library: Next spring, the long‐awaited East Regional Library will open its doors. The 25,000 square‐foot facility will serve as an example of what our regional library system will look like –‐ traditional and non‐traditional library services offered in convenient locations in state‐of‐the‐art facilities. In next year’s budget, $331,506 has been included to staff and operate the facility. Twenty‐six additional positions (18.43 FTE’s) will be required. The facility will open its doors on May 1, 2006.
¾ New Positions: Speaking of new positions, in addition to the thirty‐four new positions (26.43 FTE’s) I’ve already recommended for the pre‐trial services program, the misdemeanant fingerprinting initiative, and the East Regional Library, twenty‐four (23.39 FTE’s) new positions have also been recommended in fifteen other departments. These new positions will increase our total County workforce to 1,803 positions (1802.75 FTE’s); is 160 fewer positions than what we had in 2001.
Durham County Board of Commissioners May 23, 2005 Page 8
Positions Recommended
FTEs
Cost
Hiring Date
Senior Internal Auditor/Audit Manager (Int. Audit)
1.00
$
37,713
10/1/2005
Revenue Agent for Real Property (Tax)
1.00
$
26,576
10/1/2005
Revenue Agent Motor Vehicles (Tax)
1.00
$
26,576
10/1/2005
Associate County Attorney (Legal)
1.00
$
54,041
10/1/2005
Deputy Register of Deeds II (Register of Deeds)
1.00
$
17,572
1/1/2006
Maintenance Tech I (General Services)
1.00
$
23,412
10/1/2005
Equipment Technician (Electrician) (Gen. Services)
1.00
$
18,493
1/1/2006
Senior Programmer Analyst (IT)
1.00
$
56,484
10/1/2005
Data Base Administrator (IT)
1.00
$
40,594
1/1/2006
Project Coordinator (IT)
1.00
$
25,904
1/1/2006
Budget Analyst (Budget)
1.00
$
36,403
10/1/2005
Sheriff Deputy (Sheriff)
1.00
$
30,727
10/1/2005
Detention Officer (Sheriff)
5.00
$
46,208
4/1/2006
Staff Specialist (CJRC)
1.00
$
16,979
1/1/2006
Human Services Coordinator III (CJRC)
1.00
$
38,316
9/1/2005
Case Manager (CJRC)
2.00
$
56,558
10/1/2005
Animal Control Officer I (Animal Control)
2.00
$
32,554
1/1/2006
Clinical Affairs Coordinator (EMS)
1.00
$
29,082
1/1/2006
Real Estate Technician (Engineering)
1.00
$
30,233
10/1/2005
Program Assistant/EFNEP (Cooperative Extension)
0.39
$
7,552
10/1/2005
Public Health Nurse II (Public Health)
2.00
$
72,104
10/1/2005
Social Worker III (Social Services)
1.00
$
35,984
10/1/2005
Income Maintenance Caseworker II (Social Services)
1.00
$
27,437
10/1/2005
Processing Assistant II (Social Services)
1.00
$
21,550
10/1/2005
Administrative Librarian II (Library)
1.00
$
26,292
1/1/2006
Sr. Librarian (Library)
2.00
$
29,344
3/1/2006
Librarian (Library)
4.47
$
63,246
3/1/2006
System Support Tech (Library)
1.53
$
18,072
3/1/2006
Circulation Manager (Library)
1.00
$
14,043
3/1/2006
Sr. Library Assistant (Library)
3.00
$
32,553
3/1/2006
Library Assistant (Library)
1.00
$
14,781
3/1/2006
Staff Assistant II (Library)
1.06
$
10,153
3/1/2006
Library Page (Library)
3.84
$
19,861
3/1/2006
Project Coordinator (Enterprise Fund)
1.00
$
40,328
7/1/2005
50.29 $ 1,077,724
Durham County Board of Commissioners May 23, 2005 Page 9
¾ Employee Salaries and Benefits: I have recommended that we continue the performance‐based pay plan that the Board adopted two years ago. I have also budgeted $1 million for increases for positions that are paid below the market rate so that we can maintain our ability to recruit the best candidates for our positions. We reported at your February retreat that County salaries for all positions were an average of 7% below the market rate. That number was a year old and is now believed to be 12.4%. It will take four years for us to resolve the impact that market forces are having on our positions. The $1 million requested appropriation is a placeholder for you to use to fund increases in January 2006 based upon the consultant’s report that you will review later this summer. This amount will be sufficient to fund the first‐year’s installment.
Health insurance costs next year will increase by 15%. Therefore, I have recommended a corresponding increase for the employer contribution, which will increase the per pay period contribution that we provide for our employees from $200 to $230.
I have also budgeted $978,000 for retiree life and health benefits for next year. Two hundred seventy‐nine retirees will receive life insurance benefits and two hundred seventeen retirees will receive health insurance benefits.
Here’s a synopsis of major increases related to employee salaries and benefits. I was glad to hear you agreed at your February retreat that this is one of the most important investments we make in our organization. Indeed, every service we provide is directly dependent on maintaining a well‐trained, high‐quality workforce.
Performance Increases Market Adjustments Longevity Probationary Increases Retiree Health Coverage Health Insurance Increase (15%)
Increases for Salaries and Benefits
$ $ $ $ $ $
1,019,302 1,000,000 564,175 120,198 978,000 219,664
$ 3,901,339
¾ Non‐Profit Funding: We received 50 applications for funding from non‐profit organizations this year requesting $2.5 million—considerably more than we are able to fund. I have recommended $1,008,070 in funding for 30 non‐profit
Durham County Board of Commissioners May 23, 2005 Page 10
organizations. Six of the applicants are first‐time recipients and will receive $5,000. These six applicants are:
¾ ¾ ¾
Full Frame Documentary Film Festival American Red Cross Piedmont Wildlife Center
¾ ¾ ¾
KB Career Services Money Wise Read Seed
Provided below is a list of all non‐profit organizations for which funding is recommended.
