Tuesday, March 5, 2024

114 West Elm Street
Graham, NC 27253
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Can commissioners get budget, tax rate down to ‘revenue neutral’?

A special-called meeting that aimed to tie up the county’s next annual budget concluded on Tuesday with plenty of loose ends still left to address.

After three hours of pitches and deliberations, Alamance County’s commissioners adjourned this budgetary “work session” with the intention of resuming their efforts at 1:00 p.m. on Tuesday, June 13.

But unlike their earlier work session, which did little more than exacerbate simmering tensions among some board members, Tuesday’s proceedings actually seemed to bring the commissioners closer to their stated objective of reducing the property tax rate in the proposed budget that the county manager had presented in May.

A large chunk of Tuesday’s work session was devoted to presentations from the fire departments that serve the county’s 12 rural districts, which receive much of their revenue from a supplementary property tax that’s tacked onto the county’s own impost.

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The top brass in most of these departments have requested new rates for these levies that exceed the “revenue neutral” rates that would effectively offset the results of the county’s latest property revaluation. Their appearances at Tuesday’s work session gave them an opportunity to defend their requests to the commissioners, who will ultimately set each district’s tax rate when they sign off on the county’s new budget.

The commissioners devoted the remainder of their three-hour confab to the task of adjusting the tax rate of 45.43 cents for every $100 of property value that Alamance County’s manager Heidi York had previously recommended. Although a nearly 20-cent reduction from the county’s current tax rate of 65 cents, York’s proposed levy is nevertheless 2.84 cents more than the county’s own revenue neutral rate of 42.59 cents, which each of the commissioners have previously pledged to support.

 

Keeping score
Before the commissioners began their deliberations on Tuesday, York reminded them of the $7,140,615 that they’ll need to cut from the $217,587,666 budget that she had proposed for the county’s general fund in order to bring the property tax rate down to the revenue neutral level. As an alternative to revenue neutrality, she also provided them with a so-called “inflation neutral” figure of 43.51 cents that would require a spending reduction of $4,827,458.

Throughout the course of Tuesday’s meeting, these two reduction targets were projected onto a pair of digital displays on either side of the board’s meeting chamber. Meanwhile, a staff member from the finance department kept a running tab of the funds still needed to hit each target as the commissioners volunteered various changes to the county manager’s original budget.

This method of real-time calculation proved quite fruitful for commissioner Craig Turner, who got the first crack at suggesting ways to tamp down the county manager’s recommended expenditures.

[Story continues below “running tally” of potential changes to the budget.]


Turner ultimately spent the balance of Tuesday’s meeting offering a wide range of ideas, which were then vetted by the county’s administrators before they were tacked up on the score board. In the end, the commissioner’s proposals managed to reduce the gap needed to reach revenue neutrality from more than $7.1 million to just over $250,000. It remains to be seen, however, if Turner’s proposals will fly with his fellow commissioners, who weren’t able to present their own, rival suggestions before the clock ran out on the three-hour stretch that the commissioners had blocked out for their work session.

One of Turner’s proposals that has already drawn the support of some of his colleagues is the potential reallocation of $2,514,301 from a capital reserve fund that the county maintains on behalf of the Alamance-Burlington school system. This reallocation, which equates to a penny on the county’s property tax rate, had previously received the all-clear from the finance director when commissioner Bill Lashley suggested it at the board’s first budgetary work session. The proposed transfer has since come under fire from supporters of the local school system, who aired their objections when the commissioners held a public hearing on the county’s next budget on Monday. Even so, most of the commissioners have publicly endorsed the reallocation as the mere recovery of surplus revenue that they had previously allotted to pay off the debt on a $150 million bond package that the county’s voters approved on behalf of the schools in 2018.

In addition to this transfer away from the school system’s reserves, Turner suggested a number of other reallocations or changes in budgetary assumptions that he insisted would have no discernable impact on any of the county’s programs or services. These paper adjustments included the use of savings to pay for $700,843 in economic development outlays and the reallocation of another $2,150,010 from the county’s own capital reserves and its capital improvement plan.

In addition to these tricks of accounting legerdemain, Turner also suggested some bona fide cuts to the general fund’s outlays. Perhaps the most significant of these proposals was the potential elimination of $748,477 by reducing the county manager’s recommended cost-of-living adjustment for full-time county staff members from 5 to 4 percent. Turner added that the commissioners could theoretically free up enough revenue to attain revenue neutrality if they cut the cost-of-living adjustment to 3 percent while raising a proposed merit-based raise that also appeared in the manager’s budget from 3 to 4 percent.

“That would get us to zero,” he said, “but I’m not recommending it.”

Turner endeavored to trim an additional $282,759 from the bottom line by proposing that the county impose a 90-day freeze on 22 vacant positions in departments other than EMS, social services, and the sheriff’s office. He went on to float other, department-level reductions – some of which were vetoed by the county’s administrators – although he also wrested a number of concessions from some county department heads in a series of on-the-spot negotiations.

