Monday, May 20, 2024

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Graham, NC 27253
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Commissioners wrangle over budget; no path (so far) for cutting spending or proposed tax rate hike

Alamance County’s commissioners trooped into the county’s main offices on Tuesday afternoon with the stated intent of lowering the property tax rate that the county manager had recently proposed to a level that would effectively wipe out the higher taxes that property owners would otherwise pay as a result of the county’s latest property tax revaluation.

But after two hours of intense, sometimes acrimonious, wrangling, the commissioners had made little headway toward this “revenue neutral” tax rate. Try as they might, they couldn’t identify the more than $7 million in cuts needed to reach their objective – and as the business day drew to a close, some of them had begun to resign themselves to the more modest goal of an “inflation neutral” tax rate, which lies halfway between the county manager’s proposal and the revenue neutral alternative.

This somewhat underwhelming outcome was the nevertheless net-out of the first so-called “work session” that the five-member board of commissioners held on the proposed budget that county manager Heidi York had unveiled last Monday.

Under York’s spending plan, some $217.528 million in outlays would pour from the county’s general fund, which relies on the proceeds from various taxes and fees to cover most of the county’s programs and services.

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In order to make ends meet in the new fiscal year, the county manager’s budget proposes a property tax rate of $45.43 cents for every $100 in value. Although a considerable drop from the current levy of 65 cents, this rate is 2.84 cents higher than the so-called revenue neutral rate needed to counteract the higher property assessments that came out of the county’s most recent mass property revaluation.

Earlier this year, each of the commissioners had publicly declared his or her intention to adopt this revenue neutral rate of 42.59 cents in the county’s next budget. But in order to attain this break-even figure, the commissioners would have to jettison some $7.1 million in spending from York’s proposed budget.

During Tuesday’s work session, York presented the revenue neutral rate as one potential goal for the commissioners to work toward as they trawled through her recommended spending plan. As an alternative, she proposed an “inflation neutral” levy of 43.51 cents that the county’s tax office believes would allow the county to keep up with the increasing cost to do business. In order to achieve this inflation neutral levy, the commissioners would need to trim back about $4.8 million, or the equivalent of 1.92 cents on the tax rate.


A point of comparison
Before she set the commissioners loose to pick apart her proposed budget, York took a few moments to clarify some things about the spending plan that she had originally presented on May 16.

The county manger began by emphasizing that her proposed spending plan already included $18.6 million in administrative-level reductions – including $4.4 million that she had struck from the bottom line by omitting 49.2 vacant positions that the county is unlikely to fill in the new fiscal year.

Despite these preemptive reductions, the manager’s proposed outlays for the general fund are still roughly $14.3 million more than the expenditures that the commissioners approved in the spring of 2022. York’s recommendation nevertheless compares much more favorably with the general fund’s current amended budget, which Susan York, the county’s finance director, conceded is $248,643 more than the manger has proposed in her spending plan.

During Tuesday’s work session, York also revisited an illustration that she had previously shared with the commissioners to demonstrate the potential impact that her proposed tax rate would have on a typical taxpayer. The county manager had previously declared that this hypothetical homeowner with a home worth $200,000 would roughly $15 more a month in property taxes than they did in 2022.

On Tuesday, York recalculated this estimate based on the assumption that her theoretical taxpayer also has two motor vehicles, which weren’t reassessed in this year’s revaluation and would consequently be taxed less at her proposed rate than the county’s current levy of 65 cents. She pointed out that this taxpayer’s monthly increase drops to $11.65 cents when these two cars are added into the mix. York added that the difference is even less when the amount billed under her tax rate is compared with the revenue neutral rate – which contrary to popular misconception will cost taxpayers more than they paid in 2022 because it accounts for a year’s worth of natural growth in the tax base.

“Your average homeowner would see an increase of about $63.18 a year in their bill…which equates to about $5.27 a month,” the county manager explained as she compared the increase under her rate with the revenue neutral alternative. “We wanted to make notice of that because we lose a lot of revenue when we make that adjustment.”


All the rage
The board’s own foray through the county manager’s budget got off to a rather inauspicious start due to some unresolved hostilities between two of its members.

These simmering resentments ultimately boiled over during an opening statement from commissioner Pam Thompson, who acknowledged that she wasn’t particularly inclined to eviscerate the manager’s budget in order to reduce the proposed property tax rate.

