Remarks – Harry L. Jones, Sr., County Manager
County Manager’s Recommended FY05 Budget
May 17, 2005
Mr. Chairman, members of the Board, distinguished guests and residents of Mecklenburg County…
As I did last year in presenting my recommended budget, I will concentrate my remarks on the principles, goals and strategies associated with this budget. My comments will be followed by a very brief video that will highlight the key budget numbers and how the recommended budget increase will impact County taxpayers.
I want to make sure those watching at home are aware of how we arrived at this budget recommendation.
In January and February, the Board re-prioritized the County’s 56 Program Categories into seven priority levels based on the three broad criteria of:
• Relevance to the County’s mission and goals;
• Performance in achieving desired results; and
• Efficiency in allocating and managing public funds
These Program Categories comprise 259 separate services funded by the County.
These priorities of the Board serve as a foundation for building a recommended budget.
Other factors that were used in building the budget included:
• The Board’s three-year strategic business plan
• The Board’s vision for this community and the current state of the County compared to this vision; and of course,
• Various mandated and other legal funding obligations.
Two weeks ago I informed the Board that, at the current tax rate, we will not have enough growth revenue to pay for the services we provide right now. That’s because our mandated costs consume all of the additional money that will be generated by growth in the tax base, sales tax and other revenue sources. This leaves us literally in the red before we begin to pay for current services and before we can even consider paying for new or enhanced services.
Therefore, the choices we have are fairly straightforward. We can:
1. Find savings through efficiencies
2. Reduce or eliminate services we provide right now
3. Generate additional revenue beyond what we’ll collect at the current tax rate; or
4. Some combination of all three choices.
Let me talk about choice number 1 – Finding savings through efficiencies. I’m pleased to report that County staff identified approximately $8 million in efficiency savings. We define efficiency savings as the dollars we can cut from existing budgets, or projected increases we can avoid without reducing the level of service we provide. As a result of these efficiency savings, the cost to provide the same County services next year will increase by only 1.3%, or $4.5 million.
Frankly, this is a remarkable example of holding the line, because we had to absorb mandated increases such as $1.1 for Medicaid, contractual obligations such as a $1.4 million increase in the Health Department contract, as well as normal business increases such as $1.9 million for the annualized cost of employee merit increases provided in this year.
Still, while County staff did a good of redirecting efficiency savings to cover most of the cost increases in County services, it was simply not enough to cover our largest cost increases, particularly debt service.
The bottom line is that despite a gallant effort, we simply cannot identify enough in efficiency savings to pay for all our mandated cost increases, while also funding the services we provide right now.
This takes me to the second choice: Reducing or eliminating some of the services we provide now. This is a viable option…but this choice has serious consequences.
The plain English version of the consequences is that if we reduce or eliminate service costs to the level needed to balance the budget at the current tax rate, we will not be able to achieve the Board’s goals for this community. Now, I am not sounding an alarm. I also do not make this statement lightly. I say this as your manager using my professional judgment. Here’s why.
Let’s consider the Board’s vision as represented by the Community and Corporate Scorecard. The Board identified 24 desired results it wants to achieve for this community by the year 2015. To date, we are approximately 9 years away from this deadline. This may seem like a long time, but it is not. Since the Board established its vision 4 years ago, we have managed to achieve 10 of these 24 desired results. This is good progress. However, some of these results were achieved as low-hanging fruit. But achieving these goals becomes much more difficult after the first few years. Now, we find ourselves with less than a decade to:
• First, sustain these 10 results as green lights for the next 9 years; and,
• Secondly, to improve performance dramatically in 14 other desired results.
Again, we should be pleased with our progress so far. But we will not continue to make progress if we significantly reduce or eliminate services that are needed to reach the Board’s desired destination.
The good news is that we know where we need to concentrate our efforts to improve performance. They are identified on our scorecard as well as articulated in the Board’s three-year strategic business plan.
Essentially, we are at another defining moment for the Board and for this community. The question is whether we are truly committed to the vision and goals this Board has established. If we are not committed, or if we are committed only to having no tax increase, then by all means we can reduce and eliminate services.
