A grueling two-day “work session” earlier this week saw no hard-fast agreement arise among Alamance County’s leaders about the final details of the county’s next annual budget.
But the county’s board of commissioners did reach a consensus to reverse some of the more contentious spending cuts that had previously appeared in the county manager’s recommended budget. Its members also hit on a couple of ways to increase the revenue at their disposal – namely by increasing the county’s property tax rate and the amount of savings they’re willing to set aside to balance the budget.
These modest breakthroughs are among the few solid achievements to emerge during 10 hours or so that the commissioners spent closeted in the county’s agricultural services building on Monday and Tuesday. For the most part, however, this two-day confab merely multiplied the board’s task this coming Monday when its members are scheduled to vote on a new spending plan for the county.
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In fact, the commissioners ended their brainstorming session with no fewer than four alternatives to the proposed budget that county manager Heidi York had presented to them in May. Nor did they endear themselves to the manager when they gave her to the end of the work week to have each of these competing proposals ready for prime time.
“I think what’s being asked of staff with these scenarios is rather taxing,” York acknowledged as the second day of the work session drew to a close.
The county manager may not have been hinting at anything with the words that she chose to describe the staff’s forthcoming challenge. Yet, the issue of taxation has been front and center throughout the debate over her proposed budget, which recommends a 1.59 cent increase in the county’s levy on property in order to make ends meet in the financial cycle that begins on July 1.
York’s proposed hike, which would raise the county’s tax rate to 48.49 cents for every $100 of property value, has come under fire from county commissioner Ed Priola, who recalled that he and his colleagues had instructed her to hold the line on the tax rate when they began their deliberations about the budget in February. Priola went on to present his own alternative to the manager’s spending plan, which calls for $4.2 million in spending cuts in order to maintain the status quo rate.
Priola’s spending plan would go on to become one of the alternatives that the commissioners considered during this week’s extended work session. During the course of this two-day affair, John Paisley, Jr., the chairman of Alamance County’s commissioners, asked the county’s administrators to craft another proposal around a 2-cent hike in the tax rate. Meanwhile, commissioners Pam Thompson and Kelly Allen requested a workup on a 7-cent tax increase – which they both insisted they wanted to see out of sheer curiosity.
See separate story on commissioner and staff discussion, dissection of Priola’s plan: https://alamancenews.com/county-administrators-eviscerate-commissioners-alternative-budget/
In addition to these variations on the county’s property tax rate, Steve Carter, the vice chairman of Alamance County’s commissioners, sought some additional calculations based on increased allocations of savings. York had limited her use of these funds to a comparatively modest $1 million due to concerns about the potential depletion of the county’s financial cushion. Even so, the county’s latest financial figures have emboldened Carter and other commissioners to consider tapping into the county’s reserves for as much as $10.7 million to balance the budget.
Whether this additional revenue comes from a property tax increase or the county government’s savings, the commissioners have a short list of items that they want to prop up with this infusion of funds.
Apparent consensus on some spending cuts to be restored
In particular, all five of the commissioners have expressed interest in restoring $125,000 that York’s budget had eliminated for the Alamance County Rescue Unit. The rescue unit’s supporters had come out in force to defend this subsidy during a public hearing last week, and their collective entreaties had left quite an impression on the likes of commissioner Pam Thompson, who acknowledged as much when she and her colleagues kicked off this week’s work session.
“We have a lot of work to do,” Thompson warned her fellow commissioners on Monday, “because if you expect me to cut rescue, that isn’t going to happen.”
The commissioners were equally united in their desire to retain $150,000 in outlays that the county manager had proposed to cut from the nonprofits Crossroads and Family Abuse Services. York informed the county’s governing board that she had struck these proposed allocations since they were originally introduced at the height of the coronavirus pandemic to help these organizations survive the accompanying drop off in private donations.
THE ATTRACTION OF NONPROFITS
“We say at every budget retreat that we don’t want to continue funding nonprofits. But every time that I propose cuts to nonprofits, they’re the first thing we put back.”
