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HomeMy WebLinkAboutFeb 26-27 2010 Winter Planning Session MinutesIREDELL COUNTY BOARD OF COMMISSIONERS WINTER PLANNING SESSION MINUTES Agricultural Resource Center 444 Bristol Drive Statesville, NC Friday, February 26 & Saturday, February 27, 2010 The Iredell County Board of Commissioners met for a Winter Planning Session beginning on Friday, February 26, 2010, at 8:00 a.m., in the Agricultural Resource Center, 444 Bristol Drive, Statesville, NC. Board Members Present Vice Chairman Marvin Norman Steve Johnson Scott Keadle Ken Robertson Absent: Chairman Godfrey Williams Staff present: County Manager Joel Mashburn, Deputy County Manager Tracy Jackson, Finance Director Susan Blumenstein, Cooperative Extension Director Ken Vaughn, and Clerk to the Board Jean Moore. Others in attendance: Jim Munoz -McNally with the Statesville Record and Landmark CALL TO ORDER by Vice Chairman Norman. Opening Remarks: County Manager Mashburn said the following: "To begin with, the main purpose of' this meeting, as I see it, is for the staff to provide the commissioners the latest and most complete information we have relating to the current budget, and then to project, to the best (?four ability, what we anticipate will occur for FY 10-11. What we are NOT presenting today is a proposed budget for you to review. Although we do anticipate we will discuss several items that will have an impact on the upcoming budget, the goal today is to give a picture in time as to how we are doing now, and what we expect to occur in the months to come. "As you are aware, by state statute GS 159-9, the County Manager shall be the budget officer and that same statute requires that I prepare and submit a proposed budget to the board not later than June 1. Historically the budget has been brought forth to the board at your mid-May meeting. "There is about 2 '12 months left before a proposed budget will be presented to you for your consideration but in order for that budget to correctly reflect the fiscal policy of the majority of the board, it is imperative that we have open and candid discussions of any and all aspects of the budget. Of course, this is also a time for the board to make adjustments to the current budget if you do not feel it is moving in the direction of your previously established fiscal policies. "With that being said, I will soon call on Susan Blumenstein to present the updated information on the current year's revenues and expenditures. Following that presentation, and after any questions you may have, Susan will present projections for next year's revenue and what impact those revenues will have on our ability to provide sustainable services at the current level. Also participating in the presentation, Bill Doolittle, County Tax Assessor, will provide you with updated information on how the current economic situation has impacted, and will continue to impact, our ability to maintain an adequate tax base to support the desired level of services. "Just as a point of interest, Ms. Blumenstein and 1 have been working together preparing budgets for almost 20 years, and during those years, we have witnessed the economy make many twists and turns, sometimes going into treacherous territory, but this has been the worst we have experienced in our 20 years, and it is the worst I have experienced in my 35 years as a County Manager. With that much experience, there are some who would say we should have seen this coming, and we should have better positioned the county to deal with this drastic downturn. Maybe we should have — but we didn't —just as most of the world didn't see it coming. It is easy to look back and find signs that could have warned its, but they were not obvious and before we saw them, it was too late. The best we can do now is to try to provide the information and leadership needed to clear a pathway for the board to maneuver through these difficult times and move forward to restoring the level of service the county citizens have come to expect. I feel confident we can do that, but it will not be easy, and it will not be quick. It is going to take the efforts of everyone, including every employee, every elected official, and every citizen. "The main purpose is for the staff to provide the latest information relating to current budget and to project to the best of our ability what we anticipate will occur next fiscal year. What we are not presenting today is the proposed budget for you to review, although we do anticipate discussing several items that have an impact on the upcoming budget. The goal today is to give a picture in time on how we are doing now, and what we expect to occur in the months to come. " Commissioner Ken Robertson had the following comments: `7 wanted to say a few things to kind of frame up the environment for our discussions. The last time we had a budget workshop, we discussed how long we expected the economic downturn to last. At that time, we basically agreed and made an assumption that it would be a three-year timeframe. Some thought it would be shorter than that, and some thought it might be longer. Basically we said that we assumed it would be a three-year problem. I think its becoming obvious to everybody that this is a national problem, not just for as, but for a lot of governments in the world. `7f you can, imagine that a person decides to buy a riding lawn mower, and they borrow the money. When its time to make the payments, they borrow the money to make the payments, and they also borrow for a car. Then, when it's time to make the payments they continue to borrow. If you're allowed to do that, and it doesn't impact your revenue stream, you're borrowing money just to make the payments. Then, there's no reason why you wouldn't borrow more money for a boat, an SUV, and a bigger house. That's what we've done. You can keep doing that until the music quits playing. "It looks like worldwide that Greece may be the canary that is in the coal mine, but this borrowing trend of governments is going to end. We've been trying to borrow our way out of these problems, and 1 think that when the music stops, and all of a sudden you have to pay it down, its not going to be a short period of recovery. For that reason, I believe our three-year assumption is going to be way off. It may be that within three years it stops getting worse, but 1 certainly don't see a big recovery happening. "A lot of this goes back to the flawed assumption we made as a nation -- which was that we don't need our manufacturing base. That we could simply have a strong financial sector and loan money to each other as long as we're skimming a little bit in fees -- that somehow this would work. We were told that as long as we just do high-tech manufacturing, we'll be okay. But if'you look, none of your computers, none of your cell phones, none of your flat -screen TVs are made in the USA, and that turned out to be untrue. Also, if'we could just build big houses,lor more and more people that would be a source of jobs. That also turned out to be not true. The end result is that because of those had choices, all of it based upon the fact that we did not need manufacturing, has resulted in high unemployment in the county that's running 13% officially, and we believe unofficially, it's probably closer to 18%. But worse than that, we've lost our industrial tax base. Businesses use to account for about half of our revenue but that percentage continues to go down. This is a direct result of bad economic policy and bad assumptions on the federal level -- that manufacturing was not necessary. Now combine that with our current situation of declining sales tax revenue which is a direct result of the unemployment, or rather the