But if we are committed to the Board’s vision and goals, we also must be committed to sustaining the services that will achieve this vision and these goals.
It’s a choice, with clear consequences.
One of the consequences we need to recognize is that services equal taxes. This brings me to choice number 3 – generating additional revenue.
We have few options for generating additional revenue. Based on state law, we are largely dependent on the property tax as our primary source of revenue. Therefore, generating additional revenue, above what we receive through normal growth, almost always means we must increase the property tax rate.
But as you recall, I also mentioned a fourth choice -- combining the first three choices. This fourth combination of choices is the strategy I have selected in developing a recommended budget for next fiscal year.
I have already mentioned that we have identified $8 million in efficiency savings. I also have recommended $3 million in service reductions and eliminations from the current budget. But clearly the most significant aspect of my recommended budget is an 8.21-cent increase in the countywide property tax rate. This is 10.9 percent increase in the property tax rate, which will generate an additional $68.3 million for FY 2006.
This tax rate increase is required to fund services that have demonstrated value to the community and are most likely to continue achieving the results desired by the Board.
Funding Priorities
Ninety percent of county revenue is allocated to the Board’s top three program category priorities, and 67.6 percent of recommended funding is within the Board’s number one program category. The strategy here is to make sure we fund our core services.
The recommended budget will result in a $144 property tax increase for the owner of a home with an assessed valuation of $175,000, which averages out to $12 a month.
In a few minutes, we will run a video that will provide key details about this recommended tax increase and the value taxpayers will receive. First, I would like to discuss the principles and key strategies associated with this recommendation.
Budget Principles
Consistent with our Managing for Results philosophy, the County Manager’s Recommended Budget for FY 2005 – 2006 is based on the following six principles:
• Understandable
• Responsible
• Sustainable
• Affordable
• Choices; and
• Consequences
I will spend time on each of these but primarily will address the principles of a responsible, sustainable and affordable budget.
Key Strategies
There also are 4 key strategies that I am recommending the Board endorse as part of adopting the FY 2006 budget. I will link these strategies to our budget principles. These strategies will address the following:
1. How we pay for capital projects…specifically adopting a pay-as-you-go approach to control debt
2. How we pay for major business imperatives, such as facility repairs, fleet replacement, and technology improvements
3. How we consider CMS funding…specifically related to our partnership with the state and in the context of focusing on the need for County services
4. How we recruit and retain a qualified and high-performing workforce
Understandable
First, let me talk about the principle of having an understandable budget. We seek to be a transparent government. We want our business plan and our budget to be understandable to the Board, to our employees, and particularly to our customers and stakeholders, the residents of Mecklenburg County.
As a result, our business plan, the recommended budget, and the County organization itself are structured from the citizen’s perspective – by programs and services, not by departments. Information is presented this way to create transparency in our priorities and goals, current performance, recommended funding and services, and the results taxpayers should expect for their investment.
This transparency and understandability is intended to help people connect taxes with services and services with taxes. It also allows the Board and residents to assess the value of funding specific services.
Employee Compensation
Part of being a transparent government is having wholesome dialogue with the Board on challenging issues. One of our greatest challenges as an organization is recruiting and retaining qualified and high-performing workforce. This was not as much a challenge in years past when the culture of workers was to find a job and stay with it for their entire career.
But just like in the private sector, this generation of workers is at or close to the age of retirement. A new generation – indeed more than one generation – of employees are now part of our workforce. This presents new challenges for us in attracting and keeping the best and brightest.
Right now, we have a red light for employee recruitment and retention. To be competitive in recruiting and retaining qualified and high-performing employees, Mecklenburg County must be competitive in payroll and benefits. Last year we demonstrated to the Board that our benefits plan is competitive, though not rich. Earlier this year, we shared with the Board the preliminary assessment from our consultant, Fox Lawson, that our salaries are slightly behind the market. In addition, the market continues to move at about 3 to 3.5%.
