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APPROVED 10/15/02 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION 7:30 p.m. June 20, 2002 The Orange County Board of Commissioners met in regular session for a budget work session on Thursday, June 20, 2002 at 7:30 p.m. in the boardroom of the Southern Human Services Center in Chapel Hill, North Carolina. COUNTY COMMISSIONERS PRESENT: Chair Barry Jacobs and Commissioners Margaret W. Brown, Moses Carey, Jr., Alice M. Gordon and Stephen Halkiotis COUNTY STAFF PRESENT: County Manager John M. Link, Jr., Assistant County Manager Rod Visser and Clerk to the Board Beverly A. Blythe (All other staff members will be identified appropriately below) NOTE: ALL DOCUMENTS REFERRED TO IN THESE MINUTES ARE IN THE PERMANENT AGENDA FILE IN THE CLERK'S OFFICE. 1. Chair Review of Schedule and Topics Chair Jacobs said that there are two public hearings being held tonight. The first one is on the Article 44 Sales Tax and the second is on the 2002 Orange County Legislative Agenda. Also, at the County Commissioners' places, there is a blue sheet, which reflects an amendment to the Legislative Goals. There is also a yellow sheet, which summarizes some of what the State Senate decided to do regarding the budget. 2. Public Hearing —Article 44 Sales Tax John Link referred to the rose colored document in the agenda packet. He made reference to the third page and said that the General Assembly increased the State sales tax by % cent (to 4.5 cents) effective this year until July 1, 2003. The law authorizes the counties to enact a local % cent optional sales tax that would be effective July 1, 2003. It could also be enacted later. The tax proceeds will be allocated among participating counties with 50% on the basis of population and 50% on the basis of point of origin. Food purchased for home consumption would be exempt from Article 44. The new tax is intended to replace the existing State reimbursements, which will be repealed effective July 1, 2003. The sales tax would generate for Orange County approximately $3,318,669. Chair Jacobs made reference to the Senate bill that passed and said that it includes a hold harmless provision so that, even if the sales tax started later, it would raise the same revenue that we might have otherwise realized in reimbursements. Also, the Senate has authorized counties to enact this tax without a public hearing. Commissioner Carey verified that the sales tax would generate the same amount that the County is losing from the State from existing state reimbursements. John Link pointed out that we have been advised to conduct another public hearing before the summer break that would indicate to the Department of Revenue our intent to enact the sales tax. There is a placeholder on the June 27`h meeting for such a public hearing. Commissioner Halkiotis asked what we would do if the action taken by the Senate yesterday, which would give teachers a 1.8% salary increase, was put in place. He said that both school systems did not factor in an increase in salaries. He asked where the County would find the money to pay for this and other things that the State decides to do after the tax rate is set.