Thompson reminded her colleagues that she has previously expressed some concern about high turnover at the local sheriff’s office and in the department of social services. She added that she doesn’t think the county would be well served if the commissioners were to cut costs to the point that they make these positions even harder to fill.

“I don’t think that people are going to be lining up to work for DSS and law enforcement when they can go elsewhere for much better pay. I don’t want any cuts. I think [York] has already cut a lot.”

– County commissioner Pam Thompson

“I don’t think that people are going to be lining up to work for DSS and law enforcement when they can go elsewhere for much better pay,” Thompson told the rest of the board. “I don’t want any cuts,” she went on to concede. “I think [York] has already cut a lot.”

Thompson also recalled that she had voted against the budgets in each year after a majority of her fellow commissioners decided to knock a penny off the property tax rate. She argued that these decisions have cost the county $4.8 million in unrealized revenue that could’ve come in quite handy this year.

This observation drew a Vesuvian outburst from commissioner Bill Lashley, who has recently been at odds with Thompson over her accounts of various financial decisions that the commissioners have made. As he broke into his colleague’s soliloquy, Lashley argued that the board’s previous tax cuts have left more money in the pockets of taxpayer. Thompson responded with her own riposte, which touched off an increasingly hostile argument between the two commissioners.

To Thompson: “Put your emotions in check. You need to be more responsible in your actions.”

– County commissioner Bill Lashley

As tempers continued to rise, Lashley took some jabs at his colleague that seemed unusually pointed even for this unabashedly outspoken and direct member of the county’s governing board.

“Put your emotions in check,” he told Thompson at one point. “You need to be more responsible in your actions.”

In the end, it took all the diplomatic skills of the board’s chairman, John Paisley, Jr., to restore order to that afternoon’s proceedings.

“In this meeting, we need to establish what we want to cut,” Paisley said as he tried to bring the group’s attention back to the issue at hand. “We don’t need to go into all the plowed area that we’ve had over and over again.”


Seeing what sticks
Thompson was conspicuously silent after her blowout with Lashley. But Lashley didn’t let the lingering tension prevent him from proceeding with his own evaluation of the county manager’s budget.

While he had the floor, the first-term commissioner dug into everything from the county’s payroll expenses to its capital outlays as he searched for some inefficiencies to lower the manager’s tax rate.

Along the way, Lashley found what appeared to be $1 million in slack in the county’s own capital reserves – only to have county staff members warn him that this cushion could easily vanish if projects that the commissioners have already agreed to pursue run over budget.

Lashley also zeroed in on the county’s rural fire districts, where property owners pay a supplementary property tax to fund the various fire departments that serve residents outside the county’s cities and towns. Lashley noted that the departments which serve 11 of these 12 districts have proposed tax rates that exceed the revenue neutral levies for their jurisdictions. He went on to persuade the rest of the board to have each of these departments approach the commissioners to justify their requests – although this move did nothing to address his underlying concern over the base rate charged by the county.


Airport proposal
Lashley came up equally empty handed when he scrutinized a proposed allocation of $400,000 to develop infrastructure at the Burlington-Alamance Airport. York told the commissioners that their own prior instructions had compelled her to budget this outlay, which ultimately will allow LabCorp to set up a new corporate hangar on the grounds of the airport.

“You did vote to do that,” she assured the county’s governing board. “But we’re anticipating a revenue increase from the funds that would be housed there.”

But Lashley was reluctant to acknowledge that the county should dip into its own coffers to benefit the medical testing juggernaut, which, he contended, would pad its own bottom line by relocating aircraft from Greensboro to the new hangar, where it will benefit from Alamance County’s comparatively low levy on property.

“This is corporate welfare at its worst,” he exclaimed.

In the end, though, Lashley seemed to relent in his opposition to this line item after York and her fellow administrators assured him that, for all intents and purposes, the commissioners have already committed themselves to the outlay.

The one area where Lashley did have some success was with the capital reserves for the local school system.

A recent point of contention between county officials and the school system’s boosters, these reserves are predicted to grow in leaps and bounds in the coming years thanks to property tax revenue that the commissioners had set aside to pay off a $150 million bond package that area voters approved in 2018. Lashley has previously argued that the commissioners should help themselves to the surplus that these reserves are expected to accumulate as the value of each penny on the county’s tax rate increases, and with it, the size of its annual contribution.

On Tuesday, Lashley suggested that the commissioners reclaim $4.7 million that’s anticipated to accrue in these reserves over the coming year.

“We could use if we need to,” Lashley went on to propose. “There’s a lot of extra revenue in there that we can use to offset this [proposed tax rate].”