employment rate, along with the high amount of school construction debt that we took on over the years, and throw in the fact that we have a tax rate that's about 40% lower than most surrounding communities. It puts us in a difficult situation right now. Last year, we tightened our belt and reduced our budget. This year we're going to tighten our belt and reduce our budget, but we've put off replacing cars and equipment, along with not providing raises for the employees. They didn't get a raise last year, and I don't think they'll be given one this year. The county cannot go on forever operating in this mode. It is every bit as unsustainable that we can somehow continue to cut our way without consequences anymore than the federal government could borrow, everything they wanted without consequences. " 1 think the time horizon for recovery is going to be longer than an additional two years. Even though I'm a conservative and a Republican, I don't think that if in 2010 we elect all Republicans in the House and Senate that we will see a major turnaround. The President will still have veto power, and I believe the President will veto any conservative agenda. In 2012, even if the Republicans get the House, Senate, and the Presidency, it will still take a while for policy to significantly change -- assuming they made changes for the better. I think 2013 and 2014 is the earliest that things will get better. Now with that being said, I know that Mr. Mashburn has painted a somewhat dark forecast, and 1 believe it's somewhat correct. I've been somewhat negative too. `7 want to remind everyone about D Day. When the army hit the beaches they incurred a lot of casualties, and they found themselves basically hiding for protection behind a sea wall. The night before, the 2 Airborne troops had dropped in behind the coastal areas, and just like the units that got split apart on the beaches. Those Airborne units, when they landed, didn't land where they thought they would land. They weren't able to organize like they thought they would organize. There were Airborne troops inland and small bands of disorganized people, and the same thing on the beaches. However, something miraculous happened. There was no one General or Colonel who stood up and got everyone organized, but they went and won the battle. What happened is that small pockets of men, many of whom had never worked together, formed into teams led by Corporals and Sergeants, and they took the fight to the enemy where they were and with what they had. Small units started sticking their heads up over the seawall and doing their part. The Airborne units, just whatever soldiers could link together did, and they fought the Germans where they could find them. Everybody did their part. Everybody had some personal risk at stake. Every leader, who was involved there, had to put the people they led in harms way, and a lot of them lost their lives. Americans with that American spirit, with everybody involved, everybody doing their part, everybody enduring some sacrifices won some battles, but we didn't win the war that day. It still took another year, but we prevailed. Like those Americans in 1944, today, and in this county, in dealing with the problems that we've got, everybody will have to do their part. When I say everybody, it can't solely just be the people in county government. This is a county problem and everybody needs to do their part. "One of the ways ordinary citizens can do their part, and I know that people have lost their jobs and there's less money to spend, but every dollar spent in this county, not somewhere else, will make it better here. I want to end this by saying I don't think we should assume we're going to make choices that have no risks and no negative consequences any more than those soldiers on D Day took risks without consequences. We're going to have to do it too. We're going to have to make some tough decisions. " In regards to the economic situation, Commissioner Johnson voiced concerns over commercial real estate and health care costs. He said that if health care reform passed, Medicaid costs might dictate a 20 to 25% increase in property taxes. Johnson said this would create a tax wedge for local governments, and taxes would have to be raised to service the debt. FYI Update and FYI Projections Finance Director Susan Blumenstein provided the following comments pertaining to the current budget and estimates for the new year. • Ad valorem property taxes are holding steady. (No reason for concern.) • Sales tax revenues continue to be under budget. (If revenues for the next seven months continue as the past five, the county will be 16% under budget.) • Service fees for some departments are below budget (Inspections/Code Enf. will be under budget by an estimated $268,190; Planning/Erosion Control will be under budget by an estimated $617,600; and on-site water protection will be under budget by $389,925.) • Of the $2 million budgeted for fund balance appropriation, it is believed that $1.7 million will be needed. (This year's budget was about nine percent less than the 2008-09 final ending budget.) • It is estimated this year's budget will end with a fund balance that is 15% of next year's projected budget which will be 3% less than the current year. (The departments have been asked to reduce the budgets by three percent, and this same request has been made to the school systems.) • Lottery proceeds of $528,000 have been budgeted for Mooresville Graded School System's debt service. • County departments have spent about 1.7% less as of January 1 than the previous year. *Based on current estimates the projected budget next year will be $151,812,511 compared to an estimated ending total of $159,975,258 for FY 10. • In the Register of Deeds' office, there are lower revenues but the work is steady. (There is not as much overtime and the usage of part-time employees.) *The Inspections/Code Department has seen lower revenues this year. There are several frozen positions, several employees have been assigned to other departments, and permanent cuts have been made. Commissioner Keadle asked the per capital amount in all revenues. Blumenstein said the amount would be $1,015.28 for this year, compared to $780 in 2001. In regards to the three percent reduction in the departmental budgets, Commissioner Robertson asked if the request had been made to the economic development offices. He suggested that these offices be cut the same three percent. Pertaining to the code enforcement/inspections department, Robertson noted that the 3 inspectors were highly compensated and some of them had been moved to positions in other departments that didn't pay as much. He asked the point in time when this type of arrangement would end. County Manager Mashburn said the issue would be confronted in the new budget. He said the employees might have to be told the job would only pay a certain amount of money. Commissioner Robertson asked about the workload in inspections. Blumenstein said it was significantly lower than in years past. Mashburn said that when the lighting project was completed, there would be excess labor. He said the county would not be able to allow the employees to remain for the next three to four years while the economy improved. Mashburn said that it would be difficult to retrain anyone if the employees were terminated. He said the county would try to seek any grants that might be available. Commissioner Robertson said the situation was called opportunity cost. He said he didn't' see the economy turning around soon enough to let the employees "just ride." Commissioner Keadle said he understood that more children were in foster care in Iredell County (per capita) than any surrounding county. He