FY 04-05 Funded
Organization
Eno River Association Full Frame Documentary Film Festival American Red Cross Council for Senior Citizens Durham Crisis Response Center Literacy Center-Adult Literacy Family Counseling Services Genesis Home KB Career Services Meals on Wheels Money Wise Piedmont Wildlife Center- Rehabilitation Planned Parenthood Radio Reading Services Senior Aides Senior PHARMAssist Urban Ministries Community Shelter Women-In-Action Literacy Center-Youth GED John Avery Boys & Girls Club Middle School After School Read Seed Big Brothers Big Sisters Child Advocacy Commission Child Care Services Association Child and Parent Support Services Durham Companions Infants and Young Children with Special Needs Teen Court and Restitution Operation Breakthrough Project Graduation TOTAL
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
12,350 0 0 128,750 46,730 14,250 14,250 19,000 0 9,500 0 0 4,420 3,536 28,500 85,500 147,500 30,000 32,000 35,000 85,500 0 35,000 29,925 28,215 8,800 4,750 9,999 30,000 97,375 5,700 946,550
FY 05-06 Recommended
$ 12,350 $ 5,000 $ 5,000 $ 135,188 $ 46,730 $ 14,963 $ 14,963 $ 19,950 $ 5,000 $ 9,975 $ 5,000 $ 5,000 $ 4,641 $ 3,713 $ 28,500 $ 89,775 $ 154,875 $ 31,500 $ 32,000 $ 35,000 $ 89,775 $ 5,000 $ 35,000 $ 31,421 $ 29,626 $ 8,800 $ 4,750 $ 10,000 $ 31,500 $ 97,375 $ 5,700 $ 1,008,070
Durham County Board of Commissioners May 23, 2005 Page 11
¾ Court System Funding: I really labored over what to do regarding various needs in our court system. While I am confident that the General Assembly will not fully fund the needs of the court system as you have requested, I do think it is too early to throw in the towel. Therefore, I recommend that you continue to monitor the process before rendering any final decision on next year’s budget. However, if no action is taken before you are ready to adopt your budget, I think you need to seriously consider funding some of what you have asked them to fund. Specifically, I would recommend that you consider funding all “Tier 1, 2, and 3” requests, except for those pertaining to additional judges, which legally you cannot fund. This amounts to $1,000,938 and would necessitate a tax rate increase of approximately a ½ cent. I have included a $73,436 appropriation to pick‐up the cost of one additional assistant district attorney. This position is one of two grant funded positions for which funding will expire on June 30, 2005. The other position will be picked up by the City of Durham. Neither position is a part of the request that you have asked the legislature to consider. Before I begin to discuss our revenue budget, I want to vent a little. We are fighting to provide services in our county with one hand tied behind our backs. State government is doing little to give us the tools we need to keep pace. The truth is, when it comes to raising money, we have twentieth‐century solutions to twenty‐first‐century problems. Something has got to change! We have only two major sources of revenue to finance the vast majority of the county services we provide – sales and property taxes. These two revenues combined generate $214 million a year, and excluding pass‐through funds, comprise 73 cents of every dollar we collect in our general fund. We don’t have the authority to raise any additional sales taxes; the only revenue over which we can completely control how much we receive is the property tax. Our current property tax system is almost one hundred years old. It is in sore need of repair as it fails to reliably generate the income that counties and cities really need to provide services. The system is saturated with inequities. Over the years, special interest groups have convinced legislators to grant exemptions, reductions and other breaks, forcing homeowners to shoulder an unfair proportion of the burden. Ironically, some of the “fixes” counties have proposed over the years have been ignored by the legislature. Why? Because special interests continue to lobby in the corridors and backrooms in Raleigh for breaks they should not receive. What about the common
Durham County Board of Commissioners May 23, 2005 Page 12
interest in this state? We need reform ‐ reform that will give counties the tools we need to serve our citizens. Let me give you two examples. North Carolina is one of two states left in the country that requires counties to pay a share of Medicaid expenses. New York, the only other state, just passed legislation to transition that responsibility to the state, where it belongs. We only pay a little more than 5 cents of every Medicaid dollar we spend, but those nickels really add up. In fact, next year, we’ll pay $10.9 million worth of nickels! I don’t think it will be too much longer before the state does the right thing and pays full freight for Medicaid. When they do, we’ll have almost $11 million to fund some needs that we just don’t have the money to fund. Several counties in North Carolina already have additional means at their disposal to raise monies for county services. For example, Chatham and Orange Counties have special legislation and have adopted school impact fees and several coastal counties have land transfer taxes. If we had school impact fees, we could raise enough money in five years to build a new middle school. If we had a land transfer tax, we could raise as much as $18 million a year. That’s nine cents on, or off, our tax rate. Again, the problem is special interest groups have lobbied strongly against impact fees, land transfer taxes, occupancy taxes, prepared food taxes, etc. I do see some light at the end of the tunnel but getting to the other side is taking far too long. In the meantime, our tax rate is inching up each year because we don’t have the income to support the mandates that are handed to us by federal and state governments from year to year. As I mentioned earlier, next year’s general fund budget represents an increase of almost $36 million. Virtually every dollar of that increase, $35.7 million, is in the form of pass‐ through funding, e.g. Medicaid, Food Stamps, Work First, Title IV B Adoption Assistance, Title IV E Adoption Assistance, Special Assistance to Adults, and Low Income Energy Assistance Program, all important and worthwhile programs, but programs over which we have no control. My point is this: The General Assembly is not helping us with legislation we need to get the job done in Durham County. As I said, the only real money that we can count on from year to year to fund increases in our budget comes from sales and property taxes. Next year, we project our sales taxes will grow by $2.3 million. Property taxes at the current rate of 79 cents will generate an additional $4.7 million. In other words, only $7 million in new money exists for the $66.8 million in new requests we received this year.
