1-28 - 29-2021 BOC Planning Retreat

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Fund Balance % of GF Expenditures numbers.pdf Debt Capacity Discussion - Dr. John Crumpton County Manager John Crumpton went over the report Davenport performed when the County borrowed money for Baraht Forge, Library, Lee EArly College, and Multi-Sport Complex as analyzed in order to have a minimal tax impact. There were 5 announced major economic development projects in the last three years with Pfizer, Caterpillar, Bharat Forge, and Audentes Therapeutics. These big projects won't start impacting the tax rate until about 18 months from now. The debt affordability analysis covers borrowing for Project Forge,joint library/classroom project, and the multisport complex and initial analysis of a 20 year note with a 5% interest rate. The economic development project borrowing occurred with no impact. Ways to reduce impact are to increase debt service tax rate using new revenue from the economic development projects. To generate revenue new a tax base of$370,000,000 must be realized over the next two fiscal years in excess of normal growth. The County must tie borrowing to tax base increase. Borrowing funds for multi-sports complex may occur in two phases. The recommendation is to borrow funds when interest rates are lower, and currently on average around 3.2% in the market. The Board of Education provided their five- year facility needs plan previously to the Board of Commissioners. The birth rate and percentage of kids under 5 has gone down. The student population trend for the last 6 years ranges from 10,178 in 2014-2015 to 9,839 in 2019-2020 due to the declining birth rate, charter attendance, and homeschool impact. If County Grows at 1.2% over the next 11 years in 2030 the county will have a population of 70,909. The anticipated build out of new developments is 6 to 10 years. Projected development included the addition of 3,454 residential units to Lee County including 1,136 apartments, 1,620 residential houses, 1,472 residential houses in smaller subdivisions. This does not include Deep River Forest and Cumnock Village. Normal growth in 2030 would produce 470-570 children under the age of 5 and the existing schools already have the capacity. If residential growth is in excess of normal growth on the low end, it would create an additional 1,097 by 2030 and the County would likely need a new school in this case. If there is higher growth, about 1,800 students, this could result in the need of about 3 new schools by 2030. Although ADM is going down, this does not necessarily reflect the spending of the schools, because the total per pupil spending is still used to cover expenditures. FY 21-22 Budget Issues for Staff- Dr. John Crumpton County Manager John Crumpton provided a recap of the economic picture from last year which changed dramatically when the pandemic hit. Today we are in a period of uncertainty but the County is still in a strong economic position. The unemployment rate increased to 13.9% at one point and is now down to 6.5%. Sales tax growth is now around 20%. Tax base growth is at least 4%. The population is growing and public school ADM is down. The County's financial picture is strong. He provided budget guidance stating while its too early to project tax base for the upcoming year it is likely to increase. Dr. Crumpton stated that from labor statistics the COLA is expected to be 1.5% and the departments'goal is to fund the pay plan in order to continue improving employee retention. Health insurance is anticipated to increase. In 2018-2019 there was a 14% increase in health insurance but over 6 years the average increase was 1.5%. This year after meeting with the BCBS broker since claims have run extremely high, the County has been advised to budget a 10% increase for health insurance in the upcoming budget. Horton Park Phase 2 Project is estimated at $1,000,000. Staff recommends using fund balance to fund a one-time expenditure to address the issues at Horton Park which could also be used at other 11