asked why this was occurring, assuming what he had heard was correct. In addition, Commissioner Keadle mentioned the position classification or pay structure at the health department. Mashburn said employee pay grades had ranges and a person's salary could move back and forth in the range. He said the health and social services departments were under state guidelines and moving employees between different ranges and grades could have a domino effect on other employees. He said both departments could submit reclassification requests to the state, and the county might not know about it. Mashburn said the county would have to comply with the state's recommendation, but there was leeway in when the reclassification might become effective. He said the two departments had been asked to notify the county when the reclassifications were requested. Mashburn said that if the health director cut someone's salary, that everyone in that pay grade would have to be cut the same amount. He said the approach that had been taken this year was a reduction in hours. Mashburn said furloughs had been used to save money and everyone was affected with the exception of emergency services. He said the health board was an advisory board, and the board of commissioners determined the number of jobs and the amount of money available. School Reports Iredell-Statesville Schools: Board of Education Chairman Dr. David Cash, Superintendent Brady Johnson, Director of Facilities & Planning Dr. Kenny Miller, and Chief Financial Officer Melissa Wike attended the meeting on behalf of the Iredell Statesville School System. Dr. Cash said I -SS was one of the top school districts in the state. He said the Phase II projects were finishing, and the Phase III Union Grove Elementary School project had started. Supt. Johnson said there had been no employee lay offs, but the system had 145 fewer staff positions due to attrition. He said the system had grown by 188 students, but capacity wise, the system was in good shape. Supt. Johnson said the Career Tech Center in Troutman for the auto tech program would open in April, and nursing and culinary programs would be added in the future. He said the state had requested the units to budget a 3, 5, or 7% decrease in the next budget, and unfortunately, attrition alone would not be able to make up the difference. Supt. Johnson said that for the next year, fewer services would have to be provided. He said the state had cut transportation funds, and some students might have longer walks to the buses. In addition, he said the state would not fund School Resource Officers for the middle schools. Dr. Miller said the state had changed vessel inspection guidelines, and this would increase the cost for permit fees. Supt. Johnson mentioned the following budgetary issues or problem areas for 2010-11: 4 Budgetary Issues Additional Local Burden Title I Stimulus — non/very little carryover will be available (salaries) $1,348,100 Child Nutrition Indirect Cost -lost revenue 560,000 Increase in the retirement rate— 10.51% for 2010-11 vs. 8.75% for 2009-10 287,930 Increase in hospitalization - $4,929 for 2010-11 vs. $4,527 for 2009-10 203,065 Federal Grant — Safe & Drug Free Schools - defunct 36,181 AT & T Grant—expires 6/30/10 63,552 SAY Grant — expires 6/30/10 115,657 State Textbook Funding — no funding 855,000 State Required Reversion — 35% increase from the 09-10 amount 1,128,429 Federal Early Intervention Services — PRC 070- Reduced funding for next year 191,688 Certified — Step restored to actual (two steps up) — average 3.91 % 767,593 $5,557,195 Supt. Johnson said the children would be the ones impacted by less funding. He said one year of cuts was bad, but when the students were faced with two or three years of reductions, it significantly impacted their educations. Commissioner Robertson mentioned a caveat that most county departments understood pertaining to grants. He said no one should expect the county to pick up the costs for items or personnel that was previously funded by grants. Mr. Robertson noted the $855,000 that had been funded by the state for textbooks. He said this was a large amount of money cut by the state. Mooresville Graded School District: Superintendent Dr. Mark Edwards, along with Chief Financial Officer Terry Haas, shared information about the Mooresville School System. Edwards mentioned the following: •The new Rocky River School, and the Mooresville Middle School (expansion/renovation) projects were within the allotted budget. *Mooresville is in good shape in terms of facilities and many visitors come to tour them, especially the technology school. •The system has increased by over 100 students. (Many students have returned from charter and private schools.) • Mooresville is currently number eight in state academic rankings, but based upon benchmarks and test scores this year, the system could move up to number one. • Dropout rates have been reduced, and there is a goal to totally eliminate anyone from dropping out of school. • Last year the state cut $1 million from the system. • Mooresville is small, and the system had to terminate employees rather than use attrition as a mechanism to reduce the workforce and costs (Forty people were cut with twenty of these being teachers.) •The system is actively searching for alternative funding (grants/foundations/etc). Dr. Edwards requested the board to focus on the children during the budget deliberations. Mitchell Community College: Those speaking on behalf of the college were Board of Trustees Chairman Dr. Ralph Bentley, President Dr. Doug Eason, Finance & Administration Vice President Dick Lefevre, Facilities & Auxiliary Services Director Gary Johnson, and Instruction Vice President Tim Brewer. Dr. Eason said (1) the new building in Mooresville was progressing and should open in the summer (2) the Mooresville campus had a new parking lot (3) ICATS was running a shuttle between the Mooresville campus and Statesville (4) the college's major concern related to the operating budget and (5) the utility bills were 12 to 15% higher due to the cold winter. He said by statutes, Mitchell was an open admission school with the exception of the nursing program which was controlled by the state health board. Dr. Eason said the college had a high student retention rate due to the job market, and this year, 600 students enrolled without state funding. Eason said there was much interest in the allied health program, and a state grant had been received 5 for the pre -planning of a new building that would include classrooms for radiology, physical therapy, and pharmacy tech. Commissioner Johnson asked about capital projects. Facilities Director Gary Johnson said the college did not have any buildings with structural problems at this time; however, a year or two without funding would hurt. Tim Brewer said the proposed allied health building would be 30,000 to 40,000 sq. ft. at an estimated cost of $8 million. He said the facility would be on land already owned, and the $8 million was only for construction. Dr. Eason said a public safety training course with two classrooms was needed. He said it would be more feasible to bring all interested parties (law enforcement/firing range, 18 wheeler truck driving, fire burn pits) together and have a quality training center in one area. Eason said the college would want the operating rights, and about 14 acres was needed. Presentation Regarding the 2011 County -Wide Reappraisal Tax Administrator Bill Doolittle, Chip Parks and Steve Ervin presented information regarding the 2011 reappraisal. Doolittle said the board would be required to adopt a schedule of values. He said the tax department did not change property values due to economy. Iredell County Sales Analyst Chip Parks provided a PowerPoint presentation that included the following slides pertaining to the residential reappraisal. Why conduct Reappraisal? NCGS 105-286 requires that all properties reflect 100% market value as of January 1" of the effective reappraisal year. To create equity among all classes of property at the time of the reappraisal. What is the Schedule of Values? The Schedule of Values represent values, standards, and rules to be used in appraising real property in the county to determine fair market value, as defined by NCGS 105.283-284 (uniform appraisal standards). Specific tables used to describe or apply value. Once adopted, it does not change until the next reappraisal. The Schedule of Values will be applied to properties from 2011 to 2015 even if the market changes. 