Durham County Board of Commissioners May 23, 2005 Page 13
Our property tax base is growing slowly and has been since 9‐11. Next year, we forecast a 2.7% increase compared to the late nineties when we were seeing increases of 5% of more. I have provided a chart below that summarizes our tax base.
FY2005 Adopted
FY2006 (Budget Estimate)
FY2005 (Actual)
% Change FY06 from FY05 Actual
Real Property
$
16,291,198,517
$
16,292,200,126
$
16,807,856,693
3.17%
Auto Value
$
1,513,936,896
$
1,483,258,810
$
1,542,589,162
4.00%
Personal Value
$
2,348,593,306
$
2,325,387,420
$
2,320,387,420
-0.22%
Public Service
$
525,000,000
$
523,810,967
$
510,000,000
-2.64%
$
$20,678,728,719
$ 20,624,657,323
$
21,180,833,275
Total
2.70
I have proposed a 2.9 cents increase in the property tax rate from 79 cents to 81.9 cents, a 3.6% increase. For the owner of a $150,000 home, this will mean an annual increase of $43.50. Let me reiterate, the stresses in next year’s budget are coming from the expenses that we cannot control like Medicaid and school funding. Some may argue that we can control school funding, but frankly school administrators and the school board expect at the very least continuation funding every year. That amounts to $4,407,999 next year. You add that increase to the increases next year that we’re seeing for our share of Medicaid and other public assistance programs, $1,570,103, and what I recommended for crime‐related initiatives, $468,596, and there’s your 2.9 cents. Finally, there are other property taxes that some of our citizens pay. Durham County has seven volunteer fire departments, each of which have property tax rates that this year ranged from 6.5 cents to 11 cents. Next year, two fire districts, Lebanon and Redwood, are proposing increases to their tax rates; two other fire districts, New Hope and Eno, are proposing reductions; Bahama, Bethesda and Parkwood remain flat. FY04-05 Tax FY05-06 FY05-06 Fire Districts Rate Requested Tax Rate Recommended Tax Rate Bethesda .0650 .0650 .0650 Lebanon .0670 .0750 .0750 Parkwood .1100 .1100 .1100 Redwood .0825 .1000 .1000 New Hope .0650 .0565 .0565 .0640 .0570 .0570 Eno Bahama .0600 .0600 .0600
Durham County Board of Commissioners May 23, 2005 Page 14
It should be noted that the Eno and New Hope Fire Districts serve Orange and Durham counties. The agreement between the two boards of county commissioners calls for the Orange County Board of Commissioners to set the rate and provides that the Durham County Board will approve the same rate for the Durham County portion of the districts.
I always provide a detailed analysis of fund balance. We have worked very hard to build the fund balance and I am happy to report that we will not spend one dollar of appropriated fund balance in our current budget, which means our fund balance will increase from 13.24% to 13.76%. This percentage is extremely important for us for a number of reasons ‐ not the least of which is to maintain our AAA Bond Rating. Long story short ‐ we are in excellent financial shape, and our staff is committed to make sure we maintain a strong financial position.
Next year, I have proposed a $14,890,000 fund balance contribution, $12,300,000 from the General Fund and $2,590,000 from Capital Finance Plan Fund. As always, we will not spend any of the $12,300,000. However, the $2,590,000 from the Capital Finance Plan Fund will be used for debt service and in part for what we refer to as the “County Contribution.”
GENERAL FUND BALANCE Comparison of FY2004 Actual and FY2005 Projected
FY2004 Actual
FY2005 Projected
Anticipated Change
Total Fund Balance
$ 61,458,054.00
$
64,640,765.63
$
3,182,711.63
Less: Reserved by state statute Reserved by state statute-MH Reserved for encumbrances Reserved for encumbrances-MH Reserved other purposes
$ 14,154,110.00 $ 2,796,927.00 $ 2,197,966.00 $ 145,283.00 $ 3,441,048.00
$ $ $ $ $
14,154,110.00 2,796,927.00 2,197,966.00 145,283.00 3,326,934.00
$ $ $ $ $
(114,114.00)
Net Unreserved
$ 38,722,720.00
$
42,019,545.63
$
3,296,825.63
Designated for mental health Designated for subsequent years Designated for risk management Designated for debt service Undesignated
$ 1,732,475.00 $ 10,800,000.00 $ 2,371,163.00 $ 1,868,138.00 $ 21,950,944.00
$ $ $ $ $
2,024,944.00 14,890,000.00 2,371,163.00 154,706.00 22,578,732.63
$ $ $ $ $
292,469.00 4,090,000.00 (1,713,432.00) 627,788.63
Percentage Reported to LGC
13.24%
13.76%
0.53%
Durham County Board of Commissioners May 23, 2005 Page 15
I have also recommended several changes in fees and will discuss them in greater detail during your budget deliberations. Increases in fees for Emergency Medical Services, Planning, Library and the Triangle Wastewater Treatment Plant are proposed. Finally, I want to recognize a number of individuals who have worked very hard on this year’s budget. First to my immediate staff, Vera Alston, Deborah Craig‐Ray, Wendell Davis, Heidi Duer, Wil Glenn, Robine Holcomb, Carolyn Titus, and Kristin Walker, thank you for doing your jobs and for doing them well. To Pam Meyer, our Budget and Management Services Director, thank you for caring the way you do and for the outstanding leadership you have provided to our budget process; and to our Budget and Management Services staff: Kim Connally, Kim Cook, Kevin Etheridge, Keith Lane, and Bill Renfrow— thank you for working nights and weekends to keep us on schedule. I greatly appreciate what you do for our County. I look forward to working with you in the weeks ahead and invite any questions that you may have. Sincerely,
Michael M. Ruffin County Manager
May 23, 2005 The Honorable Members Durham County Board of Commissioners Durham County Administrative Complex 200 East Main Street Durham, North Carolina 27701 Dear Durham County Commissioners: First, let me say how proud I am of the work we’re doing in Durham County. Your county government is doing some amazing things; and people are calling us from all over the country to learn more about how we’re doing it. For example, last year we implemented a System of Care initiative to make sure that collaboration was in place along the continuum of care that exists for children with mental health, educational, health, and social needs. In fact, we won a state award for it. This initiative integrates families with the work of education, juvenile justice, health, mental health, social services, family court, and other agencies to ensure better results for their children. The bottom line is we have seen a 52% decrease in the number of Durham County children placed in residential treatment facilities, meaning these kids are served from their homes, or in a therapeutic foster home setting ‐ better service at a lower cost. The progress our community has made in reducing the County’s infant mortality rate is equally remarkable. In 1998, the death rate of infants under the age of one per 1,000 live births in Durham County was 11.9. For the last reporting period, 2003, that rate was down to 4.7, a 60% reduction. This reduction has been achieved through another collaboration that has involved a number of different partners, not the least of which is our Public Health Department. Programs like “Back to Sleep” and “Baby Love” are making an important contribution in helping to reduce the County’s infant mortality rate.