As part of my recommended budget, I have included $8.9 million to implement a market-based compensation strategy to employee pay. Essentially, this strategy says we will pay employees the average pay in the market for comparable work.
This $8.9 million represents the cost of adjusting salaries and benefits approximately 3% to match the increase in the market for various pay lines. This amount represents approximately 5% of our current payroll costs, which Fox Lawson recommended we budget to implement market-based pay in FY 2006.
We also have budgeted again this year a 2.7% increase to payroll to fund our pay-for-performance merit increases. The market-based compensation and pay-for-performance go hand-in-hand as critical strategies in managing our human capital.
I know each year at this time the Board receives comments from a few people who, frankly, are angry that we would even consider paying county employees more, particularly when we’re contemplating raising taxes.
But I also know that this Board sees first-hand the excellent work and amazing commitment of county employees. This doesn’t happen by accident. It begins with this Board’s recognition that we cannot serve our customers and this community without superior people. We cannot be effective and efficient without motivated and satisfied employees willing to go the extra mile to learn and innovate.
We are building a new culture in Mecklenburg County…a learning organization where employees have the knowledge and skills to contribute to our goals…where employees have the ability to make substantive decisions…where employees understand the meaning and impact of their jobs…and where employees are paid fairly and rewarded for their performance.
This, I believe, is what the Board wants and what this community wants in their county government.
Responsible
We also want a responsible budget. While people may have philosophical differences about the size of government, most people would agree that we need better government. I submit that better government means a responsible government.
For Mecklenburg County government to be responsible, our business plan and budget must be capable of moving us closer to the Board’s vision for this community. We must set goals and priorities that are responsive to the most pressing needs of this community. We must align our programs services with these goals and priorities. Our resources must be managed using sound business practices. Our employees must be empowered to serve our customers, and must have the knowledge, skills and abilities to innovate. Our business processes must be streamlined and efficient. These are the characteristics of a responsible government, a better government.
A responsible government must have the will to invest in those services that do provide value, even if that means raising taxes. Without exerting this will, we have no goals or priorities, except one – to maintain or cut taxes.
However, a responsible government cannot be all things to all people. Therefore, we must have the will to say no and eliminate services that do not provide value. Without exerting this will, we have no goals or priorities, except one -- to fund anything.
Schools
This brings me to the issue of education funding. Given what I just said about being a responsible government, two main considerations have emerged in developing my strategy for recommendation funding for Charlotte-Mecklenburg Schools. The first consideration is that we have a partnership with the State of North Carolina in funding public schools. This Board has discussed at length the so-called funding formula for CMS. But we should not lose sight that we already have a funding framework for public education funding in this state. This framework says that counties pay the cost to build, renovate and up fit school buildings, and that the state pays for school operations.
The second consideration is that while education is clearly a high priority for this Board and for this community, we have other significant needs that simply cannot be ignored. As a result, part of my responsibility in recommending a budget is to help the Board and the community maintain its focus on county services.
In developing my recommended budget this year, I have probably spent more time than in any other year thinking about CMS funding and scrutinizing the Board of Education’s proposed budget for next year.
I’m particularly interested in dispelling the myth that the Charlotte-Mecklenburg Schools has not received a funding increase in the last three years. To those who believe this, I say you are misinformed.
First, Mecklenburg County has provided CMS with $21 million in additional funding over the last three years. This has been in the form of capital funding to build and renovate schools. This is the County’s legal obligation for schools, along with some additional mandates for facility maintenance and supplies. We see the impact of this investment in our debt service increase this year…and in years to come.
During the last three years, CMS also has received $89.9 million in additional funding from the State of North Carolina. This year alone, the state provided CMS with $57 million more in operational funding. This year’s allocation increased the state’s funding per pupil by $480 when averaged against the full CMS student population. The increase was $12,000 per pupil for each new student this year. Of course, this is the legal obligation of the state – to fund public school operations.
During these same three years, the County has continued to supplement that state’s funding by $261.5 million for operations. This year, the Board added another $6 million for the High School Challenge grant.
