TO: BOARD OF SUPERVISORS
FROM: Patrick J. Coffield, County Administrator
SUBJECT: FISCAL YEAR 2007-08 OPERATING BUDGET
It is my pleasure and honor to submit to you the Fiscal Year 2007-08 balanced budget. This budget has been prepared in accordance with Section 15.2-2503 of the Code of Virginia, as amended.
Augusta County has practiced fiscal responsibility by honestly budgeting revenues and expenditures without resorting to short-term fixes with long-term consequences. Such short-term fixes include:
· Using unspent funds from prior year funds for operating budget
(versus capital)
· Delaying spending
· Accelerating revenues
· Capitalizing operating costs
· Using reserves
· Temporarily cutting costs
· Temporarily increasing revenue
· Delaying equipment purchases
· Delaying capital expenditures
The Board has consistently adhered to sound accounting principles for establishing depreciation accounts for many reoccurring capital needs; thus, eliminating or reducing the need for bonding many public improvements. This results in a very favorable debt per capita average for Augusta County residents. According to the State’s Comparative Report of Local Governments, the County’s debt is 33% of the state average.
The Board, as well as County agencies, practice fiscal responsibility by living within budgets. This is often accomplished by “stubborn” professional pride reflective of a mature and seasoned staff. It is uncommon in many organizations (public or private) for employees to spend money like it was their own. While good fiscal management has made it easier on our County budget, the saving grace has come from growth in “Local Revenues.” What is growth? Simply stated, it is the potential revenue from new construction (real estate), local sales taxes, business licenses, machinery and tool taxes, personal property taxes, etc.
Growth for growth sake can have short-term benefits and long-term consequences. The term “Smart Growth” or “Managed Growth” is often debated by the Board and staff. Developers and no- growth proponents, by debating this issue, bring to our attention desirable and undesirable consequences of zoning and subdivision ordinances.
Some positive outcomes of managed growth include:
- Focus on Growth in Urban Service Areas where infrastructure is in place.
- Consideration and approval of rezonings in areas consistent with Comp Plan and where infrastructure can sustain growth.
- Conversely denying rezoning when not consistent with Comp Plan and when infrastructure can not sustain growth.
- Since 2000 Census, the County population has increased by 4,419 while over the same time period; we have added approximately 3,609 new housing units. Interestingly, the school system’s average daily membership (ADM) is less since the peak in 1998. The private sector (developers) has analyzed the regional housing market and has diversified the housing stock to meet the housing needs of our citizens. Twenty years ago, we witnessed larger family units with multiple generations under a single roof. Now we see many empty nesters or families with only one or two children.
- The December 2006 unemployment rate for Augusta County was 2.3% as compared to 2.7% for the State and 4.3% for the nation. The value of new construction and alterations/repairs exceeded $144,500,000 for calendar year 2006.
In summary, growth has resulted in increased real estate, machinery and tool and business license taxes. The increased number of higher paying jobs and a low unemployment rate has positively impacted us in increased personal property taxes and growth in construction. This construction includes not only new homes, but renovations and additions to existing housing.
For Fiscal Year 2007-08, the Director of Finance and I project an increase in net "new" growth totaling $3,727,350.
BUDGET EXPENDITURE HIGHLIGHTS
School Board Budget - The School Board's share of new operating revenue totals $1,863,675 (Attachment 1). This represents an increase in local funding in the amount of 5.98%.
County Employees - The County's Pay and Classification Plan was adopted fourteen years ago. The Board's commitment to "pay for performance" assists us in ensuring that salaries and evaluations are coordinated. For FY07-08, we have budgeted 3.5% for cost of living/range and 1.5% for merit (5.0% payroll increase). The actual budget impact will be 2.5% due to the January 1st implementation date. The Commissioner of Revenue and Treasurer are a part of our Pay and Classification Plan. The budget reflects a 5% increase for other constitutional office employees (sheriff, commonwealth attorney, and clerk).