Durham County Board of Commissioners May 23, 2005 Page 2
Do you remember when our election process was subjected to intense media scrutiny in 2000? Today, we are touted statewide as an example of how an election should be run ‐ a real credit to the Board of Elections, and particularly to our Elections Director, Mike Ashe, and his employees. What I take the most pride in, however, is that what you have just heard is only the tip of the iceberg. The truth is, we’re doing award‐winning work in every department. There is not one department— not one — where I could not point out an accomplishment that has brought distinction to our County. Of course, what this really means is that our citizens are receiving some of the finest services offered in local government anywhere. That’s why others come here ‐ to learn more about how we do business. Next year’s budget will continue to emphasize high‐quality services provided by thoughtful, caring, committed public officials and employees. In fact, with Results Based Accountability, we are now beginning to see how some of the most important work we are doing is paying off. I want to spend just a moment to illustrate what I mean. Over the last couple of years, this Board and the Durham City Council have adopted eight community‐wide outcomes that have created a vision for Durham. These outcomes were never meant to be an end in and of themselves but rather a means by which we can concentrate on those things that are most important to our community. As such, they have helped us to narrow the conversation, focus on strategies that will produce the best results, and develop indicators to see if these strategies are making any real differences. • • • • • • • •
Durham citizens are safe Durham enjoys a prosperous economy Durham citizens enjoy a healthy environment Durham citizens enjoy a community that is vibrant, rich in aesthetic beauty and embraces and promotes its cultural heritage Children are ready for and succeeding in school Every citizen in Durham has access to adequate, safe and affordable housing Durham citizens are healthy Durham citizens enjoy sustainable, thriving neighborhoods with efficient and well‐maintained infrastructure
Durham County Board of Commissioners May 23, 2005 Page 3
We are making progress in some demonstrable ways. For example, Durham citizens are safer today than they were in 2000. The graph below indicates that Part 1 Violent Crimes (homicide, rape, robbery, and aggravated assault) are down 12% since 2000. What this graph doesn’t say, however, is that assaults have plummeted 20% in that same period of time; and robberies have decreased almost 13% since 2001. Durham citizens are safer today than they were five years ago.
This is just one example of the progress we are making. This fall, citizens from all over Durham County will convene for a county‐wide summit where we will receive our first progress report to see how we’re really doing. That summit will likely conclude that Durham County, just like most other urban counties, has lots of work left to do. The challenge will be to forge the partnerships necessary so that we can marshal the resources to see that each and every one of the eight community‐wide outcomes receives the greatest level of support across the community. Incidentally, these outcomes that you adopted helped shape much of what I have recommended in the way of expanded funding and new initiatives in next year’s budget. The role of the manager in advancing a budget is to weave his board’s priorities into a spending plan that is realistic. I believe I’ve met that expectation and am now ready to brief you regarding what I think is most important about my recommendations. While we have twenty‐two funds that comprise our total budget, the General Fund is the home for most of the County’s services. Next year, I have proposed a $528.1 million General Fund Budget, an increase of 7.31%. A fund‐by‐fund breakdown is shown on the next page.
Durham County Board of Commissioners May 23, 2005 Page 4
Fund 101 – General
Current FY 2004-2005
FY 2005-2006 Requested
FY 2005-2006 Recommended
% Increase/ Decrease
$ 492,163,205
$ 558,964,109
$ 528,161,165
7.31%
1,972,053
2,082,576
2,082,576
5.60%
125 - Capital Finance Plan
34,795,508
38,666,597
39,108,597
12.40%
150 - Cafeteria Plan
11,280,355
12,348,911
12,460,003
10.46%
213 - Bethesda FD Fund
1,053,109
1,236,254
1,236,254
17.39%
214 – Lebanon FD Fund
623,185
836,206
836,206
34.18%
215 - Parkwood FD Fund
1,134,221
1,132,004
1,132,004
-0.20%
216 - Redwood FD Fund
601,212
605,000
605,000
0.63%
217 - New Hope FD Fund
40,481
37,900
37,900
-6.38%
219 - Eno FD Fund
17,742
17,646
17,646
-0.54%
221 – Bahama FD Fund
331,930
453,461
453,461
36.61%
222 - Special Park District Fund
333,184
307,422
307,422
-7.73%
224 - Emerg. Services Tele. Sys.