Susan Evans, the county’s finance director, replied that she would be uncomfortable repurposing more than about $2.5 million of this revenue, or roughly a penny’s worth on the tax rate, because her financial projections for these reserves hinge on a somewhat dicey forecast for the sales tax receipts that the school system receives for its capital needs.
“The reason being,” she added, “is that we are seeing slowdowns in sales tax.”


Personnel issues
In addition to the school system’s capital reserves, Lashley and his fellow commissioners cast a critical eye on the county’s payroll expenses – and in particular, the pay raises that York’s budget proposes to extend to the county’s employees.

Under the county manager’s spending plan, all of the county’s full-time staff members would receive a so-called “cost-of-living adjustment” equal to 5 percent of their current salaries. They would also be eligible for additional merit-based raises worth up to 3 percent for workers with exemplary performance.

York told the commissioners that each percentage point of her project cost-of-living adjustment, or COLA, will cost the county’s general fund some $732,033. She went on to estimate an overall cost of $1,345,315 for the 3-percent merit-based raise.

Lashley suggested that the commissioners ought to replace the manager’s COLA with a flat raise that would more beneficial for employees at the lower end of the pay scale. Meanwhile, commissioner Craig Turner suggested a larger merit-based raise in lieu of the cost-of-living adjustment as a potential cost saving measure. Even so, neither of these proposals seemed to have much traction with the rest of the county’s governing board.

What did have some universal resonance with the commissioners, however, were the concerns about turnover that had prompted the manager recommended pay raises.
In order to stem the tide of defections, the county manager has proposed a salary study to determine the market rates for the county’s most turnover-prone jobs – along with a proposed allocation of $667,000 to implement the raises necessary to reach those market rates in January of 2024.

Although none of the commissioners voiced opposition to this particular line item, commissioner Steve Carter insisted that the county shouldn’t lose sight of other, non-salary benefits as it strives to discourage defections among county staff members. Carter added that the county’s administrators ought to explore things like health coverage for dependents, which isn’t currently part of the county’s benefit package.

“I’m saying that there are ways for us to look at this to solve some of the problem,” he said.

York assured the commissioners that she and her fellow administrators aren’t oblivious to the importance of non-salary benefits as a tool for employee recruitment. She emphasized that the county has forgone an increase in its premiums for dependents for that very reason. She also underscored the value of 401-Ks as a recruiting tool, noting that she ‘lost” a candidate for one director-level position because of the county’s relatively meager 401-K contribution.


A work in progress
The board of commissioners went on to examine a whole host of other line items during the course of its work session. In some cases, its members keyed in on relatively small allocations that would have little, if any, impact on the county’s property tax rate.

Carter, for one, repeatedly questioned a $70,000 outlay for the “Sword of Peace,” a long-running historical drama that’s apparently returning to Snow Camp after a couple of years in abeyance. This outlay nevertheless is proposed to come out of a special tax on hotel and motel accommodations, whose proceeds are treated separately from general funds.

Meanwhile, Turner seized on some of the county’s proposed capital expenditures in his efforts to bring down the tax rate. He was unwilling, however, to jettison an outlay of $1 million to upgrade a ballfield in Saxapahaw – which York had identified as the only “discretionary” item among her proposed capital projects. Instead, Turner homed in on $112,000 in HVAC upgrades that he argued the commissioners could nix “if we’re in a real pitch.”

“Sure, we could put that off,” the county manager replied.

In the end, Paisley arrived at the conclusion that the commissioners will need to adjust their expectations about how much fat they can trim from the manager’s budget. He went on to suggest that the board strive for an inflation neutral rate – which he tried to position as a variant of what the and his colleagues had previously pledged to pursue.

“I would like to bring us down to revenue neutral – adjusted by inflation,” he said, “because that’s what we promised our voters. At the same time, I would like us to look at our family insurance contribution but I’m afraid that’s cost prohibitive.”

In the meantime, Lashley asked the county manager to rough out “what a revenue neutral budget would look like” so he can show it to “people who are hammering that revenue neutral number.”

“I think what you’re asking for is to identify cuts in that amount,” York said in response. The county manager agreed to have this hypothetical exercise ready in time for the state-mandated public hearing on the proposed budget, which is slated to take place on June 5 at 6:30 p.m. in the county’s historic courthouse.

Read the newspaper’s editorial views on the discussions over spending and taxes:

This week (May 25 edition):

Last week (May 18 edition):

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