Budget season has arrived in Cabarrus County as local officials hammer out cuts necessary to balance budgets in an economic environment in which revenues are down.
As the deadline for the approval of budgets for the 2010-2011 fiscal year nears, officials are proposing "conservative" and "austere" budgets with cuts to help offset revenue shortfalls caused by the recession.
Officials proposed budgets that avoid tax increases - for now - but call for cuts in funding to programs and employee benefits.
Local governments must approve a budget by the end of June.
Dealing with a budget shortfall of more than $6 million, Cabarrus County Manager John Day recently presented county commissioners with a proposal that he said is "austere" but necessary.
The $207.6 million budget he proposed for fiscal year 2011 is a decrease of $8.76 million, or 3.9 percent, from the 2010 fiscal-year budget.
The proposed budget would keep property taxes at 63 cents per $100 valuation, but Day expects to raise taxes by as much as 5 1/2 cents per $100 valuation within four years to make up for an expected $7.9 million decline in property values in 2013, when the county revalues property.
Day proposed cuts that would help offset expected decreases in revenue. The budget predicts no growth in property-tax revenue because of slowed development. The county is also expecting a 2.76 percent decrease in sales-tax revenue for the 2011 budget. That's partly because the state is taking over Medicaid costs from the counties, and to help pay those costs, it took a 1/2-percent sales tax that used to go to counties, and partly because retail sales are down.
The county's property-tax revenue is expected to decline by nearly $3 million, due primarily to the closing of the Philip Morris USA cigarette plant, which for more than 25 years was the county's largest taxpayer.
The proposed budget makes up for the decreased revenue through savings from jobs cut in February and other reduced costs. For example, the county would slash by half the amount it gives to nongovernmental agencies.
In February, anticipating a $6.2 million budget shortfall, the county eliminated 76 jobs. The job cuts reduced the expected shortfall by about $2.5 million.
The proposed budget also would withhold more than half the county's contribution to the Cabarrus Economic Development Corp., from $425,298 to $212,000. It also would cut funding in half for organizations such as the Cabarrus Arts Council and the Cabarrus Community Care Plan, which provides health insurance to residents who can't afford their own.
The budget would, however, provide $1.5 million more than allocated in the fiscal 2010 budget to Cabarrus County Schools and Kannapolis City Schools.
Other major costs included in the budget are $1.9 million to expand the county landfill and about $861,000 for the addition of 77 jobs to staff the new detention center in downtown Concord. Those jobs won't be added until March 1, 2011 or after, Day said.
Also feeling the impact of the loss of Philip Morris, Concord officials proposed a fiscal 2011 budget that reflects the annual loss of $1.8 million from the water and wastewater-fund revenue caused by the plant's departure and additional decreases in property and sales-tax revenues.
City Manager Brian Hiatt presented the "conservative" budget, which does not include property tax increases for residents, to the City Council last week. The proposed $195.1 million budget is a 1.9 percent increase, or $3.6 million, from the fiscal 2010 budget, but Hiatt noted that the fiscal 2010 budget was reduced by more than $6 million from the previous year, and cuts made then will carry over into fiscal 2011.
Hiatt's proposal recommends the elimination of six vacant positions and the freezing of 23 jobs, which would save the city about $1.1 million. The budget does, however, allow for a $600 salary adjustment for workers who receive performance evaluation ratings of "meets expectations" or better. The budget would also add a transit manager and two customer-service positions for the city's police department.
Hiatt said the loss of revenue caused by the departure of Philip Morris prompted officials to recommend an increase in wastewater rates. The increase would raise an average customer's wastewater bill by 96 cents per month, according to the proposal. Even with the increase, officials had to postpone some capital projects, such as sewer main relocations.
City Councilman Jim Ramseur said he was concerned about the increase in wastewater costs and wants to look at other options.
Mayor Scott Padgett said he was pleased with the proposal.
"It seems to be a very sensible budget," he said.
Harrisburg residents' property taxes would stay the same under the town's proposed $12.5 million budget for fiscal 2011, even though the town would spent about 23 percent more than it is spending this year.
To help balance spending with revenues, the budget would cut town employees' benefits.
Town Administrator Michele Reapsmith presented the budget proposal to the Harrisburg Town Council last week, saying the cut in benefits would help balance the budget.
The proposed budget is a 23 percent increase over the current budget, but Reapsmith said the town's operating budget was cut nearly 10 percent. The increase stems from money set aside for street improvements, sidewalks and the construction of two water-treatment plants, which the town plans to borrow.
Proposed cuts to employee benefits involve the town's contributions to 401(k) retirement plans and health-insurance coverage.
The town currently contributes 3 percent of employees' pay to their 401(k) plans regardless of how much money employees contribute, but Reapsmith suggested instead matching employees' contributions up to 3 percent, which will save the town money because most employees do not contribute 3 percent.
She also recommended that employees contribute more to their health-insurance coverage, suggesting a plan that would decrease employees' premiums but increase their out-of-pocket expense for each doctor visit.
Town Councilman Bob Scaggs said he wasn't happy with the thought of cutting employee benefits. Reapsmith said doing so was the only remaining option without layoffs or a reduction in services.
"I have cut and cut and cut," said Reapsmith. "I can't cut anymore."
But even the proposed 2011 cuts won't be enough in future years, Reapsmith said. The town's budget has historically been based on development, but because local development has slowed, the town isn't drawing in enough revenue.
Reapsmith said a tax increase of 1 cent per $100 assessed value for fiscal 2012 and incremental increases through 2015 may be necessary.
The proposed budget also includes a new stormwater charge for residents and commercial owners. Town residents will pay $4.64 per month, and owners of commercial property will pay based on the amount of impervious surface on their property, such as buildings or driveways. Stormwater runs off impervious surfaces, contributing to flooding.
The revenue from the charge helps pay for solutions to flooding problems.
"We need to plan for the future," said Reapsmith. "We haven't adequately addressed stormwater issues."