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052919ssHARNETT COUNTY BOARD OF COMMISSIONERS Minutes of Special Session May 29, 2019 The Harnett County Board of Commissioners met in special session on Wednesday, May 29, 2019, in the Commissioners Meeting Room, County Administration Building, 420 McKinney Parkway, Lillington, North Carolina. Members present: Gordon Springle, Chairman Howard Penny, Vice Chairman Joe Miller, Commissioner Barbara McKoy, Commissioner Member absent: District 2 Commissioner Staff present: Paula Stewart, County Manager Dwight Snow, County Attorney Kimberly Honeycutt, Finance Officer Margaret Regina Wheeler, Clerk Chairman Springle called the meeting to order at 9:00 am and led the Pledge of Allegiance and invocation. The purpose of this special session is for the County Manager to present the Budget Message and proposed 2019/2020 budget to the Board. Mrs. Stewart presented the following budget message: Members of the Board: The proposed Harnett County budget for 2019-2020 is hereby submitted for your review and consideration. A few highlights of the proposed budget include: • The ad valorem tax rate will remain the same at 75 cents per $100 property valuation. • An appropriation of $1,921,649 from fund balance is proposed. The proposed allocation from fund balance will maintain a General Fund Balance of greater than 15% as set forth in the Harnett County Fiscal Policy Guidelines. • The overall budget increased by 5.4% from FY 2019. The increase can mostly be attributed to adding 22 new positions midyear in FY2019. Increases in health and dental insurance costs and increased current expense funding for Harnett County Schools to cover charter school payments also contributed to the increase. • At a cost of $210,000, the recommended budget includes the first year of funding for Harnett Promise, a program proposed by Central Carolina Community College to offer eligible students graduating from Harnett County Public Schools two years of free CCCC tuition. May 29, 2019 Special Session Minutes Harnett County Board of Commissioners Page 1 of 8 • Federal grant funding for Harnett County's first -in -the -state Veterans Treatment Court is set to run out Sept. 30, 2019. While the County continues to pursue additional federal and/or state funding, as well as partnerships that will offset the cost to the County, $260,000 has been budgeted in contingency to support the Veterans Treatment Court from Oct. 1, 2019 through June 30, 2020, should outside funding not become available. • The Solid Waste Director position will be separated from the County Engineer position in FY 2020 to allow both positions to be more specialized. The County Engineer will be housed in Development Services. • The process of addressing capital needs has been further refined this year. More information was requested from departments. In addition, before a project will be scheduled in the capital plan, a funding source must be identified. Projects that do not include a reliable cost estimate, that do not have a well-defined scope or where funds have not been identified to cover the cost are included as "future projects." • The largest General Fund expenditures by percentage are Public Safety at 27.71%, Human Services at 20.94%, and Education at 20.38%, which comprise nearly 70% of the entire budget. We are entering the longest economic expansion in history and a recession is bound to occur at some point in the future. Since we must be very prudent in our spending, I am recommending a hiring freeze effective immediately for any vacancy other than sworn law enforcement officers to increase our fund balance in preparation for a possible downturn in the economy. Because we are unsure of the timing of a recession, revenues were estimated conservatively, but not as if a recession will occur in FY 2020. Had we taken that step, severe cuts would have been needed throughout the organization. In addition, I am recommending changing the county's fiscal policy to allow midyear appropriations only in cases of extreme emergency. The midyear appropriations in FY 2019 led to a very difficult situation for the FY 2020 budget. Growth in revenues would have given us some flexibility to meet other priority needs, but these revenues were required to fund the full year cost of decisions made midyear. The county's financial software had been in use for over twenty years and was replaced when the vendor no longer fully supported it. Due to the change to new financial software in October 2018, we encountered difficulty in projecting some of the revenues and tracking trends in spending. While the new system has many enhanced features and will allow us to work more efficiently in the future, using data from two systems to