Personnel - For FY07-08, 31 new positions have been requested. Of this number, the “balanced” budget includes 8 FTE positions. (Attachment 2)
Health Insurance – The SAW Health Insurance Consortium has entered into an agreement with Southern Health, Inc., for employee health insurance through December 2008. From the standpoint of the FY08 budget, our projected increase is 2%. Depending on claims experience, this figure could be lower. The insurance trust fund interest account will continue to offset employee subsidy for dependent care.
Tourism – The Board, when implementing the 4% Meals Tax, indicated it would commit 10% of revenues collected for Tourism and Economic Development. Additionally, by State Code, one-half of the 4% Lodging Tax must be designated Tourism. A breakdown of the Tourism budget is attached (Attachment 3). For FY07-08, the revenue projection is:
Meals Tax 10% $230,000
Lodging Tax 50% $245,000
Total: $475,000
Comprehensive Services Act – The General Assembly passed this Act in 1993 to coordinate agencies serving at-risk children. In Augusta County, our expenditures have traditionally been below state per capita averages. However, we have seen an increase in “mandated” services. In Fiscal Year 1996 actual expenditures totaled $188,812 (local match $62,345). For Fiscal Year 2008, $2,850,000 is being budgeted (local match $976,070).
Capital Improvements Program - A separate memorandum is provided highlighting the 2008-12 CIP. The Board has dedicated the following funding sources for Capital Improvements:
General Operating FY07-08
Consumer Utility $ 950,000
Business, Professional & Occupational
License Tax (BPOL) (1/3) 1,033,000
Meals Tax (90%) 2,070,000
General Reassessment (1993) 2,300,000
General Reassessment (1997) 1,210,000
TPP NADA Adjustment (1997) 950,000
General Reassessment (1/2-2001) 919,000
General Reassessment (2005) 2,424,000
(Agric. – 2005) 426,000
$12,282,000
- 400,000*
- 278,000**
-7,256,250
$4,347,750
* Reflects F/Y 93-94 CIP reductions to offset operating budget increases.
** Reflects F/Y 03-04 CIP reductions to offset operating budget increases.
*** School Debt – Phases I, II, III, IV and V.
BUDGET REVENUE HIGHLIGHTS
Real Estate and TPP Taxes - It is recommended that the Real Estate tax rate remain the same for FY07-08 (58¢). With regard to the Tangible Personal Property, no changes in the rate or value concept are proposed by me or the Commissioner of the Revenue.
Real Estate 1¢ = $507,000
TPP 1¢ = $ 55,000
2009 Reassessment – The process will begin this year to conduct the County’s 2009 reassessment. Historically, the County has utilized increased revenues to fund capital projects and address new programs/staffing needs. Due to the recent real estate market, a number of local jurisdictions have chosen to lower their tax rate to partially offset increases in real estate values.
The “Draft” Comprehensive Plan identified capital needs exceeding $380 million over the next 20 years. This amount did not fully reflect schools or Service Authority capital costs. With regard to operating costs, school teacher salaries and fire and rescue staffing, will continue to drive the cost of local government.
BALANCED BUDGET
Traditionally, the most sensitive revenue sources locally are sales taxes and tangible personal property tax revenues. In recent years, “Interest Income” has been the most challenging to estimate. On a statewide basis, the economy can affect the sales tax revenues returned to localities for education (1%) as well as our Virginia Retirement System rates which are affected by changes in stock market values.
As in past years, we have provided a balanced budget for your consideration. Because we have proposed budget reductions to balance the budget does not mean the unfunded requests are without merit. We recognize that the Board reserves the right to modify revenues and expenditures to meet community needs. It is our role to assist the Board by providing a base budget (balanced with existing revenue) developed with the input of county agencies and constitutional officers. Additionally, the public and non-profit agencies have been provided an opportunity to submit their requests for taxpayers supported contributions. Without revenue generated from growth, capital account dividend and prior year-end fund balances, this year's budget could not have been balanced.