2007 Reappraisal Values effective January 2, 2007 Used sales primarily from 2005 through mid 2006. 6 Sales price per square foot? Our goal: Spot value trends over time by using the median sales price per square foot. Different neighborhoods with similar homes. 1.5 acres without water frontage or golf course frontage. Several sales per year. Median Definition: The median is the preferred measure of central tendency and is the positional average that is not affected by the size of extreme values. Most used in mass appraisals. Matched Pairs (Re -sales) Criteria: Homes that sold in 2006 and again in 2009. No substantial remodeling. Results: 70 re -sales Range in sales price from $33,500 to $939,000 Median increase in value I% Residential Statistics by Quality of Construction All site built single family residential sales in Iredell County. Less than 1.5 acres. No water frontage. No golf course frontage. Residential Statistics by Area of County Improved properties grouped by location All site built single family residential sales in Iredell County Less than 1.5 acres No water frontage or golf course frontage. M Residential The results show that there is not equity among property classes or even within the same class. Iredell County Real Property Manager Steve Ervin provided a PowerPoint presentation that included the following slides pertaining to the commercial/industrial real property reappraisal. Commercial & Industrial Approximately 225 of the current real property tax base Almost 6,300 parcels in Iredell County Commercial & Industrial Very few improved sales (Less than 100 for 2009) Has the market reached the bottom? Increasing "dark" space (Pictures were shown of current vacant or never occupied buildings with many being in south Iredell.) Nationally: Commercial Real Estate Fundamentals: Rising vacancy rates Declining rents A sharp increase in delinquencies Normally, demand for commercial properties lags behind economic 10 Commercial & Industrial Valuation Process Market sales approach Compares properties to recent qualified sales within their market area Replacement cost approach Estimate of current cost of construction less depreciation. Income Approach How much income the property would produce if rented. These types of properties sell based on potential income. Commercial & Industrial Valuation Process Sales are limited 1/3 the number of sales that we had in 2006 Replacement Costs are flat to 10% lower. Depreciation alone could lower the current value by 5 to 10% Income ??? Commercial & Industrial Tax Base It's too early to develop accurate projections but we estimate a reduction of 5 to 15% for 2011. Commercial & Industrial Recalling that C& I valuation makes up 22% of the total current real property tax base. A 10% reduction would translate into an approximate 2% overall reduction in the current tax base. Current real property tax base: $17,070,000,000 x 22% S 375,540,000 $375,540,000 x .00445 current tax rate $ 1,671,153 lost revenue Reasons to Conduct a Reappraisal: A reappraisal provides fairness and equity between all property classes. Conducting a reappraisal will show our citizens that the county recognizes that values are not at the same level they were in 2007. We are currently in a flat to declining market. In some areas, property values will decrease, some will increase and some will remain the same. A 2011 reappraisal will demonstrate that county wide reappraisals are about market values and equity, not just increasing values. Important facts to remember: Reappraisals provide equalization among all classes of property. Reappraisals are not conducted to increase revenues. It was noted that Iredell County had the 11"' or 12"' largest tax base in North Carolina. LUNCH & LEGISLATIVE UPDATE Joining the commissioners, county staff, county attorney, Supt. Brady Johnson, Dr. David Cash, Dr. Doug Eason, Dr. Ralph Bentley, Dr. Mark Edwards, and Terry Haas were North Carolina Board of Transportation Chairman Bob Collier, NC House Representative Grey Mills (District 95) and NC Senator James Forrester (District 41). Judge Collier provided an update on local road projects some of which are as follows: •Resurfacing of I-77 Exit 45 to the Mecklenburg County line is now complete •Resurfacing of I-77 North of Statesville to Surry County line is in progress •Resurfacing of I-40 to the Catawba County line is under contract and progressing *Resurfacing of 1-40 from James Farm Road to Radio Road is partially completed •Resurfacing of I-40 to east of I-77 to Davie County line is under contract *US 70 four lanes from Statesville to Salisbury has been completed with the exception of 3 miles between Iredell County and the town limits of Cleveland •I-77 Langtree Road interchange has been completed •Brawley School Road widening to Williamson Road is under contract (There were many right of way issues as well as the school.) •I -77/I-40 Interchange project is scheduled to occur in three phases with the first one being Hwy 21 (Cost is $190 million for the entire project.) •Hwy 115 North of Statesville to Wilkesboro is undergoing resurfacing in sections •Hwy 21 South of Statesville through Troutman is scheduled for improvements *Resurfacing of Hwy 64 from Statesville to Taylorsville is underway • Widening of Hwy 150 to four lanes is progressing in small segments • Widening of Gardner Bagnal Blvd is progressing *Eastside Drive widening to four lanes is progressing *Widening of I-77 to Exit 73 in Mecklenburg County is moving up on the priority list Senator Forrester said the state had the same problems as the county. He said the recession would probably continue for the next three to four years, and that personal income taxes were about 10% lower than in the past. Forrester said the state was prioritizing needs, and education was the number one priority. He said, however, it was anticipated the Governor would drawback funds from the state departments and the community colleges in the next few months. Forrester said the state was limited on what it could borrow due to current debt. He said about 55% of the state budget was applied to education and another large percentage went to Medicaid. Dr. Forrester said many states would be bankrupt if the President's initiative succeeded in getting everyone without insurance on Medicaid. Continuing, he said about one half of the birth deliveries in North Carolina were paid for by Medicaid, plus the program paid many nursing home costs. He said six prisons were closed, and this would make it difficult to find inmate space. Senator Forrester said that in Raleigh, there were discussions on "taxing everything such as haircuts, grass mowing and so forth." Representative Mills shared a newspaper article indicating that North Carolina was facing a $500 million shortage in the current budget. (The article reported that the state's income and sales tax collections were not near projections.) He said the legislature would reconvene for