project a budget was challenging and more time-consuming than normal. I would like to highlight some of the county's accomplishments during FY2019. • Completed the Northwest Harnett Small Area Plan • Completed the Emergency Services Study • Completed much-needed ADA improvements including the installation of automatic interior doors at the Courthouse and removing the curb in front of the Administration Building to make the handicap entrance more accessible and closer to the building • Relocated Probation & Parole Offices from Lillington to Dunn May 29, 2019 Special Session Minutes Harnett County Board of Commissioners Page 2 of 8 • Completed the design of the Harnett County Resource Center and Library that will be located at the government complex, as well as the design of the Social Services building expansion; established plan for backfilling vacated County facilities following move to new building • Demolished gym and former cafeteria building at the Anderson Creek Primary School campus • Demolished gym and former classroom building at the Shawtown campus; constructed an outside basketball court; and continued renovations to the building that remains for future occupancy by essential County partners and resources for citizens • Achieved Duke Site Readiness status for McLamb site on 1-95 (prime Economic Development site) • Established Harnett County District H Tourism Authority - appointed members and began meeting regularly to market County • Established Harnett County Parks & Recreation Advisory Committee • Released "Come Write Your Story in Harnett County" promotional video, which earned second place from NC3C's Excellence in Communications Awards in the promotional video category • Successfully completed the Shearon Harris Nuclear Plant graded exercise in April • Emergency Services successfully coordinated efforts to prepare for and assist Harnett County citizens during and after Hurricane Florence in September, and Hurricane Michael in October. Hurricane Florence response efforts included multiple mandatory river evacuations, water rescues, and emergency shelter relocations; no loss of life was reported as a result of either storm. County departments successfully advertised and assisted citizens in seeking aid from storm damage including coordination with FEMA and D -SNAP, as well as outreach to farmers through Soil & Water and Cooperative Extension • Harnett County Solid Waste announced plans to extend landfill hours on Saturdays until 2 p.m. at Anderson Creek and Dunn -Erwin starting June 1 • Completed transition from Harnett County Public Utilities to Harnett Regional Water • Harnett Regional Water completed three water transmission projects - West Central Transmission Project- 13 miles of 20 -inch water transmission main from Lillington to Seminole which greatly improved hydraulic efficiency; South Central Transmission Project - installation of 7,500 feet of 12 -inch water transmission main to alleviate low pressure zones; Western Harnett Innovation Park Transmission Project - construction of 7,800 feet of 16 -inch water transmission main to serve the new Benhaven Elementary School The following sections include details of the proposed General Fund budget as they relate to revenues and expenditures. GENERAL FUND REVENUES - $126,346,773 Ad Valorem Taxes - The proposed General Fund budget has been developed based on a total assessed real and personal property value of $7,821,749,871 and a motor vehicle value of $972,463,384. This results in a projected collection of $66,079,417 in ad valorem taxes. Property tax revenues are up in part because of Atlantic Coast Pipeline's temporary staging of equipment and materials in the county to construct the gas pipeline in eastern North Carolina. Because these May 29, 2019 Special Session Minutes Harnett County Board of Commissioners Page 3 of 8 revenues are onetime, we are recommending that the proceeds be transferred to capital reserve to fund the capital improvement plan. Sales Tax - We project the county's sales tax revenue to increase from current year projections based on the rate we are currently receiving them and budgeting Article 44 in the General Fund. Total projected sales tax revenues are $18,265,000. Intergovernmental Revenue — We expect these revenues to increase slightly to $21,036,101. Fee Increases — There are several minor fee increases in the General Fund budget. Some significant increases or new fees are shown below. 