Agenda - 08-30-2007-4 - Laserfiche WebLink

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2 the equivalent of 3 cents on the annual ad valorem property tax to fund recurring School capital expenditures plus the equivalent of 1 cent on the annual ad valorem property tax to fund recurring County capital projects. However, the Board also acknowledged that there will be times when the "County will be bound fiscally and unable to achieve full funding. During those times, Commissioners may find it necessary to depart from the Capital Funding Policy." The Policy further states that the Board of County Commissioners will consider a timetable for phasing in the additional two cents necessary to fund the recurring capital component of the Policy. ~: Public School Building Funds (PSBF) & School Construction Impact Fees (SCIF) - The County's Capital Funding Policy dedicates PSBF and SCIF to repayment of .school related debt. Since the adoption of the policy in April 2007, a number of events have occurred that ultimately affect current and future capital revenues. For example, 2007 NC General Assembly budget action related to the Medicaid Relief/Tax Swap reduces PSBF monies anticipated in the County's current year budget by $457,024 thereby causing a revenue shortfall in the County's 2007-08 General Fund budget. In addition, the State plans to fund Medicaid Relief by rescinding Article 40 sales tax authority and redistributing a portion of Article 42 sales tax. The distribution change associated with Article 42 (beginning in fiscal year 2009-10) will have a negative impact on future County and School capital funding. The General Assembly also gave counties authority to levy either a new one-quarter cent sales tax or a 0.4 percent land transfer tax, subject to voter approval. As of the date of this work session, Commissioners have not decided on their choice of moving forward with voter approval of one of these new revenue options. Should the Board choose to pursue the recently authorized revenues, Commissioners could also elect to use the funds for annual operating costs; debt service or capital infrastructure since the legislation does not restrict the use of these funds. Other future capital considerations relate to retirement of debt. Beginning in fiscal year 2010-11, annual payments for school related debt decreases due to payoff of the following debt McDougle Elementary in FY 2010-11, Cedar Ridge High in FY 2011-12, .and Scroggs Elementary and a portion of 1988 and 1992 voter approved bonds in FY 2012-13. With the retirement of this debt come additional policy considerations for Commissioners such as impact on the ad valorem tax rate. FINANCIAL IMPACT: Following the Board's direction to staff regarding current and future capital revenues, staff will provide analysis of the fiscal impacts. RECOMMENDATION(S): The Manager recommends that the boards discuss the County Capital Funding Policy and issues noted and provide direction to staff (1) with regard to the Public School Building Fund revenue shortfall in the current fiscal year and (2) with regard to future capital revenues.