3,929,654
3,536,241
3,536,241
-10.01%
11,702
11,450
11,450
-2.15%
134,267
279,860
71,705
-46.60%
34,586,815
36,887,554
37,462,554
8.31%
660 - Water and Sewer Fund
7,562,912
10,003,753
10,003,753
32.27%
662 - W & S Debt Service Fund
3,293,961
3,612,373
3,612,373
9.67%
250
250
250
0.00%
1,310,000
132,664
1,534,455
17.13%
132,488
159,500
159,500
20.39%
1,011,453
0
0
-100.00%
$596,319,687
$671,311,731
$642,830,515
7.80%
102 - Risk Management
225 - Special Butner Fund 250 - Reappraisal Reserve Fund 304 - Debt Service Fund
705 - Geo. R. Linder Mem. Fund 708 - Comm. Health Trust Fund 770 - L.E.O. Ret. Trust Fund 868 - Equipment Leasing Fund
Grand Total
So why is the County’s proposed General Fund Budget up more than 7%? The reason is pass‐through funding, largely in the form of Medicaid and Food Stamps, has increased by $35.7 million. We have no control over public assistance program expenditures like Medicaid. In fact, only $13 million of the $250 million total appropriation for pass‐ through funding next year is County money. I’ll have more to say about that later. I do want to highlight and underscore what I consider to be the more important features of my proposed budget: ¾ Durham Public Schools (DPS): I have recommended an increase of $4,407,999 for DPS next year, a 5.65% increase. This amount represents what the
Durham County Board of Commissioners May 23, 2005 Page 5
Superintendent and Board of Education believe is needed for continuation funding plus the per pupil expenditure increase for the additional 555 students that are expected during the 2005‐2006 academic year.
Largely due to the media, the public will be told that I have recommended a reduction in school funding. Nothing could be farther from the truth. My recommendation for current expense next year represents a $4.4 million increase, equivalent to more than a two‐cents increase in our property tax rate. Keep in mind that Durham County is second among North Carolina’s ten most populous counties in per pupil spending for public schools and fourth among all school systems in North Carolina. Last year, we ranked eleventh in per pupil funding among all school systems. I have provided a table below that shows how we rank with the other nine largest county school systems in the state. Notice the great variance from top to bottom in per pupil spending.
County
Rank
Total Per Pupil Spending
Mecklenburg
1
$2,403
Durham
2
$2,264
New Hanover
3
$2,163
Wake
4
$1,849
Guilford
5
$1,801
Forsyth
6
$1,720
Buncombe
7
$1,479
Cumberland
8
$1,110
Gaston
9
$ 992
Onslow
10
$ 906
Here’s an interesting statistic for those who want to argue that Durham Public Schools should receive more funding. If we gave our school system the same per pupil appropriation that Wake County provides to its school system, we could reduce our annual appropriation for current expense to the Durham Public Schools by more than $12 million. To put it another way, Wake County would
Durham County Board of Commissioners May 23, 2005 Page 6
have to increase its funding for its school system by over $47 million to match what we give on a per‐pupil basis to the Durham Public Schools. I think it is also important to point out just how much property tax is pledged next year for the Durham Public Schools. What follows is an illustration that emphasizes the commitment that we are making for our public school system compared to other County services. As you can see, 59.5 cents from every property tax dollar we collect will be needed to fund current expense, capital outlay and debt service for the Durham Public Schools. FY 2005-2006 Property Tax Expenditures (Per $1 Dollar) Other County Exp. 40.5 cents
School Exp. 59.5 cents
¾ Pre‐Trial Services: This is an initiative that has emerged over the last year from working with the Durham Crime Cabinet, the Sheriff’s Office, the Criminal Justice Resource Center, the District Attorney, District and Superior Court judges, other court system representatives, and citizens, all of whom want to make sure jail space is reserved for our worst offenders. Again, it emphasizes just how important the role of community collaboration is for problem‐solving. I have proposed a $235,951 appropriation to create a pre‐trial services program in our Criminal Justice Resource Center. Three additional positions will be required as well as contracts with the Administrative Office of the Courts for one additional position for the Clerk of Court’s Office, and a private provider for the implementation of an electronic house arrest program. This program will reduce our daily jail population, saving us at least $90,000 a year, and provide the resources to our magistrates and judges to make sure accurate, up‐to‐date information is available for bond hearings. In short, we will have more bed space for those who will be unable to afford the higher bonds that their records deserve.
Durham County Board of Commissioners May 23, 2005 Page 7
¾ Misdemeanant Fingerprinting: Again, in our efforts to ensure that Durham citizens are safe, I have recommended an appropriation of $159,209 for misdemeanant fingerprinting. The first nine months of the fiscal year will be used to complete improvements necessary to house the function so that service can begin in earnest on April 1 of next year. While the equipment is already available, five additional detention officers will be required.
¾ Vehicle Fleet Replacement: We have struggled over the last several years to find the money to replace vehicles in our fleet. Scores of county vehicles have exceeded their useful life as evidenced by significant increases in the annual cost to maintain them over the last several years. Many of these vehicles are used in critical public safety and maintenance functions and must be ready to roll on an everyday basis. This year our Finance Director has shown us how we can purchase the vehicles we need for less money than we are currently spending. The fleet replacement schedule I have proposed will completely resolve over‐due needs for vehicles even though our annual cost for vehicles next year is $416,453 less than what we are currently spending and for more vehicles—how’s that for a more efficient way of doing business?
¾ East Regional Library: Next spring, the long‐awaited East Regional Library will open its doors. The 25,000 square‐foot facility will serve as an example of what our regional library system will look like –‐ traditional and non‐traditional library services offered in convenient locations in state‐of‐the‐art facilities. In next year’s budget, $331,506 has been included to staff and operate the facility. Twenty‐six additional positions (18.43 FTE’s) will be required. The facility will open its doors on May 1, 2006.