– County manager Heidi York
“We say at every budget retreat that we don’t want to continue funding nonprofits,” York went on to observe during this week’s work session. “But every time that I propose cuts to nonprofits, they’re the first thing we put back.”
Most, if not all, of the commissioners were also in agreement that the county manager should restore $125,000 that she had trimmed from the Alamance-Burlington Regional Airport, which has been receiving an annual subsidy of $259,698 plus a five-year reimbursement of $400,000 a year to cover the cost of the infrastructure for a new corporate hangar that LabCorp has built on the grounds of the airport.
Dan Danieley, the executive director of this publicly-owned facility, appeared before the commissioners on Tuesday to defend both of these allocations, which he said have been key to the airport’s role as an engine for economic development. Danieley was particularly keen to continue getting the county’s contributions toward LabCorp’s new hangar, which are eventually supposed to offset $2 million that the airport spent out of pocket for tarmac, utility lines, and other associated infrastructure.
AIRPORT FUNDING COMMITMENT
“We did make an agreement that the county would pay $2 million for the project. That’s commitment made. . . It’s put me in quite a bind to supplement what the county has promised to reimburse us.” – Dan Danieley, Executive Director of the Burlington-Alamance Airport Authority
“We did make an agreement that the county would pay $2 million for the project,” he went on to remind the commissioners. “That’s commitment made…It’s put me in quite a bind to supplement what the county has promised to reimburse us.”
How much should school system get?
The commissioners were more conflicted about York’s proposed allocation to the Alamance-Burlington school system, whose presumed insufficiency was another familiar theme among the residents who weighed in during last week’s public hearing.
See last week’s stories with extensive coverage from the public hearing on the county budget: https://alamancenews.com/an-alamance-news-exclusive-extensive-county-budget-coverage/
When factoring in capital outlays and debt payments for school-related construction, the county manager had earmarked nearly $72 million for the school system in her proposed spending plan. This total nevertheless included just $42 million for the school system’s non-capital operations – or roughly $17.1 million less than the Alamance-Burlington school board had sought of its operational needs.
IMPACT OF BUDGET ON ABSS
“If the $10 million cut were to remain, it would have immediate and significant negative impacts on our students and staff. Specifically, our teacher supplement would either remain frozen, or worse, be reduced, and this directly affects our ability to attract and retain the best educators for our students.”
– ABSS superintendent Dr. Aaron Fleming
During the first day of this week’s work session, superintendent Aaron Fleming told the commissioners that they’d need to tack about $10 million on the manager’s proposed outlay just to ensure that the schools operate at their current level.
“If the $10 million cut were to remain it would have immediate and significant negative impacts on our students and staff,” he added. “Specifically, our teacher supplement would either remain frozen, or worse, be reduced, and this directly affects our ability to attract and retain the best educators for our students.”
Fleming argued that these funds are crucial to pre-k and cultural arts programs as well as the school system’s ability to match the state’s “low wealth” salary supplement for teachers.
The superintendent’s concerns were echoed by commissioner Thompson, who had served on the Alamance-Burlington school board before she joined the commissioners in 2020.
WE NEED A SOLID SCHOOL SYSTEM
“We can’t keep operating this way. If you want to have a solid Alamance County, you’ve got to have a solid school system.”
– County commissioner Pam Thompson
“We can’t keep operating this way,” she told the rest of the county’s governing board. “If you want to have a solid Alamance County, you’ve got to have a solid school system.”
York had informed the commissioners that it would take the equivalent of 3.77 cents on the county’s property tax rate to raise the $10 million that Fleming had insisted he needs just maintain the status quo. The county manager had acknowledged that the tax impact would rise to 6.44 cents in order to fully fund the superintendent’s request.
A property tax hike in any amount has generally been something of a third rail for the country’s GOP-controlled governing board. Yet, Thompson, who recently gave up her Republican affiliation for an unaffiliated status, insisted that she’d do what it would take to meet the school system’s financial needs in this budget.
