Agenda - 09-09-2008- 3 - Laserfiche WebLink

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2 Preliminary FY 2009-10 General Fund Budget Outlook While it is early in the fiscal year, it is not too early to begin sharing fiscal needs that will potentially affect the County's upcoming FY 2009-10 annual operating budget. Attachment 2 of this agenda abstract is intended to give the Board a preliminary outlook of budget drivers likely to influence the FY 2009-10 budget. Highlights of the preliminary outlook include: • Projections for property taxes assume 3% natural growth in real property. • Orange County is nearing the completion of its property revaluation process. Revaluation is a systematic, in-depth process of reappraising all the real property in the county to the current market value and is necessary in order to maintain equitable and uniform property values among property owners throughout the county. North Carolina General Statutes require counties to revalue real property at least every eight years. The Orange County Board of Commissioners has chosen to authorize revaluations every four years. The next revaluation of real property will become effective on January 1, 2009. A direct result of revaluation is that the County's tax rate will be adjusted to be "revenue neutral". Revenue neutral is defined as the rate estimated to produce revenue for the next fiscal year equal to the revenue that would have been produced for the next fiscal year by the current tax rate if no reappraisal had occurred. Orange County's current tax rate is 99.8 cents per $100 of valuation, and it is much too. early in the budget planning process to anticipate what the revenue neutral rate will be. • Fiscal year 2009-10 sees the final year of the three-year phase in of Medicaid Relief/Sales Tax Swap legislation approved by the General Assembly in August 2007. The financial impact on Orange County includes a reduction of about $4.9 million in sales tax revenues with an offsetting expenditure reduction in Medicaid expenditures. • Over the last two-to-three years, the County has embarked on a number of major capital construction projects and long-term leases including schools, parks, libraries and other County and partner facilities. Given the County's limited pay- as-you-go capital funding, it has been necessary to debt finance these projects. It will be necessary, in the upcoming fiscal year, to begin repaying the borrowed monies as well as begin funding day-to-day operating costs such as utilities and leases. The projected increase in debt service and annual operating costs associated with new facilities totals $5.25 million. • During fiscal year 2006-07, Commissioners approved an employee pay and classification study. As the Board will hear later tonight, the consultant is nearing the completion of the study. Last spring, the consultant indicated a good benchmark for study implementation cost projections would be 10 percent of total salaries. • The number of students attending school in the County's two school districts has increased, on average, 385 students each year. The anticipated FY 2009-10 fiscal impact of 385 students at the current per pupil allocation of $3,200 totals $1,232,000. It is too early to predict the tax rate impact of the preliminary budget drivers. However, it is safe to say that the combination of anticipated revenue reductions and expenditure