¾ New Positions: Speaking of new positions, in addition to the thirty‐four new positions (26.43 FTE’s) I’ve already recommended for the pre‐trial services program, the misdemeanant fingerprinting initiative, and the East Regional Library, twenty‐four (23.39 FTE’s) new positions have also been recommended in fifteen other departments. These new positions will increase our total County workforce to 1,803 positions (1802.75 FTE’s); is 160 fewer positions than what we had in 2001.
Durham County Board of Commissioners May 23, 2005 Page 8
Positions Recommended
FTEs
Cost
Hiring Date
Senior Internal Auditor/Audit Manager (Int. Audit)
1.00
$
37,713
10/1/2005
Revenue Agent for Real Property (Tax)
1.00
$
26,576
10/1/2005
Revenue Agent Motor Vehicles (Tax)
1.00
$
26,576
10/1/2005
Associate County Attorney (Legal)
1.00
$
54,041
10/1/2005
Deputy Register of Deeds II (Register of Deeds)
1.00
$
17,572
1/1/2006
Maintenance Tech I (General Services)
1.00
$
23,412
10/1/2005
Equipment Technician (Electrician) (Gen. Services)
1.00
$
18,493
1/1/2006
Senior Programmer Analyst (IT)
1.00
$
56,484
10/1/2005
Data Base Administrator (IT)
1.00
$
40,594
1/1/2006
Project Coordinator (IT)
1.00
$
25,904
1/1/2006
Budget Analyst (Budget)
1.00
$
36,403
10/1/2005
Sheriff Deputy (Sheriff)
1.00
$
30,727
10/1/2005
Detention Officer (Sheriff)
5.00
$
46,208
4/1/2006
Staff Specialist (CJRC)
1.00
$
16,979
1/1/2006
Human Services Coordinator III (CJRC)
1.00
$
38,316
9/1/2005
Case Manager (CJRC)
2.00
$
56,558
10/1/2005
Animal Control Officer I (Animal Control)
2.00
$
32,554
1/1/2006
Clinical Affairs Coordinator (EMS)
1.00
$
29,082
1/1/2006
Real Estate Technician (Engineering)
1.00
$
30,233
10/1/2005
Program Assistant/EFNEP (Cooperative Extension)
0.39
$
7,552
10/1/2005
Public Health Nurse II (Public Health)
2.00
$
72,104
10/1/2005
Social Worker III (Social Services)
1.00
$
35,984
10/1/2005
Income Maintenance Caseworker II (Social Services)
1.00
$
27,437
10/1/2005
Processing Assistant II (Social Services)
1.00
$
21,550
10/1/2005
Administrative Librarian II (Library)
1.00
$
26,292
1/1/2006
Sr. Librarian (Library)
2.00
$
29,344
3/1/2006
Librarian (Library)
4.47
$
63,246
3/1/2006
System Support Tech (Library)
1.53
$
18,072
3/1/2006
Circulation Manager (Library)
1.00
$
14,043
3/1/2006
Sr. Library Assistant (Library)
3.00
$
32,553
3/1/2006
Library Assistant (Library)
1.00
$
14,781
3/1/2006
Staff Assistant II (Library)
1.06
$
10,153
3/1/2006
Library Page (Library)
3.84
$
19,861
3/1/2006
Project Coordinator (Enterprise Fund)
1.00
$
40,328
7/1/2005
50.29 $ 1,077,724
Durham County Board of Commissioners May 23, 2005 Page 9
¾ Employee Salaries and Benefits: I have recommended that we continue the performance‐based pay plan that the Board adopted two years ago. I have also budgeted $1 million for increases for positions that are paid below the market rate so that we can maintain our ability to recruit the best candidates for our positions. We reported at your February retreat that County salaries for all positions were an average of 7% below the market rate. That number was a year old and is now believed to be 12.4%. It will take four years for us to resolve the impact that market forces are having on our positions. The $1 million requested appropriation is a placeholder for you to use to fund increases in January 2006 based upon the consultant’s report that you will review later this summer. This amount will be sufficient to fund the first‐year’s installment.
Health insurance costs next year will increase by 15%. Therefore, I have recommended a corresponding increase for the employer contribution, which will increase the per pay period contribution that we provide for our employees from $200 to $230.
I have also budgeted $978,000 for retiree life and health benefits for next year. Two hundred seventy‐nine retirees will receive life insurance benefits and two hundred seventeen retirees will receive health insurance benefits.
Here’s a synopsis of major increases related to employee salaries and benefits. I was glad to hear you agreed at your February retreat that this is one of the most important investments we make in our organization. Indeed, every service we provide is directly dependent on maintaining a well‐trained, high‐quality workforce.
Performance Increases Market Adjustments Longevity Probationary Increases Retiree Health Coverage Health Insurance Increase (15%)
Increases for Salaries and Benefits
$ $ $ $ $ $
1,019,302 1,000,000 564,175 120,198 978,000 219,664
$ 3,901,339
¾ Non‐Profit Funding: We received 50 applications for funding from non‐profit organizations this year requesting $2.5 million—considerably more than we are able to fund. I have recommended $1,008,070 in funding for 30 non‐profit
Durham County Board of Commissioners May 23, 2005 Page 10
organizations. Six of the applicants are first‐time recipients and will receive $5,000. These six applicants are:
¾ ¾ ¾
Full Frame Documentary Film Festival American Red Cross Piedmont Wildlife Center
¾ ¾ ¾
KB Career Services Money Wise Read Seed
Provided below is a list of all non‐profit organizations for which funding is recommended.
