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General Revenue Highlights: Regarding the general revenue, the largest source of revenue is the property tax {65°k) and sales tax {15%). The Board has petitioned the general assembly for many years to try and pursue alternative revenue sources to reduce the reliance on property tax. The tax base has increased by about 4-4.5°~, which means it has gone up $400,000,000 to a total of $9.8 billion. He reported that the tax collection percentage would be close to the 98.7°~ that was achieved last year. This is the top rate in the State. The County's financial picture remains solid. This budget calls for an appropriation of two million dollars from the fund balance to balance the budget, leaving 10°~ of the general fund for the fund balance next year. Because of the severe budget cuts from the State, the County had to cut $4 million out of the budget last year. The State did allow counties to enact a '/z cent sales tax, and this will generate approximately $3.4 million next year. General Fund Expenditure Highlights: Education: Orange County leads all other counties in the State in per pupil contributions with $4,405 per pupil. The next highest county is Carteret County, with $3,782 per pupil. The increase in the general fund appropriation for education increased by 6.3% and totals $63 million. The Board of County Commissioners' target funding level for education is 48.1 %. He is recommending that the per pupil allocation {operating expenses) be increased from $2,516 to $2,566. The figures from the Department of Public Instruction indicate that Orange County Schools (OCS} is expected to have an additional 309 students and the Chapel Hill-Carrboro City Schools {CHCCS) is expected to have an additional 295 students. He then explained the formula for calculating the recommended current expense funding far the schools. The percentage of total request funded for the CHCCS is 98.24% and for the OCS is 84.9°~. He explained that the OCS asked for mare funding, proportionally speaking. Another recommendation is to increase the CHCCS district tax by .8 cents, going from 19.2 cents to 20 cents per hundred-dollar valuation. This would generate approximately $12.47 million, which is the equivalent of $1,165 and would address the start-up costs of Rashkis Elementary School. Human Services: John Link said that the Medicaid increase this year is only $140,000. He has also recommended the continuation of the Human Services Safety Net by recommending an additional $200,000 in the budget for the coming year. Also, the funds from last year would be carried over. Debt Service: The County issued $22.65 million in 2001 voter approved bonds (sold in March 2003) along with alternative financing. The associated debt service is $1.1 million for 2003-04, which equates to 1.2 cents on the proposed tax rate increase. Public Safety: He commended EM5 Director Nick Waters and his staff and the Rescue Squad for the difficult transition whereby the County will assume responsibility for EMS