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January 08, 2003 Work Session 388 A Budget Worksession of the Frederick County Board of Supervisors (Board) and the Frederick County Finance Committee (Committee) was held at 6:00 P.M., in the Board of Supervisors' Meeting Room, County Administration Building, 107 North Kent Street, Winchester, Virginia. PRESENT Chairman Richard C. Shickle; Vice Chairman W. Harrington Smith, Jr.; Robert M. Sager; Margaret B. Douglas; Sidney A. Reyes; Gina A. Forrester; and Lynda J. Tyler. STAFF PRESENT County Administrator John R. Riley, Jr.; Assistant County Administrator Kris C. Tierney; Finance Director Cheryl B. Shiffler; Budget Analyst Jennifer L. Place; Administrative Assistant Cathy L. Tanner; and members of the Committee. The Board was presented with an FY 2004 budget. Department heads were given a determined allocation, met the challenge, and to date the General Fund stands at present level. Giving the department heads allocated amounts drastically reduced the budget process. Two budgets were presented to the Board. The present level budget, with the determined allocation by the county administrator, resulted in the departments absorbing increased costs in other areas of their budget. The end result (excluding school) equaled the current year amount. The second budget reflected a zero-tax increase. This exercise was requested by the Board and involved cuts to the General Fund of$3.2 million below present level funding. The school operating fund was estimated at $8 million. This budget reduced the level of service provided to the Frederick County residents and proposed changes included the elimination of core County positions and significantly reduced coverage in the area of public safety, instituted a pay-as-you-throw program for trash disposal, recovering fiscal agent costs from other participating localities, and the possible elimination of 185 positions in the Frederick County schools. Administrator Riley requested the Board's direction on where to go from here. Staffwanted the ability to shift funds within the present level general fund budget to areas where funding will alleviate unusual tight budget constraints. It was also a desire of staff to maintain the current workforce with competitive salaries and benefits. A directive was also needed to the School Board for funding the Millbrook High School, increased debt service, and school operational costs. Just these items alone with the School Board will require an estimated tax increase of approximately 15 Minute Book Number 28 Board of Supervisors Budget Worksession of 01108/03 389 cents. The budget becomes a challenge when real estate taxes are used as the major funding component of a budget. The 61 cent real estate tax rate in Frederick County is extremely competitive and much admired by other localities that are considerably higher than the County. Supervisor Sager referred to the revenue growth for Frederick County. Administrator Riley estimated a six percent growth in revenue but staff does not feel this amount will cover everything taken out of reserves last year. The present level budget reflects replacing funds used last year. The estimated unreserved balance for this budget at this time is $12.8 million, however, this is without the schools budget submission. These monies are important especially if a crises should ever come to Frederick County. Supervisor Smith inquired about the COLA. Finance Director Shiffler advised the Board that no COLA had been budgeted in the proposed budget. To include the COLA, an estimated $90,000 for each percent would be needed. Supervisor Sager referred to the automobile decals. Finance Director Shiffler advised the Board that in July it would generate about $300,000 to $350,000. Supervisor Reyes asked what type of tax increase the County was looking at with all the information submitted to date. Administrator Riley advised the Board that with the opening of the new high school and the increased debt service, this would require a 15 cent increase alone. In addition, the $2 million dollars taken from fund balance will need to be replaced. The Board will also need to address Dr. Dean's concern to meet the level of services on the educational side. The range could be anywhere from 15 to 29 cents. A meeting will need to be held with the School Board to discuss their budget as staff was not prepared at this time to address these issues. Supervisor Sager addressed the fire and rescue and law enforcement budgets and if their budgets were prepared at present level. Administrator Riley advised the Board that their budgets were prepared at present level which required cuts and is not a realistic budget. A fire and rescue overtime funding issue will need to be addressed and will be presented to the Board for action later at the January 8, 2003, regular meeting. Supervisor Forrester inquired about the Capital Improvements Plan. Administrator Riley advised that the CIP is adopted with the budget but can be approved later. It is an important plan in that it is used as a guideline for applicants to proffer to. Supervisor Sager inquired about the next reassessment. Administrator Riley advised the Minute Book Number 28 Board of Supervisors Budget Worksession of 01108/03 390 Board they will be making their appointments to the Board of Assessors this spring. The rate will be set in January of2005. Request for Proposals will be advertised to hire the consultant to do the reassessment. Supervisor Tyler addressed the elderly tax relief program, how it works, and ifit needed to be addressed and what mechanism will need to be used to change it if needed. Commissioner of the Revenue Ellen Murphy explained that the current scale is, in her opinion, unfair and needed to be changed. This will require a code amendment in addition to research to make sure this is something the County could afford to do. Administrator Riley asked Commissioner Murphy to check with the County attorney to draft a code amendment and to present it to the Code and Ordinance Committee. Supervisor Forrester addressed the reserve fund. With the economy being the worst that it . has been in 40 years, she asked ifthe reserve fund balance could be reduced to help fund the budget. Administrator Riley explained that this could effect the flexibility, when the locality is a fiscal agent, to advance funds while waiting for reimbursement from the state, reimbursement on sales tax, school projects and most of all trying to put together a fiscal plan the following year. Supervisor Forrester referred to Loudoun County's budget and the amounts they keep in reserve fund. Director Shiffler was directed to obtain information from this locality to understand how their reserve funds are established. By unanimous consensus, the Board directed Administrator Riley to go ahead with preparing a present level budget (no tax increase rate was set). Frederick County Superintendent of Schools Dr. William C. Dean was asked to contact the School Board members to schedule a budget worksession with the Board sometime during the week ofJanuary 23. Discussions followed concerning a major issue on the Finance Committee Report regarding Fire and Rescue. A need for six full time firefighters was being requested as an option to alleviate the overtime expenses within this department. The finance stafftook the average overtime rate and calculated it to determine what the equivalent full time positions would be needed to offset this expenditure. Overtime will still be needed but this action would help manage it better. With continued growth, the demands have become very extensive. Questions were asked where these firefighters would be placed. Administrator Riley suggested that the Fire and Rescue Association and the director of fire and rescue determine the placement of these firefighters. If approved by the Minute Book Number 28 Board of Supervisors Budget Worksession of 01108/03 391 Board, it would be presented at the next Fire and Rescue Association meeting to be held on January 20. An overtime committee has been working with Supervisor Reyes and Fire and Rescue Director DuBrueler in resolving this issue by using the volunteer force. A first fee for service presentation is being scheduled for the end ofthis month at the hospital. Several options are being pursued but until then, the County needs to make sure the calls are met. Upon motion made by Robert M. Sager, seconded by W. Harrington Smith, Jr., the Board recessed at this time to go into regular session and was approved by the following recorded vote: Richard C. Shickle - Aye W. Harrington Smith, Jr. - Aye Robert M. Sager - Aye Margaret B. Douglas - Aye Sidney A. Reyes - Aye Lynda J. Tyler - Aye Gina A. Forrester - Aye " . Tanner istrative Assistant , Q.S_J< c~.C --LJ<-~ Richard C. Shickle Chairman, Board of Supervisors Minutes Prepared By: Minute Book Number 28 Board of Supervisors Budget Worksession of 01/08/03