5= Animal Boarding, per day (if animal is reclaimed) $20 (up from $10) > Residential Solar Panels inspection (new law requires 2 trips) $120 (up from $80) ➢ Residential Generator inspection $120/$240 after the fact (new fee) ➢ Re -inspection — 2"d trip if existing violations are not corrected $100 (new fee); 3`d trip if existing violations are not corrected $150 (new fee) Modular Home inspection (fee includes electrical, plumbing and mechanical) $500/$1,000 after the fact (up from $375/$750) Parking fee for open hangar/shade per month $100 (new fee) GENERAL FUND EXPENDITURES - $126,346, 773 Personnel — Salaries and wages are up $3,623,830 over the FY 2019 original budget primarily due to the addition of 22 new positions midyear in FY 2019, a 4.6% increase in health insurance costs and a 3.7% increase in dental insurance costs. There were 32 new position requests and numerous reclassification requests for FY 2020, but I am recommending no new positions and no reclassifications in the General Fund. i am also recommending that we no longer provide funding for the Assistant District Attorney position since county positions are being frozen and additional district attorney positions have been added by the state since this position was established. Capital Improvement Plan — The CIP process was reviewed, and a new process was established that will occur each fall going forward. County departments, Harnett County Solid Waste and Harnett Regional Water will begin using the new process in the fall of 2019, followed by Central Carolina Community College and Harnett County Schools in the fall of 2020. Addressing capital needs separate from and ahead of the operating budget will allow us adequate time to thoroughly assess and prioritize the requested needs prior to operating budget preparation. The proposed budget sets aside $1,600,457 for capital expenditures for FY 2020, and is partially funded by proceeds from the onetime gas pipeline tax revenue. Harnett County Schools - Harnett County Schools requested $77,402,972 in funding for capital outlay items in the priority 1 category. Of this, $58,193,120 is for new construction, including $29,193,120 for the Erwin Elementary School replacement, $24,000,000 for a new elementary school in Northwest Harnett, and $5,000,000 for a new early college at the former Benhaven School campus. Updated cost May 29. 2019 Special Session Minutes Harnett County Board of Commissioners Page 4 of 8 estimates for these three projects have since been provided by Harnett County Schools. The Board will consider project ordinances and resolutions for the issuance of general obligation school bonds for both schools at the first regular meeting in June - $28,000,000 for Northwest Harnett and $23,500,000 for Erwin. I propose using the remaining funds from the 2017 Benhaven Elementary School bond issuance to fund the early college as well as the security improvements at all schools, which includes automated door locks on all exterior doors and the replacement of security cameras at all schools. Because of the Board of Education's reluctance in the current year to approve the county's application for lottery funds, capital outlay, in the amount of $944,000 (based on the Board -approved capital funding formula), is being held in contingency. Those funds will be released to the Board of Education when the lottery application has been approved. Harnett County Schools requested over $6.1M in additional current expense from the FY 2019 funding amount. This year's base allocation for current expense is recommended to be $23,138,513. There is also an additional $879,000 for funding the School Resource Officers in elementary schools and $264,779 for funding the charter school per pupil allocation. The total current expense allocation is proposed to be $24,282,292. Central Carolina Community College — Funding for CCCC's current expense is proposed to increase to $1,366,978 from $1,140,207. The main increase in current expense is the first year of funding for the Harnett County Promise program, in the amount of $210,000, where qualifying Harnett County high school graduates can attend CCCC for free for up to two years. There is also a minor increase in current expense that can be partially attributed to bringing services in-house instead of outsourcing them in the areas of facility maintenance and landscaping. Capital funding is proposed at $100,000. This will partially fund some much-needed renovations and upgrades to the Miriello building on the Harnett County main campus. CCCC also plans to purchase landscaping equipment, plumbing equipment and a service bed for a maintenance truck. HARNETT REGIONAL WATER • A budget of $34,680,203 is proposed for FY 2019 compared to $33,135,753 in the current year. No appropriation of fund balance is recommended. • No new positions are requested. Three reclassifications were requested and, like those requested in the General Fund, are not recommended for approval. • A rate increase for base water customers is proposed at $20/month for 2,000 gallons, up