I recognize that CMS -- as well as CPCC -- continue to grow in student population. We have a funding formula that says CMS should receive an additional $13.9 million to pay for the projected growth in students next year – an estimated additional 4,771 students. The Board of Education says it needs $20.8 million more from the County just to keep pace with this growth. On top of that, the Board of Education would like $38 million for various enhancements. The Board of Education also projects an additional $42 million next year from the State of North Carolina.
My recommended increase for CMS is $27.8 million, which includes an increase of $18.4 million for operations and $11.9 million for capital costs. Candidly, I make this recommendation with some reluctance on the operating side. The rationale for this increase is that I believe the $18.4 million increase will be sufficient to cover the cost of new students in the CMS system. However, my reluctance is based the recent history of increased state funding of CMS along with projections for another significant increase next year. This is how the system is designed to work. The state funds operations; the county funds capital. While many believe the state has not always met its obligations, there is strong evidence that recently the trend says otherwise.
My concern is that while we – the County – have few viable options for alternative sources of revenue, CMS does have an alternative source of revenue…namely the County. Given the many other issues we must address to achieve the Board’s goals, we must be very careful about serving as an alternative revenue source when we don’t have an alternative revenue source ourselves, other than property taxes.
Again, I recognize that this Board has a strong interest and desire to ensure our schools have the resources it needs. I share and support this interest by the Board. As a result, I have recommended what I have recommended…although reluctantly.
I also am recommending that the Board allocate $3.6 million in FY 2006 for the CMS High School Challenge. This is a prorated amount for FY2006. This year, CMS received the full $6 million for the High School Challenge in November 2004. As a result CMS received 12 months of funding but only had 7 months left for implementation. As a result, CMS should have a balance that can be added to the prorated amount to result in a $6 million total available for FY 2006.
I also would like to mention that this recommended budget includes an additional $614,700 to fund 10 additional school health nurses and 1 contract supervisor for the public schools.
When combined with $88 million in CMS debt service costs, the total recommended County appropriation to CMS for FY 2006 is $371.5 million, a $27.8 million increase from FY 2005.
Funding at the recommended level would increase the County’s total per pupil funding from $2,898 to $3,011 for CMS, including operations and capital dollars. The County’s per pupil funding for CMS operations would increase from $2,255 to $2,297.
If this recommended county funding were combined with the CMS-requested state funding, the combined per pupil allocation for CMS would increase from $6,757 to $6,947 per student next year.
We have another partner in education funding – CPCC. I am recommending CPCC receive $33.4 million, an increase of $4.0 million from the FY05 Amended Budget. A $1.88 million increase is for capital, while operations will receive a $2.12 million increase. These calculations are based on CPCC adding 200,000 additional square feet of new facility space, as well as maintaining the 2% supplement for CPCC instructors.
Let me shift gears here to talk about another budget principle – that of recommending a sustainable budget.
Sustainable
A sustainable budget approach involves two critical steps the Board has taken already:
• Establishing a long-term vision and goals, which we have articulated in our Community & Corporate Scorecard; and
• Setting priorities by focusing on those that provide the most value.
However, a sustainable approach also means we must have consistency and stability in funding and providing services that achieve desired results. This includes consistent investments in technology, facility maintenance, vehicle replacement, employee compensation and service operations. It demands establishing and maintaining fiscal discipline in capital project funding through a pay-as-you-go approach. It also means abandoning across-the-board cuts as well as abandoning strategies and services that do not demonstrate sufficient value in achieving the Board’s goals.
From a sustainability perspective, one of the most significant challenges the Board will face next year and beyond is debt management. This issue continues to loom as the single most important factor as we look two and three years in the future.
In a few minutes I will discuss my recommended capital improvement program, or CIP. If this CIP is approved by the Board, next January we would anticipate selling approximately $286.9 million in bonds and certificates of participation. These are preliminary numbers that will be revised later this summer and early fall. Based on these preliminary numbers, the increase in total debt service for FY07 will be at least $28.6 million more than FY06, which also increased $22.6 million.
