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Manager's Recommended Budget

The Manager's $1.46 billion recommended budget would increase education funding by more than $25 million while saving for the future by investing in a pay-as-you-go strategy.

May 15, 2007

Mecklenburg County Manager Harry L. Jones, Sr. has proposed an annual budget for FY2007 – 2008 that increases local funding for Charlotte-Mecklenburg Schools, saves more money for future capital projects, protects the County's top credit rating by contributing additional dollars to retiree obligations, and continues to ensure that employees are being paid at market rate.

Mecklenburg County Manager Harry L. Jones, Sr. has proposed an annual for FY2007 – 2008 that increases local funding for Charlotte-Mecklenburg Schools, saves more money for future capital projects, protects the County's top credit rating by contributing additional dollars to retiree obligations, and continues to ensure that employees are being paid at market rate.

For the first time in Mecklenburg County history, total revenue for FY2008 exceeds $1 billion. But as revenue has grown, so have the costs of providing services. The County Manager is recommending a County budget of $1.03 billion, an increase of $99.5 million (10.7%). The County's total budget will be $1.46 billion, an increase of $126.5 million (9.5%) over the FY2007 Adopted Budget.

The $1.46 billion-dollar budget requires a countywide property tax rate of 85.14 cents, a 3.25 cent increase from the current rate of 81.89 cents per $100 valuation. Property owners with property assessed at $200,000 would see their County tax bill increase by $65, while increasing operating funding for CMS and addressing other critical service needs.

The County Manager's recommended FY2008 budget is built around five strategic policy questions for the Board of County Commissioners. These questions are key drivers of the Manager's Recommended Budget and the property tax rate. The five key questions are:

1. Should Mecklenburg County use funding guidelines to determine CMS operational funding?
2. At what level should Mecklenburg County fund its Annual Required Contribution for Other Post Employment Benefits as outlined in GASB 45?
3. At what level should Mecklenburg County fund Employee Compensation and Benefits?
4. Should Mecklenburg County continue to use lottery revenue to fund a portion of CMS debt service? If so, at what level?
5. Does a Mecklenburg County paygo fund make sense? If so, at what level should it be funded?

CMS funding
The current guidelines indicate that CMS will need an addition $25.2 million to address growth and cost increases. The County Manager recommends that CMS receive an increase in County funding of $25.2 million for a total of $337.4 million. This recommendation will increase the County's funding per pupil by $92 per student, providing CMS with $2,543 per pupil from the County, not including debt service or capital replacement costs.

The current guidelines indicate that CMS will need an addition $25.2 million to address growth and cost increases. The County Manager recommends that CMS receive an increase in County funding of $25.2 million for a total of $337.4 million. This recommendation will increase the County's funding per pupil by $92 per student, providing CMS with $2,543 per pupil from the County, not including debt service or capital replacement costs.

Retiree benefits
New accounting rules require the County to report its liability related to retiree benefits. The County has identified the annual required contribution and recommends full funding of $10 million. Unfunded liabilities that continue to grow could put pressure on the County's credit rating.

New accounting rules require the County to report its liability related to retiree benefits. The County has identified the annual required contribution and recommends full funding of $10 million. Unfunded liabilities that continue to grow could put pressure on the County's credit rating.

Employee compensation
Employees are Mecklenburg County's most important resource. As such, the County is committed to providing market-based compensation for employees. The total cost increase for FY08 for merit pay, market adjustments and health insurance is $12.1 million.

Employees are Mecklenburg County's most important resource. As such, the County is committed to providing market-based compensation for employees. The total cost increase for FY08 for merit pay, market adjustments and health insurance is $12.1 million.

Paygo strategy for capital projects
The pay-as-you-go capital fund was established two years ago to fund construction and renovation of some County facilities without borrowing money, thereby eliminating substantial interest costs. The County Manager recommends an increase of $20.3 million over last year's amount of tax funded amount of $8.3 million.

The pay-as-you-go capital fund was established two years ago to fund construction and renovation of some County facilities without borrowing money, thereby eliminating substantial interest costs. The County Manager recommends an increase of $20.3 million over last year's amount of tax funded amount of $8.3 million.

Lottery proceeds
For FY2008, the County is projected to receive $15 million in state lottery proceeds. The County's current strategy is to use the first $9 million for CMS debt service. The remaining balance from last year and this year is available to CMS for projects.

For FY2008, the County is projected to receive $15 million in state lottery proceeds. The County's current strategy is to use the first $9 million for CMS debt service. The remaining balance from last year and this year is available to CMS for projects.