FY 04-05 Funded
Organization
Eno River Association Full Frame Documentary Film Festival American Red Cross Council for Senior Citizens Durham Crisis Response Center Literacy Center-Adult Literacy Family Counseling Services Genesis Home KB Career Services Meals on Wheels Money Wise Piedmont Wildlife Center- Rehabilitation Planned Parenthood Radio Reading Services Senior Aides Senior PHARMAssist Urban Ministries Community Shelter Women-In-Action Literacy Center-Youth GED John Avery Boys & Girls Club Middle School After School Read Seed Big Brothers Big Sisters Child Advocacy Commission Child Care Services Association Child and Parent Support Services Durham Companions Infants and Young Children with Special Needs Teen Court and Restitution Operation Breakthrough Project Graduation TOTAL
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
12,350 0 0 128,750 46,730 14,250 14,250 19,000 0 9,500 0 0 4,420 3,536 28,500 85,500 147,500 30,000 32,000 35,000 85,500 0 35,000 29,925 28,215 8,800 4,750 9,999 30,000 97,375 5,700 946,550
FY 05-06 Recommended
$ 12,350 $ 5,000 $ 5,000 $ 135,188 $ 46,730 $ 14,963 $ 14,963 $ 19,950 $ 5,000 $ 9,975 $ 5,000 $ 5,000 $ 4,641 $ 3,713 $ 28,500 $ 89,775 $ 154,875 $ 31,500 $ 32,000 $ 35,000 $ 89,775 $ 5,000 $ 35,000 $ 31,421 $ 29,626 $ 8,800 $ 4,750 $ 10,000 $ 31,500 $ 97,375 $ 5,700 $ 1,008,070
Durham County Board of Commissioners May 23, 2005 Page 11
¾ Court System Funding: I really labored over what to do regarding various needs in our court system. While I am confident that the General Assembly will not fully fund the needs of the court system as you have requested, I do think it is too early to throw in the towel. Therefore, I recommend that you continue to monitor the process before rendering any final decision on next year’s budget. However, if no action is taken before you are ready to adopt your budget, I think you need to seriously consider funding some of what you have asked them to fund. Specifically, I would recommend that you consider funding all “Tier 1, 2, and 3” requests, except for those pertaining to additional judges, which legally you cannot fund. This amounts to $1,000,938 and would necessitate a tax rate increase of approximately a ½ cent. I have included a $73,436 appropriation to pick‐up the cost of one additional assistant district attorney. This position is one of two grant funded positions for which funding will expire on June 30, 2005. The other position will be picked up by the City of Durham. Neither position is a part of the request that you have asked the legislature to consider. Before I begin to discuss our revenue budget, I want to vent a little. We are fighting to provide services in our county with one hand tied behind our backs. State government is doing little to give us the tools we need to keep pace. The truth is, when it comes to raising money, we have twentieth‐century solutions to twenty‐first‐century problems. Something has got to change! We have only two major sources of revenue to finance the vast majority of the county services we provide – sales and property taxes. These two revenues combined generate $214 million a year, and excluding pass‐through funds, comprise 73 cents of every dollar we collect in our general fund. We don’t have the authority to raise any additional sales taxes; the only revenue over which we can completely control how much we receive is the property tax. Our current property tax system is almost one hundred years old. It is in sore need of repair as it fails to reliably generate the income that counties and cities really need to provide services. The system is saturated with inequities. Over the years, special interest groups have convinced legislators to grant exemptions, reductions and other breaks, forcing homeowners to shoulder an unfair proportion of the burden. Ironically, some of the “fixes” counties have proposed over the years have been ignored by the legislature. Why? Because special interests continue to lobby in the corridors and backrooms in Raleigh for breaks they should not receive. What about the common
Durham County Board of Commissioners May 23, 2005 Page 12
interest in this state? We need reform ‐ reform that will give counties the tools we need to serve our citizens. Let me give you two examples. North Carolina is one of two states left in the country that requires counties to pay a share of Medicaid expenses. New York, the only other state, just passed legislation to transition that responsibility to the state, where it belongs. We only pay a little more than 5 cents of every Medicaid dollar we spend, but those nickels really add up. In fact, next year, we’ll pay $10.9 million worth of nickels! I don’t think it will be too much longer before the state does the right thing and pays full freight for Medicaid. When they do, we’ll have almost $11 million to fund some needs that we just don’t have the money to fund. Several counties in North Carolina already have additional means at their disposal to raise monies for county services. For example, Chatham and Orange Counties have special legislation and have adopted school impact fees and several coastal counties have land transfer taxes. If we had school impact fees, we could raise enough money in five years to build a new middle school. If we had a land transfer tax, we could raise as much as $18 million a year. That’s nine cents on, or off, our tax rate. Again, the problem is special interest groups have lobbied strongly against impact fees, land transfer taxes, occupancy taxes, prepared food taxes, etc. I do see some light at the end of the tunnel but getting to the other side is taking far too long. In the meantime, our tax rate is inching up each year because we don’t have the income to support the mandates that are handed to us by federal and state governments from year to year. As I mentioned earlier, next year’s general fund budget represents an increase of almost $36 million. Virtually every dollar of that increase, $35.7 million, is in the form of pass‐ through funding, e.g. Medicaid, Food Stamps, Work First, Title IV B Adoption Assistance, Title IV E Adoption Assistance, Special Assistance to Adults, and Low Income Energy Assistance Program, all important and worthwhile programs, but programs over which we have no control. My point is this: The General Assembly is not helping us with legislation we need to get the job done in Durham County. As I said, the only real money that we can count on from year to year to fund increases in our budget comes from sales and property taxes. Next year, we project our sales taxes will grow by $2.3 million. Property taxes at the current rate of 79 cents will generate an additional $4.7 million. In other words, only $7 million in new money exists for the $66.8 million in new requests we received this year.