In the final tally, Turner was able to come up with enough viable cuts to bring the general fund’s outlays to within $255,205 of the sum needed for a revenue neutral property tax rate. Even so, his apparent success was thrown into doubt when commissioner Pam Thompson piped up at the end of the meeting to observe that the rest of board has yet to have a turn to even the score.

“We need to schedule another work session,” Thompson told her fellow commissioners, “because we’re not done.”

 

In the hot seat
Also left unresolved during Tuesday’s work session was the status of the requested property tax rates that the county received from its rural fire departments.

Commissioner Bill Lashley had initially suggested that each department should formally pitch its proposed rate to the board after he observed that the vast majority of the county’s rural fire districts had submitted proposed rates that exceeded the revenue neutral figures computed by the county’s tax office for each fire district.

Lashley and his colleagues were initially in a skeptical frame of mind as they began to listen to the various departments lay out their requests at Tuesday’s work session. But their outlook appeared to soften as they grilled each department’s representatives on the rationale behind their proposed property tax rates.

Along the way, the commissioners learned that some of the rural fire departments had made considerable strides toward revenue neutrality before they submitted their requests to the county manager’s office. They even realized, after close scrutiny, that the Swepsonville fire department had actually proposed a break-even tax rate for its service area, which consists of both the Swepsonville and the NC 54 fire districts.

“When you pull the two together you’re below revenue neutral as a combination,” observed John Paisley, Jr., the chairman of Alamance County’s commissioners. “You’re serious about cutting the tax rate.”

Luke Macon, the chief of the E.M. Holt fire department, also informed the commissioners that his requested rate of 7.92 cents had originally equaled the revenue neutral figure for his fire district – although he noted that the county’s tax office has since revised that figure downward to 7.66 cents. Meanwhile, Jamie Joseph of the Mebane fire department seemed to score some points with the commissioners when he acknowledged that the rate of 7 cents which his department has sought for the rural fire district it serves on Mebane’s periphery is just the revenue neutral rate of 6.73 cents rounded to the nearest whole number – a penchant that Paisley also expressed at the meeting.

In the meantime, the commissioners heard detailed accounts of the financial circumstances that have compelled the other fire departments to submit rates that exceed their own revenue neutral levies. In a number of cases, the departmental representatives cited runaway increases in the cost of vehicles and equipment, while some chiefs in historically rustic districts alluded to recent growth and development that has forced them to increase their budgets.

But perhaps the most frequent defense that the commissioners heard concerned the problems that nearly all of these departments have had filling their ranks – and the increases in wages and benefits that they’re consequently dangling before their prospective recruits.

Deborah Holt, a representative of the Eli Whitney/87 South fire district, conceded that her department has struggled mightily with staffing as it has become more reliant on professional firefighters to augment the volunteers it has traditionally fielded.

“We’ve had to add a fourth full-time person, and we do not have a paid chief at this point,” Holt told the board of commissioners. “I know we’re asking for more than our revenue neutral. But we’re strapped for people.”

Meanwhile, Franklin Clapp, the treasurer for Snow Camp pointed to a growing need for salaried posts and other incentives to attract the high caliber of firefighter that his agency has tried to recruit.

“It’s always a revolving door when we find someone,” Clapp lamented. “We seem to be a stepping stone for a lot of young fire fighters coming out of school.”

Even Luke Macon admitted that staffing has been a perennial struggle in the E.M. Holt fire district, in spite of his department efforts to minimize the property tax burden it imposes on residents.

“We just don’t get as many volunteers,” he said, “so we’ve had to accommodate additional staffing.”

Although the commissioners didn’t make any formal rulings on any of the requested tax rates, they were quick to commiserate with the staffing-related woes that they heard from many of the rural fire chiefs. Later on, some of the commissioners also addressed the county’s own struggles with recruitment and retention – particularly in the case of the deputies and jailers who serve under Alamance County’s sheriff.

During Tuesday’s proceedings, commissioner Steve Carter tried to impress the gravity of the sheriff’s predicament on his colleagues by sharing information about salaries and benefits at Burlington’s municipal police department, which has recently reversed its own turnover crisis thanks to an across-the-board pay raise of nearly $9,000.

As a corollary to the issue of salaries, the commissioners also discussed the possibility of family health coverage to attract more candidates to the sheriff’s office. Alamance County’s attorney Rik Stevens sucked much of the air out of this proposal when he announced that state law wouldn’t allow the county to extend this benefit to just one department or agency.

At the same time, Paisley declared that he isn’t aware any local law enforcement agency that offers dependent health coverage, whose cost he went on to surmise “would be astronomical.” Lashley, for his part, estimated that the financial toll for this benefit would equate to about 5 cents on the property tax rate.

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