The development of a budget is not without the participation and assistance of a great number of people. I would especially like to thank Joe Davis for his leadership, John McGehee for his input and guidance, Jennifer Whetzel for her staff support, Jean Shrewsbury and her office for revenue projection assistance, Rita Austin and Faith Souder for their patience and willingness to run calculations and preparing drafts. Department Heads, Constitutional Officers, and the Superintendent of Schools have been most cooperative and understanding of time constraints and follow-up requests for information.
March 30, 2007
M E M O R A N D U M
TO: BOARD OF SUPERVISORS
FROM: Patrick J. Coffield, County Administrator
COPY: Augusta County Planning Commission
SUBJECT: CAPITAL IMPROVEMENTS PLAN AND BUDGET
The recommended Capital Improvements Budget for Fiscal Year 2007‑08, along with the Capital Improvements Plan for the five years 2007-08 through 2011‑12, is submitted for the Board of Supervisors' consideration (see attachment). I am also forwarding the CIP to the Planning Commission for their review and consideration as it relates to the Comprehensive Plan.
A CIP offers a systematic approach to planning and financing capital improvements. Although capital improvement programming cannot totally eliminate inefficiencies and the element of chance, a well-prepared CIP can offer advantages such as:
· Anticipating future capital facility needs
· Correlating projects to community goals, financial capabilities and anticipated growth
· Eliminating duplication and poorly planned expenditures
· Encouraging cooperation with other governmental units
· Establishing work schedules and cost estimates
· Facilitating Federal and State Grants
· Facilitating private sector improvements consistent with the Comprehensive Plan
· Developing public support for capital expenditures
2007-08 CAPITAL BUDGET SUMMARY
Specifically, the proposed capital improvement budget for Fiscal Year 2007‑08 identifies needs totaling $10,632,000. The amount of funds represented by the five‑year CIP is $69,152,000. The funding will need to be earmarked from General Fund revenues, General Fund balances, borrowing or other funding sources. Because the CIP is a multi‑year planning document, the Board has the flexibility to modify its five‑year priorities as circumstances dictate.
In 1993 and 1997, the Board authorized 100% of the general reassessment for capital improvements. In 2001, the Board authorized 50% of the general reassessment for capital improvements. With the decision to proceed with construction of Wilson Middle School, and renovations/expansions to Stuarts Draft and Wilson Memorial High Schools, $2,424,000 of the 2005 reassessment was earmarked for capital projects.
The following is an overview of the CIP by project area:
PUBLIC WORKS
The seven infrastructure accounts allow Board members the flexibility to address unique problems and needs in their magisterial districts. This account has also been used to study problems, leverage other funding sources and expedite projects.
Stormwater management continues to be a State and local problem. Regional detention facilities, especially for areas in industrial, commercial, and small lot residential subdivisions, continue to hold promise when a public/private partnership presents itself as a viable option. Currently, we are concerned with slowing the flow of water. For many communities under the Chesapeake Bay Act, detention and treatment is required. This account provides seed money or leverage to accomplish these goals.
Roads continue to be a high priority of the Board and our citizens. Statewide, the competition for secondary road and revenue sharing funding is intense. The County continues to seek TEA-21 grants to improve railroad crossings and address hazardous road conditions. Augusta County has aggressively sought additional VDOT funds by participating in the Revenue Sharing program (50% local match). VDOT’s Secondary Road budget has been reduced by over 52% since 2003 requiring that projects be reprioritized. Fortunately, with the creation of the Rural Rustic Road program, savings have been realized, minimizing the impact on the Six Year Plan.
