Agenda - 11-15-2004- item 1 - Laserfiche WebLink

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z Staff will provide a detailed PowerPoint presentation at the work session to focus discussion on a number of specific sustainability considerations, Attachment A - sustainability Discussion Flowchart b. Overview of Revenue Picture: A key element that impacts sustainability is revenue. The staff presentation will touch on a variety of subtopics related to the County's overall revenue picture, including property tax revenue, property tax base, sales tax revenue, intergovernmental revenue, recent historical use of non-recurring revenue for operations, and fund balance. The Manager's 2004-05 budget message noted that the recommended appropriation of fund balance represented about 1,5 cents on the tax rate, compared to an appropriation four years before equivalent to 5.5 cents on the tax rate. The reduction in available fund balance over recent years is a direct reflection of the downturn in the economy and of unfavorable State budget actions that have included specific State funding reductions for certain county programs and the withholding by the State of revenues earmarked for local governments. As noted in an accompanying chart, Orange County's reduction in available fund balance in recent years parallels the experience of the other larger counties throughout North Carolina. The Manager wrote that "The good news is that fiand balance has been doing exactly what it is supposed to do -help us weather the tougher times associated with amulti-year State budget crisis and a faltering economy," However, the end result is less flexibility to absorb "bumps in the road", and greater reliance on increases in the property tax rate to produce needed resources to sustain schools and County services, The final observation in the budget message was that "I hope that we can work to the extent possible in the coming years to build fund balance back to our condition of the late 1990s to early 2000s that reflected a range of 12 to 15 percent of annual General Fund expenditures". One of the final tasks associated with the Board's adoption of the 2004-05 County budget was for staff to identify $400,000 in expenditure reductions to match the additional decrease of .4 cent in the recommended tax rate that was reflected in the June 23, 2004 adoption of the 2004- 05 budget ordinance, Staff are pleased to report that the required savings have been surpassed, primarily through hiring delays, lower than anticipated health insurance costs, and lower debt service costs resulting from post-budget adoption changes to the debt issuance plan with the Local Government Commission. Staff will continue to pursue additional budget savings throughout the remainder of FY 2004-05 both to improve our fund balance position for 2005-06 and to provide additional flexibility to address in 2005 objects of expenditure that have been identified since budget adoption and accordingly were not included in the 2004-05 budget. Attachment B-1: Chart -Unappropriated Fund Balance Attachment B-2: 4/05/Q4 Local Government Commission Staff Memo re,° "Fund Balance Available for Appropriation" c. Short Term Funding Initiatives Affecting sustainability: Along with revenue, the other major elements of sustainability relate to the funding needs to sustain operations, programs, and initiatives over time, As noted above, the BOCC and staff recognize that there are numerous initiatives already in progress or to be undertaken in the near term that will affect county capital and operating budgets soon, These include, but are certainly not limited to: employee retention, debt service for bond and alternative financing projects, mental health reform, and parks development and operation, As part of the PowerPoint presentation, staff will