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County budget cruises in a less turbulent climate

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One year removed from budget deliberations dominated by rancorous debates over school construction and a 5-cent tax increase, the Henderson County Board of Commissioners took up a steady-as-she-goes budget recommendation and mostly endorsed the spending outline.

The budget is underpinned by County Manager Steve Wyatt’s ability to enforce spending discipline and preserve a large fund balance even while guiding the board through one of the most ambitious capital building programs in county history. Unlike last year, most of the big decisions — including what to do with Hendersonville High School — have been made.

The county’s total debt service climbs to $168 million in fiscal year 2019, when the county will be paying off debt for completed projects like the Health Sciences Center and new projects like Edneyville Elementary School, Hendersonville High School and the emergency services headquarters. Yet the county’s fund balance — at $45 million — remains so hefty that commissioners Bill Lapsley and Grady Hawkins have consistently argued for a property tax rollback.
“I didn’t see anything out of the ordinary,” Commissioner Grady Hawkins said of the budget. “It looks like pretty much a continuation of some of the major projects we’ve been undertaking. One of the things I’d like to do is take a closer look at a year or two past this budget. There’s going to be a big peak for about three years where we have a significant increase in debt service and then it starts dropping off as some of the other projects we have are getting paid off.”
Specifically, total debt principal and debt service (the amount the county allocates to pay back loans) peak in FY 2019, at $168.3 million and $9.7 million, and then start to taper down — to $153.5 million and $12.7 million in 2020, $140 million and $10,7 million in 2021 — until it reaches a low in 2026 of $80 million and $8.3 million, not counting any new debt the county takes on.
Hawkins said on Tuesday the county is more than likely at the high-water mark of capital debt for the foreseeable future because it’s just about completed major school and emergency services construction.
“I really don’t think at this point there are any other large capital projects coming on line,” Hawkins said.
Besides new schools, the county has added ambulance stations in Crab Creek and Fletcher and authorized the new $13 million emergency services headquarters. A $20 million law enforcement training center has been postponed while Sheriff Charlie McDonald responds to commissioners’ order to come up with cost cuts.
“We’ve not pulled the plug on it,” Hawkins said. “We directed the staff and the sheriff to at least look around and see if we could satisfy those training requirements at a little bit lower cost. I quite frankly don’t know where they’re at.”
Although Hawkins said it’s possible the location and magnitude of the project could change, he pointed out that moving off the BRCC campus would mean buying property.
“It’s on hold pending our request to the sheriff to find a way to cut the cost,” Lapsley said. “He begged us for more time and we told him take what time you need. It’s not a crisis situation. If it takes another six months then we want him to do that.” Asked whether McDonald had gone back to his initial idea for an outdoor range, Lapsley said, “I think he’s looking at all options.”

Property tax rollback?

Hawkins said he’d be willing to consider a property tax rollback, as he and Lapsley tried for last year. But another way to use extra revenue would be to sock it away for 2019 and 2020 when the debt service reaches $19.7 million.
“Remember also that the $45 million fund balance is a little bit of a misleading number,” Hawkins said. “You really don’t have $45 when you take out some of the restricted money. There’s about $9 million in the bank that’s already called for and then there was $7 million that we used to balance the budget this year. … We’re looking at $10 million to balance it this year. I think that’s kind of a misunderstood factor in the fund balance.”
Asked whether he plans again to push for a rollback of county property tax rate of 56½ cents per $100 valuation, Lapsley said “I’m not going to answer that question.” But, as he did in the fall of 2015 and again last spring, he made the case for sending money back to taxpayers instead of keeping it in the bank.
“I don’t think we should make a decision for this coming year based on what may or may not happen 2-3 years from now,” he said. “We just need to look at it year to year. I think we need to adjust the tax rate each year. It should go up and down. I don’t think we should leave the tax rate at a specific level just because we expect to need it down the road. So the question is, as I said last year, how much should we have in the rainy day? How much is enough?”

Budget highlights

Among the highlights of Wyatt’s recommended budget:
• The $134.9 million budget is $3.5 million bigger than the current budget, or 2.7 percent more.
• The budget funds this year’s debt service at $16.6 million. Outstanding debt is from the Innovative High School, now under instruction at BRCC; refinanced bond issues from 2010, 2012 and 2013, the 2010 Apple Valley-NHHS renovations, 2008 Hillandale and Mills River elementary school construction projects, the jail, ambulances and the health sciences center.
• Keeps the tax rate at 56½ cent, fifth lowest rate among 27 medium- to large-sized counties in North Carolina.
• Fully funds requests made by BRCC and public schools administrators. The county allocation for public schools is $26.9 million for operating costs, plus $1 million for repairing and preserving the Stillwell building plus school construction debt service of $36 million — overall a 6.3 percent increase. The BRCC allocation of $5.7 million is up 5.5 percent from the current year.
• The tax base of $13.23 billion is the highest it’s been in any year since 2009.
• Among the new expenses are $50,000 for spay and neuter programs.
• All rural fire departments have requested the same tax rate as the current year. The Fire and Rescue Advisory Committee was scheduled to meet Tuesday to finalize the recommendation.