a short session on May 12. County Manager Mashburn asked about the proposed legislation that would require counties to maintain secondary roads. Senator Forrester said Senator Rucho from Mecklenburg County had proposed the legislation, but no progress had been made. Commissioner Robertson asked about the state not paying for school textbooks. Representative Mills said this was a school board issue, and it might be addressed during the short session. Dr. Eason expressed concern about the finalization of the state budget which sometimes did not occur until September or October. He said it was difficult to plan or budget for the college. Dr. Forrester acknowledged the problem and said the budget was supposed to be adopted by July. He said changes needed to be made. ECONOMIC DEVELOPMENT INCENTIVES Fiscal Policy Analyst Joseph Coletti, with the John Locke Foundation, said he had reviewed a financial model for a recent economic development incentive that was approved by the board. He said there appeared to be two missing components, and the North Carolina Lottery was an example to look at in order to understand what had not been included. Coletti said the odds of winning the lottery jackpot were about 1 in 195 million with the odds of wining anything being about 1 in 35. He said the jackpot had to be $322 million before a dollar ticket was actually worth a dollar. Coletti said incentives could be viewed in the same way as the lottery, and the commissioners could study the odds of the company planning on locating or expanding in the county without the incentives. He said the county might ask how the money could be used if it wasn't approved as an incentive, and what type of return could be realized. Commissioner Robertson asked the name of the largest business that had relocated to North Carolina with no incentive package. Coletti said in the last few years, there would be none, because the state had awarded so many incentive packages. He said there were jobs, however, that had occurred without incentives. Coletti said North Carolina remained a favorite of Site Selection magazine because the criteria used for the better designations depended on how many incentives were given. He said North Carolina was an "easy mark" for companies, as they were being told how to obtain incentives from the states. 12 Commissioner Johnson said the county didn't establish the incentive rules. He said North Carolina was ranked 39°i out of 50 states in tax freedom, and this was a disincentive to locate here. Johnson said the county was further hurt by the state's tier system. He said providing incentives was not something he wanted to do, rather it was something that had to be done to be competitive with other locations. Commissioner Robertson said Iredell County had many advantages, for example, (1) one of the lowest tax rates in the state (2) largest lake in the state (3) two Interstate highways (4) an airport (5) close proximity to an international airport and (6) a school system in the top 10 for the state and the other being in the top 20. He said that if a level playing field existed, Iredell County wouldn't have to provide incentives. Coletti said he was trying to emphasize that the board ask, when deciding on incentives, what the appropriate discount rate should be and the odds the company would locate in the county. He said the second component was a guess, but the board should have a good grasp of the discount rate. Coletti said probably 50- 50 should be the odds starting point. Commissioner Keadle said that if the county was concerned about being fair and equitable, then why wasn't there concern for all of the other tax paying businesses in Iredell County. Keadle said he didn't understand why businesses without $3 million were ineligible. Commissioner Johnson said it was a struggle establishing policy. He said the question was flawed because of the underlying presupposition that there was anything inherently fair about taxing anybody. Johnson said there was nothing inherently fair about taking money from someone who earned it and transferring it to someone who didn't. He said that he wasn't against government, but it existed to maintain order. Coletti said there was a supposition that every collected tax was a transfer to someone else, and this wasn't exactly true. He said there were countywide benefits that benefited everyone, so not every dollar in taxes was given to someone else. Johnson said that in the use of stewardship, a moral hazard was created because the person now managing the money did not earn it. Commissioner Keadle asked Coletti if he felt incentives interfered with the market. Coletti said yes. Keadle asked if government interference in the market had ever worked. Coletti said he would get back with him with a response. He said the oversight of markets was one aspect, but the government picking winners and losers was another. Commissioner Robertson said that if the county eliminated incentives, then no large company would locate here, plus some existing companies might leave. He said, then, the taxpayers would have to make up for the lost revenue. Robertson said it was known that some of the companies would expand in the county without incentives; however, it was also known that it would be difficult to recruit companies from somewhere else. He said existing companies sometimes left or closed down because their products were not being purchased or their operations were moved offshore. Robertson said this was what the county was trying to backfill, and if it didn't occur, the county would be at a disadvantage. Coletti said the tax environment set in Raleigh was business unfriendly, and taxes were punitive on companies to locate and grow within the state. He said it was recognized that the board had to cope with this fact. Coletti said that when the county was evaluating incentives, the appropriate discount rate should be determined, and also what the money could be used for if the incentive was not given. He said too, thought should be given about the odds the company would locate in the county without an incentive. Keadle asked how the county could determine the odds. Coletti said it depended on the company. He said Goggle made a site decision based on the cost of electricity and water after determining the company wanted to be in a rural area on the east coast. Keadle asked how the county determined the appropriate discount rate. Coletti said to look at what else could be done with the money. 13 Mashburn said Coletti was assuming the county would have the money to do something with. He said the money paid by the company was the same as what the county provided to the company. Coletti said the discount rate was the measure of risk and opportunity cost. He said a tax credit was the same thing as spending when reviewing fiscal books. Health Care Issues and HR Policy Revisions Mark Browder, with Mark III Employee Benefits, reviewed the county's medical insurance plan and said the county was "in the black but just barely." He said this year the county had chosen two options in the health care plan with one being a co -pay plan and the other being a health savings account. Browder said there would be an 11% increase if the plan remained the same, and across North Carolina, increases were typically around 12%. Robertson asked if the county's healthy lifestyle incentives were working. Browder said the industry struggled to say if wellness incentives worked, but ultimately, they were the right thing to do. Human Resources Director Cynthia Eades said 50 employees were not participating in the program. She said health risk assessments would occur again in March. Robertson asked if the county was saving money with the wellness program. Browder said