Agenda - 02-16-2017 - 2 - Solid Waste Five Year Financial Plan and Cost Study

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47 Orange County, NC Financial Plan and Rate Study for Solid Waste Enterprise Fund SCS ENGINEERS LIST OF MODEL ASSUMPTIONS GENERAL • The County provided FY 2016-17 Budget values for revenues and expenses associated with the Enterprise Fund. SCS compared these values with the previous 3 years of"Past Actual"values for FY 2012-13, 2013-14, and 2014-15, as well as the FY 2015-16 Original Budget and Revised Budget values, to assess the reasonableness of the Budget. Obviously, certain revenues and expenses have been dramatically changed since the closing of the County's sanitary landfill in June 2013. Generally speaking, SCS concluded that the FY 2016-17 Budget values for the anticipated revenues and operating expenses that the County provided were appropriate and reasonable based on our understanding of the County's solid waste and recycling programs and facilities operating under each of the four divisions. Furthermore, SCS concluded that the FY 2016-17 Budget values for approximately 33 revenue line items and 50 operating expense line items were appropriate to serve as the baseline, or "Test Year" for projecting the subsequent four future fiscal year revenues and operating expenses. The exact manner in which these projections were accomplished is described below. • Line item accounts that had a value of zero for the FY 2016-17 Budget were anticipated to be zero for all future years and, thus, were essentially excluded from the analysis. Only Revenue and Expense account line items with a value greater than zero were included in this analysis. • Future projections for line items are escalated using the annual inflationary factor of 2.1%, which represents a calculated average of historical CPI. • For purposes of characterizing annual deficits within the Enterprise Fund as being funded by revenue that would originate from potential increases to the County's property tax rate (per$100 of assessed value), SCS assumed that each $0.01 incremental increase to the tax rate yielded$1,655,660 in annual revenue. REVENUES • Future projections for the 33 revenue line item accounts for the four subsequent fiscal years (FY 2017-18, FY 2018-19, FY 2019-20, and FY 2020-21) are either maintained constant or escalated using the annual inflationary factor and the Test Year as the baseline, unless noted in the table below as being handled differently. • County Solid Waste Programs Fee: The current fiscal year(FY 2015-16) is the first year in which this revenue line item account has been in effect and SCS understand it reflects the initial Program Fee of$107 applied to 60,178 parcels. Projections for the four future fiscal years were escalated by 1.1%,which is the projected annual population growth, to reflect the fee being assessed for additional parcels. c- 1