Durham County Board of Commissioners May 23, 2005 Page 13
Our property tax base is growing slowly and has been since 9‐11. Next year, we forecast a 2.7% increase compared to the late nineties when we were seeing increases of 5% of more. I have provided a chart below that summarizes our tax base.
FY2005 Adopted
FY2006 (Budget Estimate)
FY2005 (Actual)
% Change FY06 from FY05 Actual
Real Property
$
16,291,198,517
$
16,292,200,126
$
16,807,856,693
3.17%
Auto Value
$
1,513,936,896
$
1,483,258,810
$
1,542,589,162
4.00%
Personal Value
$
2,348,593,306
$
2,325,387,420
$
2,320,387,420
-0.22%
Public Service
$
525,000,000
$
523,810,967
$
510,000,000
-2.64%
$
$20,678,728,719
$ 20,624,657,323
$
21,180,833,275
Total
2.70
I have proposed a 2.9 cents increase in the property tax rate from 79 cents to 81.9 cents, a 3.6% increase. For the owner of a $150,000 home, this will mean an annual increase of $43.50. Let me reiterate, the stresses in next year’s budget are coming from the expenses that we cannot control like Medicaid and school funding. Some may argue that we can control school funding, but frankly school administrators and the school board expect at the very least continuation funding every year. That amounts to $4,407,999 next year. You add that increase to the increases next year that we’re seeing for our share of Medicaid and other public assistance programs, $1,570,103, and what I recommended for crime‐related initiatives, $468,596, and there’s your 2.9 cents. Finally, there are other property taxes that some of our citizens pay. Durham County has seven volunteer fire departments, each of which have property tax rates that this year ranged from 6.5 cents to 11 cents. Next year, two fire districts, Lebanon and Redwood, are proposing increases to their tax rates; two other fire districts, New Hope and Eno, are proposing reductions; Bahama, Bethesda and Parkwood remain flat. FY04-05 Tax FY05-06 FY05-06 Fire Districts Rate Requested Tax Rate Recommended Tax Rate Bethesda .0650 .0650 .0650 Lebanon .0670 .0750 .0750 Parkwood .1100 .1100 .1100 Redwood .0825 .1000 .1000 New Hope .0650 .0565 .0565 .0640 .0570 .0570 Eno Bahama .0600 .0600 .0600
Durham County Board of Commissioners May 23, 2005 Page 14
It should be noted that the Eno and New Hope Fire Districts serve Orange and Durham counties. The agreement between the two boards of county commissioners calls for the Orange County Board of Commissioners to set the rate and provides that the Durham County Board will approve the same rate for the Durham County portion of the districts.
I always provide a detailed analysis of fund balance. We have worked very hard to build the fund balance and I am happy to report that we will not spend one dollar of appropriated fund balance in our current budget, which means our fund balance will increase from 13.24% to 13.76%. This percentage is extremely important for us for a number of reasons ‐ not the least of which is to maintain our AAA Bond Rating. Long story short ‐ we are in excellent financial shape, and our staff is committed to make sure we maintain a strong financial position.
Next year, I have proposed a $14,890,000 fund balance contribution, $12,300,000 from the General Fund and $2,590,000 from Capital Finance Plan Fund. As always, we will not spend any of the $12,300,000. However, the $2,590,000 from the Capital Finance Plan Fund will be used for debt service and in part for what we refer to as the “County Contribution.”
GENERAL FUND BALANCE Comparison of FY2004 Actual and FY2005 Projected
FY2004 Actual
FY2005 Projected
Anticipated Change
Total Fund Balance
$ 61,458,054.00
$
64,640,765.63
$
3,182,711.63
Less: Reserved by state statute Reserved by state statute-MH Reserved for encumbrances Reserved for encumbrances-MH Reserved other purposes
$ 14,154,110.00 $ 2,796,927.00 $ 2,197,966.00 $ 145,283.00 $ 3,441,048.00
$ $ $ $ $
14,154,110.00 2,796,927.00 2,197,966.00 145,283.00 3,326,934.00
$ $ $ $ $
(114,114.00)
Net Unreserved
$ 38,722,720.00
$
42,019,545.63
$
3,296,825.63
Designated for mental health Designated for subsequent years Designated for risk management Designated for debt service Undesignated
$ 1,732,475.00 $ 10,800,000.00 $ 2,371,163.00 $ 1,868,138.00 $ 21,950,944.00
$ $ $ $ $
2,024,944.00 14,890,000.00 2,371,163.00 154,706.00 22,578,732.63
$ $ $ $ $
292,469.00 4,090,000.00 (1,713,432.00) 627,788.63
Percentage Reported to LGC
13.24%
13.76%
0.53%
Durham County Board of Commissioners May 23, 2005 Page 15
I have also recommended several changes in fees and will discuss them in greater detail during your budget deliberations. Increases in fees for Emergency Medical Services, Planning, Library and the Triangle Wastewater Treatment Plant are proposed. Finally, I want to recognize a number of individuals who have worked very hard on this year’s budget. First to my immediate staff, Vera Alston, Deborah Craig‐Ray, Wendell Davis, Heidi Duer, Wil Glenn, Robine Holcomb, Carolyn Titus, and Kristin Walker, thank you for doing your jobs and for doing them well. To Pam Meyer, our Budget and Management Services Director, thank you for caring the way you do and for the outstanding leadership you have provided to our budget process; and to our Budget and Management Services staff: Kim Connally, Kim Cook, Kevin Etheridge, Keith Lane, and Bill Renfrow— thank you for working nights and weekends to keep us on schedule. I greatly appreciate what you do for our County. I look forward to working with you in the weeks ahead and invite any questions that you may have. Sincerely,
Michael M. Ruffin County Manager