As a result, we will continue to be challenged to find ways to sustain and meet our growth needs without having a significant tax rate increase each year. On this point, I am recommending that the top priority for the Board of County Commissioners is to create and maintain Paygo funding for capital projects.
The strategy I am recommending is to dedicate the revenue from the half-cent sales tax established in January 2004 to fund a pay-as-you-go capital project reserve. The goal is to build a sufficient reserve that allows the Board to defray millions of dollars each year in interest payments – the cost of borrowing money to build public facilities. It’s a matter of paying a little more now to avoid paying a lot more later.
To illustrate the power and value of paygo, let’s consider the $286.9 million in bonds and COPs sales I mentioned earlier. If we implement paygo next fiscal year, we would have the capability of immediately reducing that number by $30 million. This will save us an estimated $15 million in interest payments. We also would be able to reduce the size of future bond referendums, including the one I will propose for this November. In short, implementing a disciplined approach to debt management should be the number one strategy for this Board in adopting the FY 2006 budget.
Business Imperative Reserve Funds
This Paygo strategy also applies to how we invest in our most vital business imperatives. These include maintaining our buildings, replacing vehicles, and technology improvements. Again, the strategy I am recommending is to provide a sufficient and sustainable funding source to avoid peaks and valleys in spending, while maintaining integrity to the desired results.
One of the County’s business imperatives is cost-effectively managing and maintaining its assets. This requires disciplined financial management by systematically investing in reserve funds. By making this investment and being disciplined enough to avoid using these funds to pay for other service, the Board can avoid the peaks and valleys of funding asset management and maintenance.
This approach ensures that funds are set aside for ongoing business expenses to avoid significant cost increases in the future. The Technology Reserve, established in FY 2005 is funded at 1 percent of County revenue. The Facility Capital Reserve and Fleet Replacement Reserve are funded at .5 percent of County revenue.
It should be noted that for FY 2006, the Recommended Budget includes $500,000 in lease/purchase funding to replace 123 vehicles. While this financing strategy is appropriate as a short-term approach to begin addressing $9.4 million in overdue fleet replacement needs, the establishment of the reserve is necessary to build sufficient pay-as-you-go capability for the future. Ultimately, this will flatten the investment need for vehicle replacement while avoiding additional interest costs that arise from lease/purchase over time.
In recent years, capital reserve and replacing vehicles didn’t receive sufficient funding, although funding was included in previous recommended budgets. The prevailing thought was that we couldn’t afford it. What we are seeing now is that by delaying the expense, we’re really not saving money. This practice only makes the inevitable spending more costly for taxpayers.
Affordable
This takes us to the budget principle of affordable. Mecklenburg County government must enable its residents and businesses to prosper. As a result, the price of County services must be consistent with the willingness and ability of residents and businesses to pay. While the Board should consider and acknowledge the value received in return for their investment, the investment must still be affordable.
Fortunately, we do have a prosperous community. Based on the most recent trend data from the U.S. Commerce Department, Mecklenburg County’s annual personal income grew an average of $1 billion from 1999 to 2003. This equates to an average of 4.6 percent annual growth. In addition, the effective buying income of Mecklenburg County residents has been increasing by 3 percent annually since 2002, with strong indications that this trend will continue. In fact, from FY02 – FY05, the effective buying income of Mecklenburg residents has increased by nearly 21 percent, while local taxes and other funding provided by Mecklenburg residents in our budget has increased by just under 10 percent during these same three years.
It should be acknowledged that Mecklenburg County does have a relatively high property tax rate compared to other North Carolina counties. This is true when compared on a per cent basis as well as a per capita basis. The reasons are numerous. First, Mecklenburg County serves more people and has more children as residents than any other county. Aside from this disparity in quantity of people served, Mecklenburg County also has greater challenges than other counties. In response to these challenges, the community has chosen to provide a higher level of services than many other counties.
