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base by $300 million from original 2001-02 estimates. Property taxes remain the largest single source of revenue. Regarding the anticipated State withholdings for fiscal year 2001-02, the total anticipated loss far Orange County is $712,200. The tax rate equivalent is .78 cents. This includes inventory tax reimbursements of $454,700; beer and wine taxes of $195,000 and homestead reimbursements of $62,500. The budget includes $3.1 million in State reimbursements. This is intended to send a clear message to Raleigh that it is wrong and unacceptable far the State to seize funds that rightfully should come to the citizens of Orange County. During June work sessions, the Board should consider whether it wishes to reduce the proposed budget by $3.1 million. There is a possibility of an additional '/ cent sales tax next year. This is intended to replace the local government reimbursements from the State. The interest earnings have decreased significantly this year because of the economy. General Fund Expenditure Highlights The total general fund appropriation for education increased by 4.9% and totals $60.6 million. The overall share of the County budget is 49.3°~. He explained the State mandated funding formulas. The Chapel Hill-Carrboro City School system is projected to gain 234 students and the Orange County School system is projected to lose 160 students. The recommended increase is based on the formula for CHCCS and totals $1,392,964 for Chapel Hill Carrboro City Schools and $115,364 for Orange County. Since the formula has given the CHCCS more money than they requested in the budget, he is recommending that the district tax be reduced by one cent. This money could be used to address initiatives identified by the District as important budget priorities such as minority student achievement efforts. There is another major increase in Medicaid expenditures for this year. The proposed budget allows for an increase of $600,000 for next year. The two-year cumulative increase in this mandated expenditure is $1.37 million. The County has created a reserve of existing funds of $110,000 that could be used to offset State related human service budget cuts that occur after the Board approves the County budget at the end of June. This fund was created by reallocating funds from the Department of Social Services and the Child Care Challenge Grant. The proposed budget provides the same funding allocations for non-profit agencies as the current year, including funding for the Towns for Recreation and Libraries. Last summer, the County issued $17.4 million of the 1997 voter approved bonds. This represents two cents of the proposed tax rate increase. The proposed budget includes $250,000 to fund the increases for salaries for Deputies, Telecommunicators, and Paramedics. This is a result of the Public Safety Study, which implemented a 5% retention salary increase. The proposed budget provides $12,000 a month for three months to continue the transportation contract with the Orange EMS and Rescue Squad. The staff will examine options and develop recommendations regarding EMS transportation beyond October 1, 2002. Regarding employee pay and benefits, the proposed budget does not include cost-of-living adjustments, in-range salary increases, and meritorious service awards. The countywide classification and pay study is postponed until fiscal conditions improve. There are funds included in departmental budgets for the County's portion of a projected 18°~ increase in employee health insurance. The proposed budget does include a contingency fund of $145,000 to increase employee pay and benefits as the Board decides. Solid Waste Enterprise Fund The Rogers Road neighborhood waterline has been installed. The recycling drop-off center at Carrboro Plaza is complete. The proposed budget includes four additional staff positions to bring the multi-family recycling service in-house. There are two new positions associated with the County's recent adoption of the Regulated Recyclable Materials Ordinance. There will be no increase in the per ton tipping fee for mixed solid waste. The top priority for the upcoming year is to evaluate alternative financing mechanisms to supplement the fund's traditional revenue structure.