the aggregate blood pressure scores, the body mass indexes, and cholesterol results could be reviewed to see if the participants were making any improvements. He said only about 40 people signed up for the FY 10 health savings account program. Browder said the recommended new plan would have a change in the deductible to match the health savings account. Continuing in regards to the new plan, he said the radiology charge would apply to the deductible on the co-insurance, and there would be co -pay changes. Browder said the insurance package would be a budgetary neutral event for 2010-11. Update on Fairgrounds Committee Joining Deputy County Manager Tracy Jackson to discuss the fairgrounds was Kristen Hess with HH Architecture out of Raleigh, NC. Commissioner Johnson said the committee had held meetings and determined there was no one involved with expertise in fairgrounds planning. He said Ms. Hess had been invited to the meeting due to the work her firm provided on the state fairgrounds. Hess presented a fairgrounds site study proposal costing $29,800. Cooperative Extension Director Ken Vaughn said that only about one half of the fairgrounds property was usable. He said other problems were (1) the water had to be closed off during the winter which prevented usage of the grounds (2) the exhibit hall didn't have heating or cooling and (3) other buildings had efficiency problems. Commissioner Johnson said fairgrounds improvements had been reviewed in context to the other needs, and the jail and courthouse had a higher priority ranking. He said, however, it was good to plan, even if the project was five to ten years out. Commissioner Johnson suggested that the fairgrounds committee examine the submitted proposal. Jackson said the Kiwanis Club might share in the site study costs. MOTION by Commissioner Johnson to (1) refer the matter back to the fairgrounds committee (2) have the Deputy County Manager schedule a meeting of the committee and (3) after the committee meets, to return to the board with a proposal. VOTING: Ayes — 4; Nays — 0. 14 Lighting Upgrade Bids Purchasing Agent Dean Lail and Inspections Director Lynn Niblock said the board on February 16 decided to re -bid for the lighting upgrade supplies. He said the bid package was redesigned, and five bids were received. Lail said none of the bids, however, met the requirements. MOTIO by Commissioner Johnson to go back out for bids on the supplies for the lighting upgrade project. VOTING: Ayes — 4; Nays — 0. Budget Priorities Finance Director Blumenstein said previously, a request was made to calculate the amount of money in capital outlay items the departments had delayed in purchasing during 2010 that would eventually be needed. She said the amount would be $472,498. Commissioner Johnson asked how much would be spent in fund balance. Mashburn said $2 million plus what wasn't spent this year. He said this would be $261,153. Blumenstein said the county would still be $340,000 short. Commissioner Johnson asked, after reviewing on-site waste water protection program financial information, if the county would be short $389,925 as of June 30. Blumenstein said yes. She said the costs were already known; however, the revenues were not known. Commissioner Keadle said the health director had been talking about eliminating two positions. Mashburn said the total for the two positions would be around $100,000. Commissioner Johnson said there were three departments that were losing money, plus the tax representatives did not have optimistic news. Commissioner Robertson said he didn't feel a decision to correct some of the problems needed to wait until July. Mashburn said that in regards to inspections, a full year had not been budgeted. He said action to correct the funding problems had been planned for this fiscal year had the county not received the grants. Commissioner Robertson said the workload had decreased more in inspections than what had been projected. Mashburn said one way to correct the situation was to say that another million dollars, or more, was needed out of the current years' budget and to instruct the staff to return to the board with a plan. MOTION by Commissioner Johnson to instruct the staff to come back with further budget reductions that equate, in this year's budget, to $1.275 million annually from the inspections/code enforcement, planning/erosion control, and the on-site waste water protection program. VOTING: Ayes — 4; Nays — 0. Mashburn asked if the board was authorizing layoffs. Robertson said yes. Adjournment: The meeting ended at approximately 4:40 P.M. 15 IREDELL COUNTY BOARD OF COMMISSIONERS WINTER PLANNING SESSION MINUTES Agricultural Resource Center 444 Bristol Drive Statesville, NC Saturday, February 27, 2010 The Iredell County Board of Commissioners met for a Winter Planning Session on Saturday, February 27, 2010, at 8:30 a.m. in the Agricultural Resource Center, 444 Bristol Drive, Statesville, NC. Board Members Present Vice Chairman Marvin Norman Steve Johnson Scott Keadle Ken Robertson Absent: Chairman Godfrey Williams Staff present: County Manager Joel Mashburn, Deputy County Manager Tracy Jackson, Finance Director Susan Blumenstein, Recreation Director Robert Woody, Planning Director Ron Smith, Inspections/Code Enforcement Director Lynn Niblock, Solid Waste Director David Lambert, Cooperative Extension Director Ken Vaughn, and Clerk to the Board Jean Moore. Others in attendance: Jim Munoz -McNally with the Statesville Record and Landmark CALL TO ORDER by Vice Chairman Norman Rescue Squad Association: On behalf of the four rescue squads, Iredell County Rescue Squad Assistant Chief Bill Sherrill spoke and presented a PowerPoint presentation. In the presentation, Sherrill provided historical information about the squads, along with (1) a list showing the various services offered (2) a list showing the number of members in each squad (3) a list describing the types of required training (4) a list showing the types of equipment and vehicles used by the squads (5) the types of rescues/services offered (6) funding sources and (7) a description of the county funding formula. Sherrill said the four squads received a total amount of $561,090 in county funding compared to $5,368,650 for the fire departments. In regards to funding per service calls, Sherrill said the squads received $68.09 per call compared to $466.51 for the fire departments. Commissioner Robertson asked how much redundancy was occurring on first responder calls. Sherrill acknowledged there was some. He said some calls shouldn't be dispatched, but the squads responded to them due to ECOM's computer system. Sherrill said funds for the squads continued to decrease, and he asked if the county would be willing to increase the funding. He said the squads had already made reductions due to the economy such as reducing the paid daytime staffs manning levels along with cutting first responder responses to reduce fuel costs. Commissioner Robertson said the county had the fire departments, the EMS Department, and the rescue squads. He asked if all three responded to a car wreck. Sherrill said yes, because all three organizations provided different services. County Manager Mashburn asked about rescue services within the Town of Mooresville's corporate limits. Mooresville Rescue Squad Chief Bo Winecoff said the town's fire personnel had received rescue certification. He said, however, they didn't have the heavier equipment needed for some rescue services. Winecoff said the equipment Mooresville had was on the fire trucks. An unidentified member of the audience said the Mooresville firemen were certified in heavy rescue services. Deputy County Manager Tracy Jackson said that if Mooresville desired to provide rescue services, a change in the district boundaries needed to occur. 