from $18.50 and the cost for going above the minimum will be raised from $5.25 to $5.50 per 1,000 gallons used. This equates to a $2 per month ($29/month to $31/month or a 7%) increase in water bills based on average monthly usage of 4,000 gallons. Rates have not been increased in 3 years. • No bulk (wholesale) rate water or sewer increases are recommended this year. • A flat rate for sewer customers is recommended to remain the same at $15/month for 1,000 gallons. The usage rate is recommended to increase $6 per 1,000 gallons up from $5.25. This equates to a $3 per month ($36/month to $39/month or an 8%) increase in sewer bills based on average monthly usage of 4,000 gallons. Rates have not increased in 3 years. May 29, 2019 Special Session Minutes Harnett County Board of Commissioners Page 5 of 8 • The North Harnett Wastewater Treatment Plant is undergoing major modifications to its filters and biosolids storage facilities and is scheduled to be completed in FY 2020 at a cost of approximately $11M. • Other wastewater projects for FY 2020 include running sewer to Anderson Creek Primary School and South Harnett Elementary at a cost of around $2.75M. SOLID WASTE • The total solid waste budget is proposed to decrease slightly to $5,810,400. • One new position, an Environmental Technician, was requested and, like those requested in the General Fund, is not recommended for approval. • Construction of the newest disposal cell at the Dunn -Erwin Landfill will hopefully be completed by the end of June or early July 2019. I recommend that Solid Waste begin the design and permitting of subsequent cells for both the Anderson Creek and Dunn -Erwin facilities in FY 2020. This will be need to be done soon as it is expected that the construction costs of these facilities may dramatically increase if new rules for construction and debris (C&D) sites are enacted by the NC Department of Environmental Quality. • New construction is planned for FY 2020 for a new convenience center in northwest Harnett County which will be co -located with a park and a communications tower on Oakridge River Rd. The cost of the center will be approximately $250,000 and will include a paved patron area with containers for waste and recyclable materials. • After an inventory and subsequent analysis of the Solid Waste Department's fleet of heavy equipment and other support vehicles and equipment, it has been determined the department will be able to continue operation for FY 2020 with no additional or replacement equipment. This analysis included age, usage, annual repair requirements, and general condition. FIRE TAX DISTRICTS • i recommend approval of a 1 cent per $100 valuation increase in the fire tax levy for Benhaven (9 cents to 10 cents), Flat Branch (12 cents to 13 cents) and Spout Springs (10 cents to 11 cents). Benhaven Emergency Services has experienced an increased call volume in the NC 27, Docs and Tingen Road area; they have seen increases in the cost of operations; and they are still preparing to move forward with a new station in the future to better serve the district. Flat Branch Volunteer Fire Department is currently facing personnel issues due to a substantial decrease in volunteers to cover the calls. Increasing the tax rate will allow them to hire an additional 12 -hour split shift during the week. Spout Springs requested a 2 cent increase, but / am staying consistent with recommending a 1 cent increase for them. From 2015 to 2018, they experienced an increase in call volume of over 50%, which increases their operating costs. • Erwin Fire Department requested an increase of 1 cent, but / am recommending an increase of one half cent (8.5 cents to 9 cents). May 29, 2019 Special Session Minutes Harnett County Board of Commissioners Page 6 of 8 • No other departments requested a tax increase for FV 2020. RESCUE DISTRICTS • The proposed budget includes a 3% increase across the board for the seven rescue districts. • The appropriations vary by squad, but the median compensation is slightly more than $391, 000. The FY 2020 recommended budget presented difficult challenges, but offers a good perspective on where we need to go from here. Residential growth, particularly the kind of growth Harnett has seen in recent years, places more demand on services, such as schools, but does not produce enough revenue to cover these additional costs. The recommendations made by the Northwest Harnett Small Area Plan provide a framework for improving this situation in the future, particularly in this rapidly growing portion of the county. The county needs to invest in targeted economic development efforts to grow the industrial and commercial tax base. The funding of Harnett Promise, which is the major initiative in the FY 