This may be because Mecklenburg County is a relatively affluent community. On average, Mecklenburg County’s income per capita is 16 percent higher than other comparable North Carolina jurisdictions, such as Wake County, Guilford County and Forsyth County. Mecklenburg’s income per capital, on average, is 38 percent higher than the per capita income of those surrounding counties of Iredell, Cabarrus, Union, and Gaston.
Essentially, Mecklenburg residents are capable of and have been willing to pay more to receive more value. Therefore, affordability should be measured not only in the sheer price that is paid. It also must factor in the ability and willingness to pay based on the value received.
Choices and Consequences
The final two strategic principles are those we have mentioned since the beginning of the strategic planning and budgeting process: choices and consequences. It is important for the Board and Mecklenburg residents to understand the choices that are available and the choices that are not. For example, the Board has no choice about funding certain services, such as the County’s share of Medicaid. In fact, only $230.6 million of the $875.7 million in recommended local funding is completely discretionary funding. While this total is still a significant amount of money, it does limit the choices available to the Board in terms of allocating existing funds. It also represents some of the most popular services the County provides, including parks and libraries. As a result, many of the Board’s constituents do not view these services as discretionary.
In addition, every choice carries a consequence. If the choice is to maintain or cut taxes, the consequence involves eliminating services. If the choice is to fund services, the consequence may be to increase taxes. The challenge is to strike the balance between what is responsible, sustainable and affordable.
We have significant challenges in this community that require publicly funded services. Nearly one in seven people in Mecklenburg County receives public assistance. Approximately 68,000 Mecklenburg children live in poverty. Between 70 to 80 percent of those arrested in Mecklenburg County have a connection with drugs or substance abuse. Air pollution continues to threaten our health. Mecklenburg has the most HIV/AIDS cases in N.C., which increased by 58% since 2000. Despite spending above state mandated levels for mental health services, an estimated 5,000 people who need these services are not being served. Mecklenburg County also has the highest number of domestic violence deaths in the state. This is just the short list.
Perhaps more important than a list of key needs is a list of results we can expect from additional taxpayer investment. First, we expect to maintain our current services that people are using right now. These are services the Board deemed necessary to fund just one year ago. This includes educating children and adults, running our jails and court system, protecting children from abuse and neglect, treating people for mental illness and substance abuse, keeping people healthy from diseases, caring for the homeless, moving people from welfare to work, providing recreation and leisure services, and more. We also expect new taxes will result in reduced HIV/AIDs in our community, better air quality, more health care in schools, more and higher paying jobs, and particularly more fiscal discipline to reduce the rate of growth in debt costs and other capital spending.
We do have the choice of not raising taxes. The consequence of this choice is the reduction and/or elimination of services. As a taxpayer and as the Mecklenburg county manager, I expect and demand that my taxes be used wisely. Taxes equal services. The services our taxes pay for are necessary to help people improve their lives and the community.
Budget Overview
At this point, I’d like to ask the Board to turn to the tab labeled “Summary of Net County Expenditures and Revenue” on page 80.
While I will let the video provide most of the details, I do want to offer an overview of the recommended budget expenditures, in county dollars.
Starting from the FY2005 adopted budget of $773.3 million, we can immediately take $10.9 million in reductions due to efficiencies and reductions to current services. General debt service adds $43.1 million, with $31.7 million attributable to paygo. Education services, included debt service for CMS and CPCC, adds another $31.8 million in costs. County services, broken out into four categories, adds a total of $42.4 million. This brings the total to $879.7 million, which is what is recommended in my budget.
This recommended budget, which does address our business and community needs, requires a tax rate increase of 8.21 cents.
Raising taxes is not an easy choice. However, the consequences of not raising taxes would be a significant decline in our community’s quality of life. I invite Mecklenburg residents to inspect my recommended budget and to develop their own budget by going to www.4citizenhelp.com and click on County Budget.
Manager’s Choices
In addition to the key strategies mentioned earlier, there are a few tactical issues associated with this budget. I’d like to spend just a few minutes highlighting these matters.