EDUCATION
Since 1992, the County has authorized $117.09 million in bonds for school construction projects. Projects include:
PHASE I ($2.5M) PHASE IV ($25.2M)
Stuarts Draft Middle North River Elementary
Cassell Elementary Craigsville Elementary
Riverheads Elementary Stump Elementary
Beverley Manor Middle Churchville Elementary
Wilson Elementary
PHASE V ($56.2M)
PHASE II ($14.6M) Wilson Middle School
Stuarts Draft Elementary Stuarts Draft High
Clymore Elementary Wilson High
PHASE III ($25.2M)
Ft. Defiance High
Buffalo Gap High
Riverheads High
In June 1990, school debt totalled $5,639,604. As of June 2006, school debt totalled $42,656,306. Since 1990, the Board has had to earmark local funding to finance this debt (FY07 $5.75 million versus $876,000 in FY90). These amounts do not include the debt for Wilson and Stuarts Draft High Schools (Debt $42.4 million/annual Debt payments FY09 $3.8 million)
The schools current capital list totals needs in excess of $59.6 million in today’s costs. The Five-year CIP reflects projects totaling $20.6 million:
· Addition to Verona Elementary $ 5.0M
· Addition to Cassell Elementary $ 5.0M
· School Land Purchases $ 0.6M
· Adm. Offices/Bus Garage $10.0M
$20.6M
PUBLIC SAFETY
With the opening of the new Regional Jail, the rated capacity increased from 90 to 402. With double bunking, as authorized by the State, we are able to house 828 prisoners. The bonded cost of the new Jail is $59 million. The debt payment is $2.46 million annually of which Augusta County’s share is 35.5% based upon a three-year average of prisoner days ($875,000). Because of excess capacity, bed rentals are currently “covering” the debt payments. We are currently carrying a two-year debt fund reserve for Augusta County. Future bed rentals are subject to a number of outside factors, i.e., state overcrowding, overcrowding of local jails outside of our region and jail population projections for Waynesboro, Staunton and Augusta County. While the State will have added 3,448 new beds by the end of 2007, the DOC’s “out-of-compliance” backlog in local and regional jails will continue to exist and is forecasted to be 3,400 by 2012. Local jails which are considering expansions include Rockingham/Harrisonburg, Page-Shenandoah and Warren, Rockbridge-Buena Vista and Lexington along with Roanoke County.
The current emergency communications (radio) system was successfully implemented ten (10) years ago at a cost of $2.5 million. The Board of Supervisors was wise to set up a sinking fund for replacement of communication equipment associated with this system. However, there have been new regulations written by the FCC that would affect the County when the upgrade becomes necessary. The FCC has promulgated a regulation that would split the band width of UHF radio frequencies from 25 mgh to 12.5 mgh. This regulation opens up many more frequencies that could be available to the public and private sector. Rockingham County and the City of Harrisonburg are in the process of a $21.9 million upgrade to their radio systems.
The recommendations proposed in the Emergency Services Study impacts, not only the operating budget, but the capital budget as well. We recognize this, and have created capital accounts for fire apparatus (replacement), Regional Training Center, Volunteer Fire and Rescue fund and the construction of an additional County-operated fire station.
Design is underway to the old Sheriff’s Department/Jail administrative offices to address work space deficiencies in the two courts that utilize the District Courts Building as well as the Commonwealth Attorney’s office. The City of Staunton has undertaken a Court needs assessment to plan for the future construction of a new Juvenile and Domestic Relations Court and Court Services Unit in Staunton. This move could allow for extended use of the “current” District Courts Building for General District Court (second courtroom) and Commonwealth Attorney’s office. The cost of a new court complex (Circuit and General District) could exceed $33 million.
LANDFILL
Over $9.9 million has been expended by the County to purchase additional land, to close the “old” landfill, develop a public use site, and construct an environmentally responsible Regional Landfill. The current landfill was opened in the fall of 1998 (cell number one is full and cells number two and three are constructed and in use). While tipping fees were steadily increased during the early part of the 1990’s, rates have remained stable at $40 a ton since FY93-94. The Regional Landfill includes Staunton and Waynesboro, which share in capital and operating costs. As required by law, the County is required to provide its share for closure and post closure expenses associated with Landfill.
OTHER CATEGORIES
This category represents funding for a variety of County projects. The following is a brief synopsis of major initiatives:
A) MIS/GIS – The technology needs of the county staff and residents continues to grow at a rapid rate. We are seeing a rise in the demands for more e-government access. The GIS digitized mapping website will cause a rise in GIS data requests and support. Document imaging is also, now, expanding into other areas of the government center. This year we will see a new county website developed along with GIS initiatives and more e-government projects incorporated into it. Homeland security is also a high growth area as we see more demand for security equipment, such as cameras, door access, etc. We anticipate continued resource demands placed on the Augusta County technology infrastructure.