Commissioner Kelly Allen also expressed a willingness to go up on the tax rate for the sake of the school system. Allen, who formerly served as the mayor of Haw River, recalled that she only supported one property tax hike during her time on Haw River’s town council because of a similar disconnect between revenues and the cost to provide basic services.
A MINIMUM OF 2-CENT TAX HIKE
“I’m a big supporter of education…if you explain to the public where this money is going. I think at a minimum we’re going to have to go up to 2 cents, although I hate to increase the burden on taxpayers.”
– County commissioner Kelly Allen
“I’m a big supporter of education…if you explain to the public where this money is going,” she added. “I think at a minimum we’re going to have to go up to 2 cents, although I hate to increase the burden on taxpayers.”
By the time that Allen broached a potential 2-cent tax hike, the same idea had already been floated by the board’s chairman, who asked York to calculate how much additional revenue this increase would raise over and above her proposed 1.59-cent hike. The county manager told Paisley that an extra 2 cents would generate $1,082,000 a year – enough to cover the nonprofits which he and his colleagues hoped to restore to the budget but far short of the sum needed to make a dent in the school system’s request.
The commissioners subsequently received some additional encouragement to raise the tax rate from Allen E. Gant, Jr., the long-time chairman and CEO of Burlington-based Glen Raven Mills.
Gant, who had apparently driven five hours from the Outer Banks to attend the work session on Tuesday, was invited to share his thoughts with the county’s governing board before its members recessed for the day.
‘INVEST IN THE COMMUNITY’
“The reason you’re having these problems today is that your predecessors chose not to invest in the community and the system didn’t have a chance to replenish itself. That investment is worthwhile because others have chosen to invest in you. The state has put in a huge amount of money, and total investment by private enterprise within 12 miles of this location is approaching $19 billion over ten years…You ought not to be talking about 2 cents or 4 cents, you ought to be talking about 7 cents…you can’t pinch and grow the way this county is growing. You have to have the courage to invest.”
– Allen E. Gant, Jr., chairman of Glen Raven, Inc.
“The reason you’re having these problems today is that your predecessors chose not to invest in the community and the system didn’t have a chance to replenish itself,” Gant declared. “That investment is worthwhile because others have chosen to invest in you. The state has put in a huge amount of money, and total investment by private enterprise within 12 miles of this location is approaching $19 billion over ten years…You ought not to be talking about 2 cents or 4 cents, you ought to be talking about 7 cents…you can’t pinch and grow the way this county is growing. You have to have the courage to invest.”
After hearing these remarks, Thompson and Allen asked the county manager to crunch the numbers for a 7-cent increase in the county’s property tax rate.
In the meantime, the board’s vice chairman Steve Carter urged his colleagues not to neglect the portion of their constituents who struggle to pay their current burden in property taxes.
REPRESENTING EVERYONE IN THE COUNTY
“I don’t think anything we do is going to negatively impact anyone in this room. The thing we have to be cognizant of is that we represent everyone in Alamance County. . . But Mr. Gant’s right. We’ve done the same thing every year. . . we’ve tried to keep taxes low, and we’ve kept ourselves in the same place.
“I really don’t see this year’s financial situation being as negative as we’re seeing. If we really want to minimize the impact on our taxpayers, we can use some fund balance.”
– Alamance County commissioner vice chairman Steve Carter
“I don’t think anything we do is going to negatively impact anyone in this room,” he added. “The thing we have to be cognizant of is that we represent everyone in Alamance County…But Mr. Gant’s right. We’ve done the same thing every year…we’ve tried to keep taxes low, and we’ve kept ourselves in the same place.”
In order to dislodge the county from its rut, Carter zeroed in on another potential source of revenue that has lately been a veritable no-go zone for the county’s administrators.
In her proposed budget, York penciled in $1 million from the savings attached to the county’s general fund – a much lower amount than she had previously budgeted from this so-called “fund balance,” which has historically been a convenient source of cash to even the ledger.