RESTRICTED CONTINGENCY
First, the Board should be aware that I have placed approximately $2.26 million in restricted contingency for various reasons. These funds would be appropriated by the Board during the course of the 2006 fiscal year after additional review. Let me offer a brief explanation of the purpose of the review for each item in restricted contingency.
First, there is $800,000 for Permanency Planning & Child Protective Services (DSS): The funds will be used to revise our service paradigm as it relates to child safety, well-being, and permanence. We can and should provide child protective services more effectively. We also must attempt to improve our ability to meet the federal standards for child welfare as provided for in the Adoption and Safe Families Act of 1997. While all 50 states have failed the federal review, and the proposed changes will not guarantee our success, our recommendations are in keeping with social work best practices and should produce demonstrable results in the long term.
The paradigm shift represents a decentralized, community-based, and family-centered approach. The County will be divided into five geographic districts, each with a blended team of staff who provide comprehensive services in closer proximity to families served.
While we are still reviewing options to determine the most effective use of the available funds, we plan to devote some resources to secure at least one leased facility to house a district office, and to augment professional staff.
I also have recommended placing $734,225 for Domestic Violence Prevention and Protection Services. This approximately 50% of the total annual cost of these services in FY 2006. Based on recommendations from a special study, the Board has directed the County Manager to develop and recommend a domestic violence service system design that:
• Specifies goals and performance measures
• Identifies the full continuum of services needed
• Specifies the County’s roles and responsibilities
• Eliminates gaps and removes overlaps in service
• Ensures coordination of services among provides
• Emphasizes prevention as well as protection
As result, funds within restricted contingency will be used for two purposes. The first is to reclassify the vacant Women’s Commission director position to a Domestic Violence Services Coordinator. This position will provide the County’s leadership in coordinating and overseeing all County funding for domestic violence services. This position also will assist in the planning and development of domestic violence service system. In addition, the County will contract with a consultant to perform a community audit of domestic violence services to identify the full range of needs in the community. This will be patterned after the assessment conducted on homelessness services. The audit will focus on but not be limited to transitional housing, Latino domestic violence services, and prevention services. Results from the audit and analysis will be used to identify recommendations on specific goals and measures for domestic violence prevention and protection services, and the County’s role.
In response to emerging and growing community needs, the purpose and responsibilities of the Women’s Commission has matriculated to providing domestic violence services. As a result, this has become the primary focus of the Women’s Commission and the primary driver of County funding of the Women’s Commission service array over the past several years. Therefore, I plan to change the name of this department to reflect and recognize this important service to the community. As part of this redesign, I propose to rename the Women’s Commission to Domestic Violence Prevention and Protection Services. This will not affect the Women’s Commission Advisory Board, which will remain as it is now in name and function, advising the Board on issues affecting women in Mecklenburg County. However, the new name of Domestic Violence Prevention and Protection Services will enable residents and clients to clearly understand the focus of this function within the County. It also will elevate the stature of these services by having it report directly to the Community Health & Safety Focus Area Leadership Team.
It is expected that the audit, analysis and recommendations will be conducted within the first six months of the fiscal year. Therefore, half of the cost to maintain current service level in the domestic violence prevention and protection program category has been placed in restricted contingency. Once the Board acts on the forthcoming recommendations from the County Manager, the remaining funds will be allocated. This may or may not involve a redistribution of funds. It also may involve a change in funding levels based on Board-approved changes in the service array.
$500,000 also has been placed in restricted contingency for Air Quality: This funding represents an enhancement beyond the current service level. Currently, County staff is working with the Charlotte Chamber, City of Charlotte and other potential partners on a regional public/private partnership to improve air quality. Recommendations are expected from this group at the end of June, but it is anticipated that the County will be asked to allocate some funding to leverage additional public and private dollars for an air quality campaign. Placing this amount in restricted contingency allows the Board to allocate, or not allocate, based on the recommendations that will come forward in June or early July.
Funding of $13,816 for House of Grace also is in this contingency fund. Current service level funding for this outside agency is recommended to be placed in restricted contingency pending a financial audit that is being conducted for assurance of sound financial management.