16 Commissioner Johnson said the county departments had been asked for a three percent reduction for FY 11. He asked, assuming the same request was made to the squads, what services would be cut. Iredell County Rescue Squad Chief Brian Niblock said that specifically for his organization, there was adequate equipment, but there were personnel concerns. He said the squad desired to add one additional person to each shift, and the annual costs would be $40,000 for each individual. Niblock also said (1) a long-term goal would be the addition of a staff crash truck on the district's east and west sides (2) a secondary means of call notification via text pagers was needed for "dead spots" in the county (3) a reprogramming for all radios was needed due to a FCC change in 2013 (4) the squad wanted to create a Rapid Intervention Team and (5) long term planning for either a new substation or the renovation of the existing building was needed due to increased calls. Niblock said that if the county reduced funding, then the squad would have to further decrease staff. He said the squad was carrying a "fairly large" debt service. Niblock asked if the county could absorb some of the debt. Johnson said he understood the squad would have to cut back on the level of service if cuts were made; however, the same level of service could be maintained if the county would allow for the withdrawal of capital funds. Johnson said, however, the squad wanted some assurance that if capital purchases were needed, county funds would be available. Troutman Chief Gerald Clodfelter said there were two types of service, advanced and basic. He said the squads for the most part provided basic. Clodfelter said that his squad ran two ambulances, but if cuts were made, then one would be eliminated. In addition, he said nonemergency responses or standbys would be eliminated unless the squad was reimbursed. Clodfelter said that after nonemergency response reductions, then the squad would cut the personnel's call volume payments. He said the squad had a good supply of equipment, and part of this was due to grant funding from the state. Clodfelter said money had been saved to buy future equipment, and it was hoped this cash reserve would be available in the future. He said a truck would need to be replaced in three years. Clodfelter said Troutman was trying to build a cash reserve the same as the county. Commissioner Robertson asked if the rescue squads invoiced or billed for their services similar to EMS. Some of the chiefs said that invoicing was occurring; however, the North Iredell Rescue Chief said his district didn't have enough call volume to justify hiring someone to provide the service. Donnie Perry, with the Iredell Rescue Squad, said aggressive tactics were not used in recouping payments. Robertson said, "We need to go to more than one wealth." He said people constructing houses funded inspections through fees and the same occurred with the on-site waste water program at the health department. Robertson said that if mechanisms were available to recover the costs, then the squads should use them. Commissioner Johnson asked the percentage of collections. Niblock said that with Iredell Rescue, $40,000 to $50,000 had been invoiced with only an $8,000 to $9,000 return. Deputy County Manager Tracy Jackson said the EMS department never fully recovered what had been invoiced. He said operating expenses weren't being covered. Robertson said the county had a multi-year problem. He said the squad members had convinced him that they were providing a valuable service; however, other ways to fund the "gap" were needed. Clodfelter said a billing company in Connecticut had provided the service, but there was no success. He said the company the county used for EMS was located near Clemmons, NC. County Manager Mashburn said that more "streamlining" might help. Robertson said the dispatching of volunteers shouldn't occur unless necessary. Mashburn said coordination issues between the rescue squads, fire, and EMS could be reviewed. 17 Commissioner Johnson mentioned that if the Lake Norman VFD withdrew from the countywide fire district, the funding formula would have to be reviewed. He said this would impact the squads. Clodfelter said that rescue squad tax districts could be established similar to the fire service districts. Report on Fire Department Review Committee Deputy County Manager Jackson opened this discussion by also saying there would be a funding gap if the Lake Norman VFD withdrew from the countywide fire tax district. Commissioner Johnson said there would be a 44% loss in the county -wide district revenues if Lake Norman became a separate district. Commissioner Robertson said that the consolidation of some of the fire departments had been reviewed; however, there didn't appear to be any advantages when trying to offset the 44% loss. Ken Jurney said the insurance ratings improvement program was about 80% complete. He said this equated to a $20 million reduction in homeowner insurance premiums. Tim Warren, President of the Firefighters Association, requested to be informed when the fire review committee met. Inspections/Code Enforcement Director Lynn Niblock said that if a larger meeting facility was needed, the Building Standards Center could be used. (A written activity report was shared by Deputy County Manager Jackson, and it reported the following fire department review committee activities: (1) low cost ways to improve access to water for fire departments such as ponds, current planning and zoning ordinances and dam regulations has been reviewed (2) a priority list for ISO rating improvements in each county fire district will be developed (3) fire chiefs will be surveyed about staffing, volunteer recruitment/volunteer incentives and (4) the statutory authority that allows counties to define fire tax districts will be researched. Abandoned Mobile Home Policy Planning Director Ron Smith, along with Solid Waste Director David Lambert, and Code Enforcement/Inspections Director Lynn Niblock, discussed an abandoned mobile home policy. Smith said House Bill 1134 (2007 Session) allowed counties to be reimbursed up to $1,000 for each abandoned mobile home. He said the county would have to develop and implement a plan through the Solid Waste Department. Smith said several counties including Harnett, Onslow and Buncombe County had been approved by the state for the program, and there was enough money for about five programs. He said if there was interest, a plan could be developed and submitted next fiscal year. Mashburn asked how much a thousand dollars would cover on one home. Smith said it probably would not cover the entire costs. Discussion of Future Capital Projects Courts, Jail & Recreation: County Manager Mashburn said it was known that funds were not available for capital projects, but he felt some discussion was needed. In regards to recreation, Mashburn said many inquiries had been made about the North Iredell Park. He asked for guidance on how to respond. Commissioner Robertson asked how much money had been provided by the community for Stumpy Creek Park after the land had been secured. Blumenstein said around $250,000. Recreation Director Robert Woody said about $80,000 was from foundations or businesses. He said the citizens had raised around $125,000 and the county had matched this amount ($125,000) for the $250,000 18 PARTF grant. Woody said the National Guard provided some of the initial land grading on the property that had been leased from Duke Energy. Commissioner Johnson said the citizens didn't realize the county provided only a portion of the Stumpy Creek funding. He said much of the money was