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APPROVED 9/16/2008 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS Budget Work Session May 8, 2008 7:30 p.m. The Orange County Board of Commissioners met for a Budget Work Session on Thursday, May 8, 2008 at 7:30 p.m. at the Southern Human Services Center in Chapel Hill, N.C. COUNTY COMMISSIONERS PRESENT: Chair Barry Jacobs and Commissioners Moses Carey, Jr., Valerie P. Foushee, Alice Gordon, and Mike Nelson COUNTY COMMISSIONERS ABSENT: COUNTY ATTORNEYS PRESENT: Geof Gledhill COUNTY STAFF PRESENT: County Manager Laura Blackmon, Assistant County Managers Willie Best, Gwen Harvey, and Clerk to the Board Donna S. Baker(All other staff members will be identified appropriately below). Preliminary Outlook of Fiscal Year 2008-09 Budget Drivers a. Real Property Valuation and Property Tax Revenues Budget Director Donna Coffey said that the current property tax rate is .95 per hundred dollar valuation, the valuation prediction for next year is about $11.4 billion, and the Homestead exemption would reduce that amount to $11.3 billion. This is only a growth of 2.3% since last year's budget. The total valuation has grown by about $230 million. One cent on the tax rate next year would generate $1,274,655, which is a 2.1% increase over the current rate. The valuation is clearly not growing at the rate of expenditures. The expenditures over the last ten years have grown at the average rate of 7.3% per year. Laura Blackmon said that the current Consumer Price Index will be 4.1%, so there is a gap between the valuation increase and the CPI. This coming year will be difficult as the economy continues to slow down. Chair Jacobs asked about the increase in revenue divided by the property valuation and Donna Coffey said that if the County stayed at the same property tax rate, it would get $112 million from property taxes. b. Sales Tax Revenues Laura Blackmon said that sales tax revenues will not increase as predicted. For the first six months, the targeted amount was $13.5 million and the received amount was $12.5 million. Next year is the second year of the three-year Medicaid Relief/Sales Tax Swap. The State is also keeping some of the proceeds of the Article 39 sales tax to help offset the new costs associated with Medicaid. In addition, the State is changing the sales tax distribution formula from a per capita distribution to a point of sale distribution, further reducing sales tax amounts that counties with smaller retail bases receive. Next year's sales tax revenues are anticipated to be lower than currently budgeted, which is $23.2 million. Staff is working with representatives from the NC Association of County Commissioners to finalize how the legislation will affect the upcoming revenues.