$215,674, or one-third of the annual funding for Fighting Back is in restricted contingency: This is consistent with my recommendation last year to refine and retool Fighting Back. Efforts to redesign and redefine the mission and services of Fighting Back have not been successful. Placing a portion of the funding in restricted contingency will serve as great motivation for the staff to rethink and refocus on the role and desired results of Fighting Back. I’m most interested to consider how Fighting Back could support and enable improved parental involvement with their children’s education.
It is my belief that the Board will release these funds from restricted contingency at some point during the next fiscal year. However, it is possible that some of the funds may be redirected or reallocated based on the Board’s review.
UNFUNDED SERVICE REQUESTS
Also, included in the FY 2006 Recommended Budget document is information regarding approximately $3 million in reductions from the current service level as well as $79.9 million in requests for funding that are not recommended for funding. This information is provided to ensure full transparency and enable the Board to evaluate choices in that context.
CIP Recommendation
Finally, the County Manager’s Recommended Budget for FY 2006 budget also includes a recommended capital improvement program (CIP) for FY 2006 – 2008 totaling $562,844,000. The CIP is a schedule of capital improvement projects for Mecklenburg County. This recommendation includes placing up to $534,216,000 in bond referendums on the November 2006 ballot, and approving an additional $28,628,000 in certificates of participation (COPs) and/or pay-as-you-go funding (Paygo). The $534.2 million is composed of:
• One hundred million dollars for land banking
• Fourteen-point-two million for law enforcement facilities
• Forty million for CPCC facilities; and
• Three-hundred-eighty million dollars for CMS
I also am recommending $28.6 million in COPs and/or Paygo, with $27 million for government facilities, and $1.56 million for libraries.
Details of this recommendation and the recommendations of the Citizens Capital Budget Advisory Committee are included in this budget document. If the Board approves the recommended CIP and if voters approve the bond referendums, an additional $53 million would be added to the amount of bonds and/or COPs the Board would consider selling in January 2006. As I mentioned earlier, this would bring the preliminary proposed sale amount to $286.9 million. The debt service impact of this sale would begin in FY 2007.
However, if the Board establishes and maintains Paygo at the level recommended for FY 06, it would be possible to reduce the recommended referendums by approximately $60 million – the amount of Paygo funding over two years. This reduction demonstrates the value of investing in Paygo and maintaining the discipline for ongoing investment.
Summary
If it were feasible to deliver to this Board a responsible budget that maintained the current property tax rate, I would have done so. However, in my judgment, the consequences of such a recommendation would have been too great. Based on our priorities, such a budget would not have been responsible to the needs of this community, because it would have required the elimination of services that, while fully discretionary, are those that contribute great value to this community and advance us toward the Board’s goals.
Such a budget also would not have been sustainable because, in my judgment, the long-term cost to the County would be detrimental, and residents would be immensely dissatisfied with the quality of life in this community.
On the other hand, there is strong data to indicate that an 8.21-cent tax rate increase, though challenging, is affordable for County residents and businesses, particularly in the context of the services that would be maintained.
As a result, I am delivering to the Board and to the residents of this community a recommended budget that is understandable, reasonable, sustainable and affordable, and which provides the Board with choices and consequences for informed decision-making.
At this time, I’d like to run a short video that provides additional details on the recommended budget figures, after which I will be available to respond to questions.
Following the Video
I’ll take this opportunity to remind the public that the Board will hold two public hearings on the recommended budget. The first will be 6 p.m. in this meeting chamber on May 19. This hearing will be on all budget matters except education. A separate public hearing on education funding will be held at 6 p.m. on May 26, again in this chamber. Those wishing to speak may sign up by calling 704-432-0645.
I want to extend my thanks and appreciation to the staff in County departments and agencies for working diligently to provide source information for the recommended budget. I also look forward to working in partnership with the Board of County Commissioners in finalizing a budget that serves the residents of Mecklenburg County.
