Of six options County Manager Tony Brown presented to commissioners this evening, only one comes without a tax increase. The one without the tax increase, judging from preliminary discussion, would cut into the county's bleeding fund balance, putting it at 8 percent.
A fund balance that dips below 8 percent could put the county in jeopardy with the Local Government Commission, board member Marcelle Smith explained during the initial discussion of the county's upcoming fiscal year financial plan. “It would effect our bond rating and limit us doing any business period.”
Brown explained should the fund balance dip below 8 percent, the county would at least get a letter from the LGC and in a worst-case scenario could have them approve any expenses. “It has the potential to take us over.”
This evening's discussion comes as the fund balance sits at a precarious 8.83 percent and Brown telling the board at the beginning of the deliberations, “This is quite a serious budget issue for us.”
Brown, who has been with the county for 17 years, said, “This will be the most challenging in my 17 years. It's not an easy road. Revenues are slightly up. Expenses far exceed revenues. The budget is balanced but does not meet critical needs.”
He said there are still mandates that may come down from the state. “School budgets are tight. The schools have needs that are not being met.”
State lottery funds have been slashed by 22 percent, a loss of $1 million, Brown said. “There's flat projections for sales tax. We hope the economy will continue to get better.”
As it stands now, the proposed budget includes no staff reductions except for possible reductions in the grant-funded positions, Brown said. There will be no cost of living increases and no new positions funded.
The only option that does not include a tax increase would pull $330,058 from the fund balance and reduce it to 8 percent. It would only fund $45,815 of more than half a million in school current expense and only $1.131 million of some $2.893 million in school capital needs.
“As far as I see it, Option 1 is not an option,” Commissioner Rives Manning said. “We can't afford to pull down what little fund balance we have left.”
Board Chair James Pierce said by using the fund balance over the last six fiscal years, the county spared total tax increases during that span of around 29 cents. “If we would have enacted a 29-cent tax increase they would have shot us all,” he said, saying earlier in the discussion, “Now is the time to pay the piper.”
Commissioner Rachel Hux spoke out against a possible tax increase, saying, “We can't afford a tax increase. The people in Halifax County can't afford it.”
Said Smith of using the fund balance: “If we had not done this, we would be in worse shape.”
Option 2 presents the 1-cent property tax increase, which essentially has the same outcome as the no tax increase proposal. A 1-cent tax increase would generate $330,000 in income for the county.
Option 3, which includes a 2-cent tax increase, would generate $660,000 in revenue.
Option 4, which includes a 3-cent tax increase, would generate $990,000 in income.
Option 5, which includes a 4-cent tax increase and using $19,727 in fund balance, would generate $1,320,000 in revenue and would preserve the fund balance at above 8 percent.
The final option, one which sets a 5-cent tax increase and uses $229,194 of fund balance, would generate $1,650,000 in revenue and reduce the fund balance to just above 8 percent.
Brown said in preparing the 2014-2015 proposed budget plan, he cut department requests by 1 percent across the board.
The commissioners will meet again next Monday at 5:30 p.m. to continue budget deliberations.
