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County takes long-term look at finances, plans budget

Times News - 1/18/2018

Jan. 18--The Board of Commissioners took a broad look at the county's finances for the next several years as snow fell outside the Historic Courthouse on Main Street Wednesday.

Henderson County Manager Steve Wyatt began the annual budget meeting with his mid-year financial report. As of Dec. 31, the county's general fund total spending is on track, at 49.35-percent of budgeted expenditures.

On the revenue side, the county has received 59.1 percent of its budgeted estimate of $136,486,200, or $80.9 million, including 84.2 percent of ad valorem taxes levied.

Sales tax revenues are up, Wyatt showed, coming in consistently above budgeted revenues over the last months of 2017. This reflects a strong state and local economy, he added. In July, those revenues were over budgeted amounts by more than $357,000, in August by more than $298,000 and in September by more than $155,000.

The county is also in the midst of "the most aggressive capital construction program in the history of Henderson County," Wyatt said. Public safety facilities and education facilities including the Health Sciences Center, Edneyvville Elementary, Hendersonville High and more.

The county's debt service, which Wyatt likened to a mortgage payment, will increase to $1.7 million next year.

Wyatt also compared the county's tax rate to 27 comparable urban counties, showing its rate of $0.0565 per $100 of property value is the sixth lowest among those, and the 24th lowest of all 100 North Carolina counties.

That's substantial given the county's aggressive slate of capital projects and education funding increases, Wyatt said.

Looking to the fiscal year 2018-19 budget, projected revenues are forecast at $127,350,000, Wyatt said, cautioning that the end of that fiscal year is still 18 months away.

Forecasted base expenditures, however, are set at $142,750,000, leaving a $15.4 million shortfall. This would require pulling all $12,643,266 from the county's available fund balance to cover the gap, as well as pulling $2.7 million from the debt service fund to balance the budget.

The county's fund balance -- essentially money it has in the bank -- has climbed over the past decade or so, to the point where at least one commissioner has called it unfair to county taxpayers.

Wyatt showed that currently, Henderson County has more than $50 million in the fund balance, but most of that is earmarked for other spending. The county keeps a 12-percent reserve of those funds, more than the state's requirement of 8 percent.

Commissioner Bill Lapsley, noting that the county is required to show a balanced budget on paper, said that at the end of the year, the county tends to add millions of dollars to its fund balance instead of taking from it to balance the budget.

The audit from the county's 2016-17 fiscal year, Lapsley pointed out, showed an addition of $5.4 million to the county's fund balance, even though the budget for that year showed $9.7 million would be needed to balance the budget.

"I would submit that there's an excellent chance -- well above 50/50 -- that we won't have to do this," he said about using the fund balance and debt service funds to balance the 2018-19 budget. Instead, he said, there's a good chance the county will add to its fund balance again.

Board Chairman Mike Edney pointed out that something different about this upcoming budget is $1.7 million in debt service spending.

The county's total debt principal for fiscal year 2019 is $192,542,292, with a payment schedule showing a total of $18,325,248 in debt spending next fiscal year -- $10 million of that for Henderson County Public Schools and $1.9 million for Blue Ridge Community College.

Lapsley pointed out that while that's a large number, it's nowhere near the maximum allowed by law for Henderson County, which is around $960 million.

The next two years also have substantial increases in that payment, a $1.7 million increase followed by a $4.4 million increase, Wyatt showed, before it begins to decrease again in fiscal year 2021.

Departmental updates and requests

Blue Ridge Community College

Laura B. Leatherwoood, president of Blue Ridge Community College, presented the budget request for the college. She said infrastructure needs are topping the list, including $560,000 for the Sink building, $363,000 for the Spearman building and $113,000 to repair paving that was damaged during the construction of the Innovative High Schools building.

The college's capital improvement budget for fiscal year 2018-19, driven mostly by those listed projects, is set for $1,403,200, she said.

For the upcoming fiscal year, the college has an operating budget of $3,458,000, Leatherwood said, set to increase to $3.8 million the following fiscal year, 2019-20. It will increase by roughly 12 percent , to $4.3 million the next year, $4.8 million the next and $5.4 million in fiscal year 2022-23.

Henderson County Sheriff's Office

The Sheriff's Office, with problems mounting at the detention center due to mental health and substance abuse issues and an aging communications system, got the go-ahead from commissioners for a study to determine what work needs to be done and what it may cost, and to compile a multi-year action plan.

