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May 16, 2006

Recommended Budget Would Enhance Health and Safety While Lowering Taxes

Charlotte, NC – Mecklenburg County Manager Harry L. Jones, Sr. today proposed an annual budget for FY2006 – 2007 that increases funding for health and safety while lowering taxes.  The $1.34 billion budget requires a countywide property tax rate of 82.66 cents, a one-cent (1.02 cents) decrease from the current rate of 83.68 cents per $100 valuation.

The property tax rate decrease would reduce by $20 the County tax bill for property with an assessed valuation of $200,000, while increasing health and safety services.  Currently, the Mecklenburg County Community & Corporate Scorecard carries a “red light” for its health index measure.  This indicates significant progress is needed to achieve the public health goals established by the Board of County Commissioners by the year 2015. 

As a result, Jones is recommending additional funding to add 20 school health nurses and 11 public health inspectors.  He also is proposing a $2.1 million increase to indigent care funding and $267,000 to reduce or eliminate waiting lists for domestic violence protection and prevention services.  The recommended budget also calls for $1 million to expand this year’s air quality improvement pilot that encourages area businesses to adopt practices to reduce the production of ozone.  There also is an additional $610,000 for court-related resources to speed adjudication of criminal cases. These and other recommended service enhancements are listed below.

The County Manager’s FY2007 Recommended Budget includes $63.3 million more revenue than budgeted in the current fiscal year.  This growth revenue is due to a combination of factors, including a $24,016,913 (3.4%) increase in the property tax base, $17,638,281 (8.8%) growth in sales tax revenue, and $53.7 million in projected fund balance from FY2006 and FY2005, with $19.7 million dedicated to debt service. 

The FY2007 Recommended Budget also has identified $12.8 million in cost efficiencies and service reductions.  These are a result of County departments finding ways to operate more efficiently and identifying reductions that do not impact service delivery.

The cost of existing services is projected to grow by $50,054,565 (5.7%) in FY2007 over the FY2006 Adopted Budget.  Below is a summary of current service level increases.

Education Services
Existing Education Services will increase by $22.3 million, a 5.4 percent increase, including:
• $10.4 million (3.6%) for Charlotte-Mecklenburg Schools operating funding for enrollment growth, based on the current per pupil funding
• $1.3 million for the High School Challenge to maintain an annual appropriation of $6 million
• $1.1 million for CMS debt service
• $3.1 million for CPCC operating to address the increase in additional facility square feet 
• $1.1 million to CPCC debt service

(County Services)
The cost of current County services will increase by $37.9 million, a 4.3 percent increase, including:
• $6.4 million for FY2006 and FY2007 employee pay for performance merit increases
• $4.8 million for the annualized costs of market pay adjustments
• $4.7 million for Medicaid cost increases
• $4.4 million in Pay-As-You-Go (PayGo) capital funding
• $2.7 million for medical and dental plan cost increases
• $1.8 million for workers compensation and risk insurance
• $1.8 million for increased public assistance
• $1.8 million for behavior health center contract increases
• $1.3 million for the rising price of gasoline for County and Medic
• $1.2 million for the public health contract with Carolinas Health System
• $1.2 million for the annualized cost of 401-K/457 1% match increase

Service Enhancements
In addition to these current services, Jones is recommending $17.3 million, a 2.0 percent increase, in funding for additional resources and services.  These recommendations are focused primarily on improving the health and safety of Mecklenburg residents, a priority expressed by the Board last January.  Jones is recommending additional funding that targets high-growth, high-volume services that have a direct impact on and direct contact with Mecklenburg residents, as follows:

• $3.1 million for enhanced facility stewardship through the capital reserve and other operating funds
• $2.6 million for the opening of the new courthouse
• $2.1 million for indigent care funding
• $1.6 million for new Park and Recreation facilities operational in FY2007
• $1.2 million increase for 20 additional school nurses to reduce the student: nurse ratio from 1700:1 to 1380:1.
• $1.2 million for child protection legal services and other legal costs
• $1.0 million for air quality improvement pilot expansion
• $752,000 for 11 additional public health inspectors and two supervisors
• $733,000 for the Dental Insurance Reserve to reduce the reserve deficit
• $610,000 for court-related resources to speed adjudication of criminal cases
• $500,000 for the study of CMS decentralization and developing a weighted student funding methodology consistent with the CMS Task Force Recommendations
• $364,000 to enhance tax collections
• $267,000 to reduce the waiting list for domestic violence protection and prevention services
• $250,000 for funding Medic’s Omega Protocol for triaging emergency calls

Funding Priorities
The recommended budget allocates 89.3% of county funds to the Board’s top three priority levels, with 66.3% going to the top priority services. Of the $1.34 billion recommended budget, about $932.5 million is County funding – primarily from property and sales taxes. The remainder is generated through charges for services, fees, transit sales tax and other sources. 

“This recommended budget will help us make progress toward the Board’s goals for this community,” said Jones.  “This budget supports several responsible, sustainable and affordable strategies designed to achieve the Board’s vision for Mecklenburg County.”  This vision is described in the Board’s Community & Corporate Scorecard that identifies 24 desired outcomes the Board wants to achieve by 2015. Ten of those goals have already been achieved. 

Jones’ recommended budget is based on six budget strategies and how they will advance the County toward achieving its annual budget goals and the Board’s 2015 Scorecard objectives.  These strategies are:

Strategy 1:  Enhance Targeted Health and Safety Services
The Recommended Budget aims to enhance targeted health and safety services in FY2007.  These proposals are consistent with both the Board’s long-term Scorecard goals as well as the priorities identified by the Board during its January planning conference.  Funding for additional health inspectors, the court system, Medic and domestic violence services are some examples of the County’s commitment to improving health and safety services.
          