raised through fundraisers. Commissioner Robertson said the next step was for the citizens to raise money, and then they could approach the board for matching funds. He said this understanding was clear, and he understood the community had only raised $6,000. Commissioner Johnson said money was loaned to Stumpy Creek out of the park fund (southern quadrant), but it was paid back. Commissioner Robertson said that on Stumpy Creek, the community had shown that they were committed to the park. He said, "Anyone can sign a petition, but they can also volunteer and sign a check." Commissioner Keadle asked the original "seed" money for Stumpy Creek. Woody said $125,000. He said that for North Iredell, it would take a million dollars to get the dirt up and graded. Woody said that if $500,000 were raised, and there was a match, at the least the grading and erosion control could occur. He said a master plan estimated the park's turn key costs to be at $4.5 million. Mashburn asked the park's acreage, and if only a smaller tract could be graded. Woody said there were 67 acres, but the land wasn't flat. He said to build one field, the top level, or dirt, would have to be taken, and this would alter the whole project. Woody said it was also cheaper in the long run to have all of the grading work done at one time. Commissioner Keadle asked if the right property had been selected. Commissioner Johnson said Stumpy Creek was more challenging from a grading standpoint. Woody said the site was "shovel ready," and the permits were in place. Commissioner Keadle said one individual had requested a resolution indicating that the board showed support for the park. Commissioner Robertson said the board offered support when the land was purchased. He said the county had showed up with a check. County Manager Mashburn said there was county money in the parks capital reserve fund but there were no long range plans to spend it. He questioned how much longer this practice would continue. Commissioner Johnson asked if any money had been added this year, and Finance Director Blumenstein said no. Commissioner Norman asked how much money was in the fund. Mashburn said $700,000. Commissioner Robertson said that if the community raised $500,000 then the county had $500,000. Commissioner Johnson said that only a fourth of the $700,000 was for the northern quadrant. He said the money, however, could be loaned. Commissioner Keadle questioned whether or not the $700,000 could be directed towards some of the county's debt. Commissioner Robertson said he would not be in favor of "raiding" the $700,000 because it would take the county a long time to raise it again. 19 County Manager Mashburn said it was being understood that no additional funding would be appropriated to the park reserve fund for FY 11, and the $700,000 should remain untouched. Commissioner Robertson said the county was in a financial crisis and either spending had to be cut or taxes would have to be increased. County Manager Mashburn said his understanding on the North Iredell Park was that when the community raised the money, then the county could be approached for assistance. Courts & Jail: Mashburn said the county had adequate space with the exception of the courts and jail. He said that even if funds weren't available now, it would take a two year planning process. Mashburn said the projects could not be "pay as you go," and the money would have to be borrowed. Deputy County Manager Jackson said the courts committee had met, and the sheriff had reviewed options. Mashburn suggested that a consultant work with the committee and sheriff to take the projects to the next step. He said cost estimates could be provided, and this would allow long-range planning. Commissioner Johnson said the costs would be based on today's market, and construction costs would be different four years from now. He mentioned that modular units might have to be used to house some of the weekend inmates. Mashburn asked if the board would be agreeable to budgeting for a consultant in next year's budget. Commissioner Johnson stressed that on courtroom space, a thorough examination should occur on how much was actually needed. He asked, "How efficiently are the court officials using the space now?" Jackson said that probably a consultant was needed to look at the efficiencies and to examine the square footage of the existing space. Mashburn said there appeared to be consensus that the committee could be reactivated with an understanding that professional assistance was needed. Vice Chairman Norman said Commissioner Ken Robertson could replace former Commissioner Sara Haire Tice on the committee. Completion of FYI l Priorities Commissioner Robertson said a directive had been given to the county manager on Friday to "close the gap on the departments that had the delta." He said this was still correct, but some clarification was needed. Robertson said the board did not want to stop work on some planning department projects, for example, the USA plan, the small area plans, the abandoned mobile home ordinance, or the lighting upgrade project in inspections. He said the board wanted the manager to know there was leeway, but the gap needed to be closed. Robertson said the board didn't want the manager to authorize something that might be regretted. He said that if the manager returned with a plan that did not fully close the gap, then the board would understand. Robertson said, however, it needed to be understood that "idle people could not be kept on staff for years on end." Mashburn said this was the direction that he planned to take for FY 11; however, it was now understood the board did not desire to wait that long. Commissioner Johnson said the lighting upgrade project would help. He said in addition, the new animal control building would need cabinet construction and so forth. Lynn Niblock said a new barn would also be needed at the animal shelter for horses and cows. He said this was a project his staff might be able to work on, and there was money in the project ordinance that could be used. Commissioner Johnson said that if the county had personnel with the skills and resources to provide the work, rather than paying someone from outside, then that was fine. He said, "The last thing we want to do is to send someone home, but do not create make-work projects." Johnson said if the county could bridge the gap with grant funds, then that would be agreeable. 20 Mashburn said it was understood the county wasn't supposed to "make work." He pointed out, however, that laying off an employee who made $50,000 didn't actually save $50,000 due to the county being self-insured. Request from Victor Crosby for Surrounding Counties to be Invited to a Meetine to Discuss Mutual Needs: Victor Crosby said he had spent 60 years working on water, water supply, and flood control issues. He requested for the county to invite surrounding counties to a meeting to consider mutual needs and to jointly apply for grants. Crosby said surrounding counties had similar problems as Iredell, and state and federal policy dictated that 20% of water funds be allotted or set aside for inter -county connection and uses. He said Iredell Water had discussed a new water tank in the northern end as a backup for all systems in the county, and Love Valley was trying to obtain a 200,000 gallon tank. Crosby said a larger tank might be needed, and a cooperative assistance arrangement between the counties could determine this. He said it was his belief the counties should meet and try to obtain the funds available for water and transportation issues. Adjournment: MOTION by Commissioner Robertson to adjourn the meeting at 11:40 a.m. VOTING: Ayes — 4; Nays — 0. Approval: 21 Clerk to the Board