York had been reluctant to dig any deeper into these funds because of her fear that the county was beginning to deplete its reserves by overusing them as a fiscal stopgap. Although the county’s latest annual audit noted that the general fund’s savings contained more than $41 million in “unassigned” cash, the county manager stressed that this sum amounts to about 19.7 percent of the general fund’s annual outlays – or less than the 20 percent goal that a previous board of commissioners had set for these spendable reserves.
During Tuesday’s proceedings, Carter insisted that he thinks the general fund’s savings can give up another $4 million or so without any lasting harm.
“I really don’t see this year’s financial situation being as negative as we’re seeing,” he added. “If we really want to minimize the impact on our taxpayers, we can use some fund balance.”
To the surprise of some observers, Susan Evans, the county’s finance director seemed to concur with the vice chairman’s assumption about the fund balance.
Evans went on to reveal that the county’s latest financial data shows that the unassigned fund balance is on track to end the year at about $54.6 million. She added that a total allocation of $5 million from these reserves would still leave the county with unassigned savings worth 22.9 percent of the general fund’s annual budget. She said that even a $8 million drop would put the imminently spendable portion of these reserves at 21.5 percent of the budget.
“But please remember, that is a very rough estimate,” the finance director proceeded to caution.
This apparent surge in the general fund’s savings seemed to befuddle Paisley and left Priola scratching his head.
“We’re going to be reducing that fund balance which I heard some concern about two or three hours ago by $8 million?!” Priola told the rest of the board. “I don’t know how we can justify digging into that fund balance at that level.”
The county manager affirmed Priola’s general unease about a withdrawal on this scale from the general fund’s savings.
“It’s a lot to use for a one-time appropriation,” she said. “It creates a pattern of dependency on fund balance…and the staff has had a lot of pause.”
York encouraged the commissioners to apply any funds they pull from the fund balance toward either the school system’s or the county’s capital funds, which are used to bankroll one-time expenditures. She added that they can then move some money from these capital funds to cover the school system’s operational needs. It nevertheless became harder for York to sustain this sort of fiscal legerdemain as Carter and other commissioners suggested ever greater appropriations of savings.
At one point, Evans was asked to calculate the impact of a $10.7 million withdrawal, which she conceded would leave 20.3 percent of the general fund’s budget available in the reserves. Carter, for this part, argued that the commissioners could make up this loss a year from now if the county’s voters approve a proposed increase in the county’s local option sales tax that he hopes to get on the ballot in the spring of 2026.
Although similar sales tax increases have failed four times to pass muster with the local electorate, the board’s vice chairman was confident that a fifth referendum would go over better with voters.
York nevertheless warned that the public may not be all that impressed if the county plans to use the proceeds from such a tax hike to backfill its savings account.
“The expectation is that we’re going use this money to fund a lot of improvements,” she explained. “But we’re just going to use it to replace the fund balance.”
On the whole, this week’s work session saw the commissioners give more weight than usual to the advice of York and other top-level county staff members. The board’s members were reinforced in this tendency by Gant, who urged them not to “micromanage” the people they pay “to make good decisions.”
The commissioners heard a similar suggestion from assistant county manager Bruce Walker, who plans to retire in a few months to take care of his ailing father. Seeing him as an imminent free agent, Paisley called on Walker to offer an unvarnished staff-level perspective on the board’s budgetary deliberations.
TRUST THE FOLKS YOU HIRE
“You’ve got to trust the folks you hire. When we tell you something, we’re not making up this stuff…Fund these folks and let them do what they do – trust but verify.”
– Assistant county manager Bruce Walker
“You’ve got to trust the folks you hire,” Walker said in response. “When we tell you something, we’re not making up this stuff…Fund these folks and let them do what they do – trust but verify.”
In the end, both Paisley and Carter seemed to take this lesson to heart as they considered York’s role as the resident expert on the county’s operations.
“Ms. York,” the board’s chairman said. “You’re it, and we ought to have the sense to listen to you.”
“We put a target in front of her, and she tried to hit it,” the vice chairman added in reference to the board’s original demand for a hold-the-line tax rate. “And that’s probably where we made the mistake.”