The Recommended Budget also proposes two structural changes to improve health and safety in this community.  The first is to strengthen the approach we are using to achieve the goals of Fighting Back.  To do this, we will be aligning and integrating the current Fighting Back resources within existing services of the Health Department and Area Mental Health.  This will allow us to maintain the community-based network and focus of Fighting Back while leveraging other resources to combat substance abuse and reduce health disparities within the Fighting Back neighborhoods and throughout the community

The second structure change is related to the increased resources to coordinate criminal justice agency resources.  These resources will become a separate operation within the County Manager’s Office, providing critical oversight and monitoring of the operation of the criminal justice system.  The pretrial jail coordinator position created last fiscal year within the Sheriff’s Office will be reassigned to this new unit.  Again, the strategy is to increase the efficiency of the justice system to move more people more quickly from arrest to adjudication.

Strategy 2:  Maintain Current Per Pupil Funding
The County Manager’s proposed $10.4 million increase in funding for Charlotte Mecklenburg Schools (CMS) operations is based on the strategy of maintaining the County’s current $2,354 per pupil funding of CMS.  Therefore, the increase is derived by multiplying this per pupil allocation by the 4,442 projected growth in CMS enrollment next year.  In addition, Jones is recommending an additional $1.3 million to maintain the $6 million in funding for the third year of the three-year High School Challenge.  Jones also is recommending that $500,000 be placed in restricted contingency to fund a study on a weighted student funding methodology and CMS decentralization implementation strategies, consistent with the recommendations of the CMS Task Force.

Strategy 3:  Fulfill Commitment to Market-Based Compensation
The recommended budget also includes the second-year funding of a two-year phase-in of market-based compensation for County employees approved by the Board last fiscal year.  The FY2007 cost is $4.8 million for the adjustment in salaries.  Jones also is recommending a 2% increase to payroll for merit increases.  County employees will receive between 0% - 5% based on performance. 

Strategy 4:  Emphasize Facility Stewardship
Jones also is calling for additional funding to maintain and repair publicly-owned facilities.  Funding for this purpose is recommended to increase by $3.1 million.  However, to do this, Jones also is recommending the majority of these funds come from the County’s Technology Reserve Fund.  “This shifting of funds is intended to focus greater resources where this is a greater need, namely the stewardship of parks, libraries and other buildings owned by the public,” said Jones.

Strategy 5:  Phase-in Full PayGo Funding
Jones also is recommending a three-year phase in for full funding of Paygo.  The Board established a Paygo fund in the current fiscal year at 70% of the value of the half-cent sales tax. Jones’ recommendation is to reach 100% in three years, starting with FY2007.  The $4.4 million increase would fund Paygo at 75%, with increases of 10% and 15% in the subsequent two fiscal years.  Paygo is part of the County’s debt management planning to reduce or eliminate the cost of borrowing funds to pay for capital improvements. 

Strategy 6:  Reduce Property Tax Rate
To address the Board’s long-standing desire to use alternative revenue sources to reduce the reliance on property taxes, Jones recommends the County’s property tax rate be decreased by half the $18 million in lottery funds the state preliminarily projects for Mecklenburg County.  By state law, lottery funds can only be used for public school facilities.  As a result, Jones is recommending that $9 million of the lottery funds be used to offset CMS debt services costs to be incurred by the County in FY2007.  The remaining $9 million will be allocated to an Education Paygo Fund.  Jones prefers this conservative approach because the projected revenue from the lottery is a preliminary estimate.  Placing half of the project funds in a Paygo Fund will not leave the County exposed if the full estimated lottery revenue is not realized.  However, Jones says whatever lottery revenue is received and allocated to the Education Paygo Fund will be used either to pay for CMS debt service in FY2008 or to avoid incurring future debt by funding CMS capital without borrowing.  Both scenarios will defray costs that would have otherwise been paid for through property taxes.

LESD Tax Rate Reduction
In addition to a county-wide property tax rate reduction, the recommended budget also includes a decrease in the Law Enforcement Service District property tax rate.  This tax rate is added to the county-wide property tax rate for those properties within the unincorporated areas.  The LESD tax rate pays the cost of police services provided by the Charlotte-Mecklenburg Police Department (CMPD) within the unincorporated areas. The agreement with the City of Charlotte to fund CMPD services in the unincorporated areas calls for the payment of $12.5 million annually to the City through FY2008.  However, due to $500,000 in LESD fund balance, the FY2007 funding required is only $12,048,543.  This results in a 0.71 cent tax decrease for the LESD from 17.68 to 16.97 cents to generate this level of revenue.  When combined with the county-wide tax rate decrease, property owners within the unincorporated areas would realize a total tax rate decrease of 1.73 cents.  This would reduce by $34.60 the tax bill for properties with an assessed valuation of $200,000 in the unincorporated areas.

Public Comment
Residents who wish to comment on the recommended budget may sign up a public hearing to be held on Thursday, May 18 at 6 p.m. The public hearing will be held in the meeting chamber of the Charlotte-Mecklenburg Government Center, 600 East Fourth Street, and televised live on the Government Channel (Time-Warner Cable Channel 16). Residents can sign up to speak by calling 704-432-2071 or online at www.mecklenburgcountync.gov.

Budget Schedule
The Board is scheduled to hold a series of budget workshops on May 23, 24, 25, 30, 31 and June 1 on the County Manager’s FY2007 Recommended Budget.  The Board is slated to approve the FY2007 budget and set the property tax rate on June 6, 2006.



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