2020 budget, will help us build the skills of our children and future workforce. It offers one path towards this goal. The Manager's Office is working with Economic Development staff on other strategies for moving forward and will focus on economic development with the Board of Commissioners during the upcoming budget retreat. in the meantime, we must exercise fiscal discipline by discontinuing approval of midyear funding requests. Unless decisions that impact the budget are funneled through the annual budget process and prioritized at the same time, we cannot make the best use of our limited resources. in addition to developing our County's workforce, it is essential that we continue to develop and attract a skilled governmental workforce. The FY 2020 budget does not include a cost of living adjustment for County employees or an increase to the County's Performance Pay Plan, however 1 am proposing several initiatives which aim to continue making Harnett County a better workplace for current and future employees. Preventive and Diagnostic services will no longer count towards an employee's $1,000 maximum annual benefit for Dental Insurance. I am also recommending a change to the Personnel Ordinance that will grant up to three days of bereavement leave per calendar year to full-time employees for the death of an immediate family member. in 2017, the County implemented a compensation study that brought the County's salaries in line with the market. That same year, the Performance Pay Plan was enacted, which provided employees with annual increases based on performance, and did away with a pay plan that only provided increases after an employee's third and fifth years with the County. The cost savings from the transition away from the former 3/5 Pay Plan and from the County's previous longevity policy will begin to be realized in FY 2021, and it is my hope that the County can use these savings to provide additional incentives and benefits for our employees. 1 would like to thank our department heads, Central Carolina Community College, the Fire and EMS Departments, and Harnett County Schools for their valuable contributions to the budget. May 29, 2019 Special Session Minutes Harnett County Board of Commissioners Page 7 of 8 Our management team, specifically Finance Officer Kimberly Honeycutt, Deputy Finance Officer Allen Coats, Assistant County Manager Brian Haney and Assistant Manager Coley Price, worked extremely hard during the budget process and 1 appreciate the collaboration and teamwork. I would also like to thank the Board of Commissioners for their support this year, especially in allowing me to hire Renee Paschal as the County's Part-time Budget Director. Her knowledge and experience in capital budgeting, revenue forecasting, and all aspects of the budget process has been invaluable to me and I cannot thank her enough. I would be remiss if I did not mention another individual who had a significant influence on the creation of this document. As you all know, we lost Commissioner Abe Elmore earlier this month. He embodied strategic vision which allowed him to accomplish all he did as a businessman and as a public servant. He also stressed fiscal responsibility in planning for the future. It is my belief that this budget adheres to those values. His presence on this Board will be greatly missed. Staff responded to questions from commissioners. Mrs. Honeycutt responded that the General Fund balance is currently at 17% unassigned, clarifying the balance was at 26% before monies were set aside for projects. Commissioner Miller commented citizens will question the rate increase for water while Harnett Regional Water's fund balance is between $35 to $42 million. Mrs. Stewart said she had asked departments to cut their requests and where they may not have gotten everything they asked for, most still got increases. She noted adjustments within the proposed budget maybe forthcoming. Regarding the hiring freeze effective immediately, Mrs. Stewart said she would approve vacant positions that can be justified. Staff will provide the Board with a list of positions requested by departments in the budget. The Sheriff requested clarifications regarding the hiring freeze for any vacancy other than sworn law enforcement officers and asked that detention officers also be exempt. Staff reviewed changes within the recommended 2020-2026 Capital Improvements Program for Harnett County. Mrs. Stewart reviewed the proposed June 3, 2019 regular meeting agenda. Vice Chairman Penny moved to adjourn the meeting at 9:37 am. Commissioner Miller seconded the motion that passed 4 — 0. Gordon Springle, OM et Regi ny. heeler, Clerk May 29, 2019 Special Session Minutes Harnett County Board of Commissioners Page 8 of 8