B) BLUE RIDGE COMMUNITY COLLEGE – With the 2002 State bond referendum, construction is underway for the $5.5 million Humanities and Fine Arts Building and $.5 million Maintenance Building. Planning is underway for a $4.6 million Technologies Building and $4.9 million Administration/Classroom Building. Localities served by the community college are responsible for the site work associated with projects, i.e., utility extensions, parking lots, side walks, etc. Augusta County’s share is $845,000 or $84,500 over the next 10 years.
C) LIBRARY - We continue to earmark funds to ensure that library technology is kept up-to-date. Staff has developed a master plan for improvements to the main library in Fishersville and construction of a new children’s wing should begin this summer. The Town of Craigsville is considering relocating its Town Hall and it is planned to incorporate the successful “Book Station” into the new facility.
D) RECREATION FACILITIES - The Parks & Recreation Commission and staff continue to serve as a resource for the allocation of Recreation Matching Grants to community groups which have dedicated their time and energy to promoting recreational opportunities for our citizens. Since 1988 when this program was initiated, over $1,890 million has been authorized leveraging 187 projects against a conservative estimate of $3.6 to $3.8 million in community, individual and corporate contributions. The Countywide public support for youth activities is impressive and deserving of our support and appreciation. The completion of the Recreation Master Plan has provided guidance and direction to prioritize needed projects, maximize (limited) funding resources, and assist in leveraging private sector contributions with new residential developments. Staff is working with the Board and Verona community to develop a recreation plan for utilizing County owned property adjacent to the Middle River and complete construction of Crimora Park. With the recent purchase of land in Augusta Springs, planning is underway to identify short and long-term recreation opportunities. With the recent changes to the Recreation Matching Grants program, funding can be allocated to countywide recreation projects as identified in the Recreation Master Plan as well as providing flexibility to fund needed District projects.
The Board of Supervisors and School Board continue to work cooperatively to increase the number and size of gyms in Augusta County. With improvements to Wilson and Stuarts Draft High Schools, two new competition gyms are under construction. The Parks and Recreation Commission is also studying the possibility of building a Community Center in Verona.
E) SHENANDOAH VALLEY REGIONAL AIRPORT COMMISSION – The Airport has been successful over the past several years ensuring that local funds are used to leverage State and Federal grants to market and improve facilities at the airport. Projects underway include the construction of new corporate hangers. Augusta County partners with Rockingham County, Staunton, Waynesboro and Harrisonburg to operate the Airport.
F) AUGUSTA COUNTY SERVICE AUTHORITY – The County’s Infrastructure Accounts have traditionally covered minor water and sewer extensions. The County’s Comprehensive Plan, as well as Economic Development initiatives, often require a financial commitment from the Service Authority. In such circumstances, it would be appropriate to consider cost sharing proposals to implement. Additionally, the issue of fire flow is being evaluated which may require public-private and County-ACSA partnerships to address.
G) BUILDING SINKING FUND – The Building Sinking Fund has been established based upon depreciation costs associated with mechanical equipment, carpet and tile, roofs, painting associated with county-owned buildings, along with solid waste container sites. The account has been funded from revenues generated from rental of space at Government Center to State and Federal agencies.
H) COURTS – Funding to address master planning, renovation, security and construction of new court facilities.
I) GOVERNMENT CENTER – The County occupied the Government Center seventeen years ago. Master Planning has been completed for the next 10-20 years. The next phase will be to close in the remaining bays adjacent to the Building and Grounds, Parks and Recreation, and Animal Control facilities (old fueling bays). The County is also working with the School Administrator to study costs associated with relocating the School Administration offices, bus garage and maintenance center to Verona.
J) SOCIAL SERVICES BUILDING – The current offices are located in a circa 1965 warehouse. The roofing system, along with HVAC systems, make it extremely difficult to maintain. An opportunity may present itself to relocate to Fishersville with the School Board’s move to Government Center.
