There’s no tax increase in the FY2015 budget that Moore County Manager Wayne Vest proposed to the Board of Commissioners during their Tuesday, May 20 regular meeting.
If ultimately approved, the budget would hold the property tax rate at 46.5 cents per hundred dollars of valuation, where it has been since FY2010. On top of that, County property owners would continue to pay two cents per hundred for the county's Advanced Life Support levy, which funds Moore County EMS.
Fire district tax rates, which range from a low of four cents in Seven Lakes to a high of eleven cents in the Cranes Creek district, will also remain unchanged, with one exception. West End Fire and Rescue is seeking a one cent increase, from 5.9 cents to 6.9 cents, to pay for new equipment.
The total proposed budget, net of internal transfers between the various county funds, is $120.8 million, up $943,315 from last year's initial budget.
The county budget is made up of a number of funds, some of which do not depend on tax dollars to operate — for example, public utilities, which derives its revenue from the rates customers pay for water and sewer service.
Taxes go primarily to support the general fund, budgeted at $89.9 million, a $1.9 million increase over last year's budget. General fund expenditures include core government services like schools and law enforcement.
Commissioners praise manager, budget team
The commissioners were generous in their praise of Vest and the budget team.
"In the last six budgets," Commissioner Picerno said, "the property taxes in our county, paid buy our taxpayers, has either been reduced or maintained. This was no small feat. Many in America still say that this was one of the most difficult, and economic terms, that our country has ever faced."
Commissioner Jimmy Melton said that Vest's budget was "the best budget that I have seen in my time on the board."
Cost of living raise for county employees
The manager's budget includes a two-percent cost-of-living increase for county employees but also increases copays in the employee health insurance plan -- as well as requiring employees to pay $15 per pay period for their coverage.
That $15 charge can be avoided if the employee participates in a biometric screening and wellness program aimed at producing healthier employees while reducing claims.
Vest said the county was initially looking at a 14 percent per employee cost increase for health care coverage, but, with the cost-cutting measures, was able to reduce that to 6.3 percent.
Funding for Moore County Schools [MCS] and Sandhills Community College [SCC] consumes 42.81% of general fund dollars.
School funding up, negotiations underway
MCS requested $28.9 million in county funding for FY2015, a $2.3 million increase over last year.
The proposed budget falls $1.8 million short of meeting that request, though it does provide an additional $488,000.
MCS requested $750,000 to support its digital learning initiative, which aims to put a laptop or tablet computer in the hands of every student in the district. The manager's budget cut that to $600,000.
Commissioner Randy Saunders noted that MCS had spent less than the $750,000 the commissioners contributed toward that effort last year.
Praising MCS' stewardship, Saunders said, "The schools still have about $180,000 in that account, so we were able to allocate only about $600,000. So we put the $150,000 into [their] current expense [budget]."
Finding a funding formula
But the real story on school funding lies behind all those numbers.
The Commissioners, the Moore County Board of Education, and MCS administrators have been actively negotiating for the past few months, attempting to develop a predictable formula for funding the schools.
The idea is to allocate a fixed percentage of county tax revenue to MCS. A similar deal has already been worked out with the community college. County Manager Vest's budget proposal suggests that 35.61% is the magic number for the school district.
But too many questions remain for the funding formula to be finalized for FY2015. MCS believes that is being shortchanged by the state, and the county is applying pressure to state legislators the fix that problem. If more state funding is available, then the percentage of County revenues allocated to MCS might be adjusted downward.
Right-sizing the MCS fund balance
Another key issue still under negotiation is the appropriate size of the MCS fund balance. The “fund balance” is the extra cash on hand that remains unspent at the end of the year. It's carried over from year-to-year as sort of a rainy day fund.
MCS built its fund balance from $2.4 million in FY2007 to $12.4 million in FY2012, primarily by banking a temporary increase in federal funding that was part of the American Recovery and Reinvestment Act — the federal "stimulus."
But recent cuts in state funding, combined with the growing student population, have rapidly depleted that fund balance. It's expected to shrink to $5.7 million by the end of this fiscal year.
The Board of Commissioners have been consistently skeptical of MCS's need for a substantial fund balance, because the county maintains its own set of rainy day accounts.
The county's financial policy caps the amount it can hold in unallocated fund balance at fifteen percent of general fund revenues. That amounts to approximately $12.5 million. Any excess is transferred into capital reserve funds, which currently total about $18.1 million.
So, the county has access to more than $30 million that, the commissioners believe, is adequate to fund any emergency need for cash that the school district might encounter.
Changing the facts on the ground
With the county and MCS preparing budgets in the midst of negotiations about the right size of the school district's fund balance, both appear to have built their negotiating positions into their respective budgets.
Though MCS's budget for the past few years has included spending a portion of its reserved fund balance, this year's budget did not include drawing down the rainy day fund. MCS Budget Director Mike Griffin told the school board that the fund balance is a non-renewable resource which can't be tapped indefinitely.
However, the commissioners may feel that, at $5.7 million, the MCS fund balance is still in need of a bit of trimming. So the manager's budget, assembled by a team that included Commissioners Saunders and Nick Picerno, provides the school district with less than requested, and the difference will need to be made up by spending some of the MCS fund balance.
Exactly where the numbers will come out is likely to be worked out in negotiations over the next few weeks.
But time is short. A public hearing on the budget is scheduled for the June 3 regular Commissioners meeting; a vote is expected at the June 17 meeting.