Capt. Neal Urch, with the Sheriff's Office and Detention Center, said the study should consider the standards for operation, operational philosophy, number and types of beds, existing facility evaluation and criminal justice system profile. Thewill eventually present a four-year plan with estimated cost for consideration in fiscal year 2020.

Mental health and substance abuse issues are prevalent at the detention center, Urch said, which serves as a de facto detox center for the community.

The county also is running out of beds for female inmates, averaging about 37 occupied beds out of 45 total. Some inmates must be kept separate, and the general rule, he said, is that if the jail is at 80-percent capacity, it's full, and 37 is 80 percent of 45.

Costs for sending inmates to state prisons could also potentially be decreased, Urch said. Only 5 percent of inmates held at the detention center move on to state prison, but the county pays that cost, $40 per day plus medical expenses.

He said that between July and December 2017, that cost was $58,389.

Recidivism is another problem to be addressed, Urch said, noting that in all, inmates cost an average of $71.26 per day; 500 people who were incarcerated three or more times over the last 32 months cost the county just shy of $2.5 million.

Sheriff Charles McDonald said the software system the Sheriff's Office uses is not only out of date, but isn't even serviced anymore, after the company that produced it was purchased by another company in 2011.

The software has been in use since the early 1990s, said Director Lisha Stanley. She presented details about the software, which she said doesn't offer features considered standard elsewhere, and is costing the county $200,000 in annual maintenance.

Those features the software doesn't provide include interfacing with fire departments and EMS units, GPS tracking outside the county, and allowing tablets or smartphones to conduct certain operations like scanning drivers' licenses.

The Sheriff's Office will spend the next year doing research and negotiating prices, and bring a proposal back to the commissioners for consideration next year.

Chief Deputy Jason Brown noted that the HCSO budget had the $28,750 available to fund the study. Commissioners directed the department to move forward with the effort.

He also noted that new software suites HCSO is considering cost between $500,000 and $1 million. The office has $369,000 it plans to hold and let grow for the next few years to offset that cost, as well as seek state and federal grant funds.

Henderson County Public Schools

Superintendent Bo Caldwell thanked the board for its work in building new schools and helping to make the system as successful as it is, ranked sixth in the state and 11th in the state for graduation rate, among other accolades.

Some uncertainties remain for the upcoming school budget, including charter school enrollment increases, a kindergarten through third-grade class size mandate and expected increase in state benefits like retirement and salaries.

The school district also wants to initiate its own strategic initiatives that Caldwell said will help it keep climbing state rankings. These include a virtual academy to allow students to do more online, allow middle schoolers to take high-school credit classes, saying more details on those initiatives will come closer to budget time in May.

Caldwell also said the school system would like a facilities study from an outside group to examine closely its capital needs.

Edney asked about what the school board has been considering as a use for the Stillwell building at Hendersonville High. Caldwell said a consensus hasn't yet been reached, as ideas change often, though discussions are starting at a work session Thursday.

In the capital projects update, David Berry, county construction manager, said renovation work at the building was on schedule and within the $1 million budget allocated to renovate the roof and chiller, enclose the outdoor stairwells and repair exterior brick.

The first two of those are already done, Berry reported, and bids are being taken for the stairwell work.

Jakson Park, Fletcher library

The meeting closed with commissioners listing issues they'd like looked at or items they'd like considered as the budget process goes forward.

Edney asked county staff to start exploring ways to increase the usage of the house the county owns at Jackson Park, saying it only gets minimal use now.

He asked staff to review a number of issues with the county insurance plan for employees, including eliminating pre-approval for prescription drugs, and allowing county employees with a cumulative 30 years' experience with the county receive retirement insurance benefits even if they retire before age 55.

He also expressed a desire to begin the process of updating the county's 2020 Comprehensive Plan and the Solid Waste Division plan.

Commissioner Charlie Messer proposed ramping up discussions about a picnic shelter for Green River and having the county look at establishing a greenway fund.

He also proposed the idea of a contribution to the New Fletcher Library Partners' effort to get a new library built in Fletcher. Commissioners discussed the possibility of a one-time donation or a matching challenge.

Commissioner Tommy Thompson, noting that one new school nurse is included in the proposed budget, urged the board to keep working toward the goal of having one school nurse per every 750 students in Henderson County schools. He also reiterated support for funding the sheriff's study and a similar study of the tax department.

Lapsley, noting the recent Pertussis outbreak, also voiced support for more school nurses, calling it a perfect example of why they're needed.

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