K) ECONOMIC DEVELOPMENT - The Board of Supervisors' economic development strategy has been successful in maintaining an enviable unemployment rate (December 2006):
Augusta County 2.3%
State 2.7%
National 4.3%
The value of new construction and alterations/repairs exceeded $144,500,000 for calendar year 2006.
L) TOURIST INFORMATION CENTERS –VDOT Enhancement grants have been submitted to relocate and construct a new Tourist Information Center at the entrance of Frontier Culture Museum. Discussions are also underway for a project to relocate the center at Afton Mountain.
M) HOMELAND SECURITY – Funding to monitor activities at various governmental buildings and to upgrade locking/security systems.
N) FLOOD CONTROL DAMS – NRCS has completed Dam Rehabilitation Studies at three locations. Improvements to Robinson Hollow Dam are underway. Reviews are also pending for two other structures and a request has been submitted to add three other dams to the list. The non-federal share for bringing dams into compliance is 35%. The State is currently participating in helping to offset the non-federal share.
O) AGRICULTURAL DEVELOPMENT AND FARMLAND PRESERVATION – Funding to enact recommendations of Agriculture Industry Board and implementation of Purchase of Development Rights program.
P) SOLID WASTE TRANSFER STATIONS – The recycling committee and staff continues to seek a site in Deerfield to construct a new transfer station. Additional sites are needed to relieve demand on existing sites in the Verona and Mt. Sidney areas.
CAPITAL FINANCING
To fund the capital budget, year-end fund balances and reassessment revenues are supplemented by designated revenues, i.e., one-third of consumer utility taxes, one-third of BPOL license taxes, 90% of meal taxes, a portion of lodging taxes, rental income, and the 1997 NADA tangible personal property adjustment. Additionally, with school projects, our goal is to position the County to receive the best possible financing package, i.e., VPSA, VPSA loan subsidy, literary loan, etc. As with all revenue sources, increases and decreases fluctuate from year to year. It is staff's goal to provide the Board with the greatest flexibility while minimizing financing and interest costs.
For Fiscal Year 2007-08, the following funding sources are dedicated for capital projects:
General Operating FY07-08
Consumer Utility $ 950,000
Business, Professional & Occupational
License Tax (BPOL) (1/3) 1,033,000
Meals Tax (90%) 2,070,000
General Reassessment (1993) 2,300,000
General Reassessment (1997) 1,210,000
TPP NADA Adjustment (1997) 950,000
General Reassessment (1/2-2001) 919,000
General Reassessment (2005) 2,424,000
(Agric. – 2005) 426,000
$12,282,000
- 400,000*
- 278,000**
-7,256,250
$4,347,750
* Reflects F/Y 93-94 CIP reductions to offset operating budget increases.
** Reflects F/Y 03-04 CIP reductions to offset operating budget increases.
*** School Debt – Phases I, II, III, IV and V.
With the adoption of the Capital Improvement Plan, there are a number of “what ifs” which can positively and negatively affect the CIP. The following is a partial list of projects which are not included in the CIP or only partially funded:
Roads - State Secondary Road funding, along with Revenue Sharing funding, continues to be uncertain.
Flood Control Dams – Project funding is contingent upon Federal (65%) and State
contributions. A funding formula for Waynesboro has been established for structures within the South River Watershed.
Fire Training Center – Phase II funding is uncertain at this time.
Fire Station – The County funding is contingent upon sale price for current station and cost to relocate.
Libraries – The County funding for Phase II of the Fishersville Library Master Plan is uncertain.
Recreation - The funding for projects identified in Parks and Recreation Master Plan is dependent upon continued allocations to Magisterial District’s infrastructure and Recreation Matching Grants accounts. The Comprehensive Plan process could identify possible “Developer Driven” funding sources to compliment county funding.
Emergency Communications – The depreciation account is for replacement of the existing analog/UHF system. By 2013 the FCC will be mandating that systems fall within certain “narrow banding” criteria, thus requiring a major equipment upgrade. This cost could exceed $16 million versus the $2 million identified in depreciation account.
PJC/rra
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