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2 <br />is working with counties to determine ways to reduce the counties' <br />dependence on property tax and increase options for generating <br />revenues. <br />Expenditures <br />1. School funding. Currently 51 % of the county budget supports local <br />schools and Durham~Technical Community College. The board discussed <br />how funding levels were set and learned that in 2000, the board of <br />commissioners met with the school board and agreed to a target of <br />48.1 %. The following options were discussed for determining funding for <br />schools by tying funding to: <br />a. Annual increase in real property valuations <br />b. Consumer price index <br />2. Debt service. Board members were asked to consider how much the <br />county should take on in debt. The county is currently committed to $30 <br />million with additional projects such as parks, affordable housing and <br />Gateway needing funding. <br />3. General fund. Based on historical trends, natural growth in county <br />revenue from property tax is projected to grow by about 3.9%. This is <br />exclusive of revenue increases tied to recent real property revaluations. <br />However, the growth in revenue could be less due to the decline in <br />housing sales. Historical trends in expenditure growth is about 5.4% <br />Policy Issues for Board Consideration <br />] . Based on preliminary projections shared with the Board in September <br />2008, there is a projected $10 million gap between.revenues and <br />expenditures. Options for closing the gap include: <br />a. Reducing expenditures and raise revenues. <br />b. Looking for other sources of revenues. <br />c. Growing the commercial tax base. <br />2. if the board decides not to increase taxes and stay with the revenue <br />neutral tax rate for FY 2009-10: <br />a. What would the revenue neutral tax rate be and how much <br />revenue will that generate? <br />b. How to determine the level of funding for schools and other county <br />priorities? <br />3. What level of funding should be provided for schools? Should schools be <br />asked to "share the pain" with other priorities? Options to consider: <br />a. Cap expenditures at 48.1 <br />b. Do not use a ceiling for expenditures and consider other methods <br />2 <br />6 <br />