These five policy questions account for 67.4 percent of the total cost increases ($67.1 of $99.5 million) in the FY2008 Recommended Budget. In addition to the increases related to the policy questions, there are other increases for achieving the Board's Three Year Emphasis, funding general government operations, meeting debt service requirements, and providing educational services. Key increases include:

Debt Service (General, CMS, & CPCC), $14.0 million
Medicaid, $5.6 million
Overtime for Sheriff's Office, $3 million
Capital Reserve, $2.6 million
AMH Contract with CHS, $1.9 million
Annualized cost for FY07 Park facilities, $1.9 million
Operating cost for 22 new parks, $1.9 million
School Nurses (26), $1.6 million
MEDIC, $1.5 million
Retiree Medical Insurance, $1.3 million
Health Contract with CHS, $1.2 million
New Outside Agency Funding, $1.2 million
Business Investment Grant, $1.2 million
Annualized cost for FY07 authorized positions, $1 million
Contractual increases, $919,000
Utilities costs, $860,000
Claims Settlements, $700,000
Indigent Care Increase, $693,000
Jail Diversion (restricted contingency), $500,000
Emission Reduction, $500,000
Park and Recreation Paygo, $500,000

Debt Service (General, CMS, & CPCC), $14.0 millionMedicaid, $5.6 millionOvertime for Sheriff's Office, $3 millionCapital Reserve, $2.6 millionAMH Contract with CHS, $1.9 millionAnnualized cost for FY07 Park facilities, $1.9 millionOperating cost for 22 new parks, $1.9 millionSchool Nurses (26), $1.6 millionMEDIC, $1.5 millionRetiree Medical Insurance, $1.3 millionHealth Contract with CHS, $1.2 millionNew Outside Agency Funding, $1.2 millionBusiness Investment Grant, $1.2 millionAnnualized cost for FY07 authorized positions, $1 millionContractual increases, $919,000Utilities costs, $860,000Claims Settlements, $700,000Indigent Care Increase, $693,000Jail Diversion (restricted contingency), $500,000Emission Reduction, $500,000Park and Recreation Paygo, $500,000

Note: This does not include increases under $500,000.

The FY2008 Recommended Budget also has identified over $15 million in cost reductions. These include a reduction in funding for the high school challenge ($4.9 million), vacancy savings ($2.4 million), one-time dental reserve, lease payments, mainframe decommission and temp salaries.

Funding Priorities
The recommended budget allocates 88.6 percent of County funds to the Board's top three priority levels, with 66.2 percent going to the top priority services. Of the $1.46 billion recommended budget, about $1.03 billion is County funding – primarily from property and sales taxes. The remainder is generated through charges for services, fees, transit sales tax and other sources.

The recommended budget allocates 88.6 percent of County funds to the Board's top three priority levels, with 66.2 percent going to the top priority services. Of the $1.46 billion recommended budget, about $1.03 billion is County funding – primarily from property and sales taxes. The remainder is generated through charges for services, fees, transit sales tax and other sources.

LESD Tax Rate Increase
In addition to a countywide property tax rate increase, the recommended budget also includes an increase in the Law Enforcement Service District property tax rate. This tax rate is added to the countywide 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, the FY2008 budget includes the usage of $397,143 in fund balance generated in the previous year. As a result, the FY2008 net tax levy will be increased to $12,151,400, which will result in a tax increase for the LESD. The tax rate for the unincorporated area will increase by 1.15 cents, bringing the FY2008 tax rate to 17.62 cents per $100 of assessed value, a 7.0 percent increase. The available fund balance plus the FY2008 total net tax levy will maintain the necessary funding level of $12.5 million.

In addition to a countywide property tax rate increase, the recommended budget also includes an increase in the Law Enforcement Service District property tax rate. This tax rate is added to the countywide 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, the FY2008 budget includes the usage of $397,143 in fund balance generated in the previous year. As a result, the FY2008 net tax levy will be increased to $12,151,400, which will result in a tax increase for the LESD. The tax rate for the unincorporated area will increase by 1.15 cents, bringing the FY2008 tax rate to 17.62 cents per $100 of assessed value, a 7.0 percent increase. The available fund balance plus the FY2008 total net tax levy will maintain the necessary funding level of $12.5 million.

When combined with the countywide tax rate increase, property owners within the unincorporated areas would realize a total tax rate increase of 4.4 cents. This would increase by $88 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 24 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). It will also be streamed live here.

Residents who wish to comment on the recommended budget may sign up a public hearing to be held on Thursday, May 24 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). It will also be streamed live

Residents can sign up to speak by calling 704-336-2647 or via email.

Budget Schedule
The Board is scheduled to hold a series of budget workshops on May 29 - 31 (or as needed) on the County Manager's FY2008 Recommended Budget. The Board is slated to approve the FY2008 budget and set the property tax rate on June 5, 2007. Click here for more information about the FY2008 budget process.

 




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