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Agenda Packet January 20 2015PERSON COUNTY BOARD OF COUNTY COMMISSIONERS MEETING AGENDA 304 South Morgan Street, Room 215 Roxboro, NC 27573-5245 336-597-1720 Fax 336-599-1609 Board of County Commissioners Annual Retreat January 20, 2015 Kirby Theater 213 N. Main St., Roxboro, NC 8:15-8:45 Arrival / Informal Tour of Kirby Rebirth 8:45-9:00 Welcome / Call to Order Chairman Puryear & Heidi York 9:00-9:45 State Legislative Update Rebecca Troutman, NCACC 9:45-10:00 County Trends for Decision-Making Sybil Tate 10:00-11:00 Federal and State Economic Outlook Mike Wolf, Wells Fargo 11:00-11:15 Break 11:15-12:00 Audit Report & Fund Balance Jim Winston & Amy Wehrenberg 12:00-1:30 Lunch / Informal Tour of Kirby Rebirth 1:30-2:00 Ad Valorem and Vehicle Tax Revenues Russell Jones 2:00-2:45 Fund Projections & Capital Projects Amy Wehrenberg 2:45-3:00 Break 3:00-3:30 Workforce Impacts Angie Warren 3:30-3:45 Break 3:45-4:15 Budget Priorities Heidi York 4:15-4:30 Closing Remarks & Evaluation Chairman Puryear Note: All Items on the Agenda are for Discussion and Action as deemed appropriate by the Board. 1 BOARD RETREAT NOTICE The Person County Board of Commissioners will hold a Board Retreat on Tuesday, January 20, 2015, beginning at 9:00 a.m. at the Kirby Theater located at 213 N. Main Street Roxboro for the purpose of discussing the Fiscal Year 2015-2016 Budget and any other topics as deemed appropriate. Brenda B. Reaves, NCCCC, CMC Clerk to the Board Note: The Board Retreat will be streamed live via the Internet as done for regular scheduled Board meetings however note the streaming will not take place during breaks and lunch. 2 REBECCATROUTMANNCACC IGR DIRECTORPerson CountyStatewide Issues & Impacts to County Budgets3 NCACC—Who We Are•100 counties strong•Focus on advocacy, county services, education, & research•Sponsor debt set off ($224 M to counties & cities) & EMS Medicaid Enhancement ($258 M for counties)•Offer county-centric risk management services•Expanding research24 Discussion Today•State revenue collections?–State of the State, US, Counties•Tax reform 2.0?–Issues to watch•State budget priorities?–Issues to watch•Medicaid expansion/reform?•Good news for local government pension funding5 State of the State(Barry Boardman)•2013-14 = $450 million shortfall–Personal Income tax collections the key reason•2014-15 ytd Dec. = General Fund revenue $199 million under target •2% under target & 4.7% down year to year–Sales Tax collections were $78 million above target•6.4% baseline growth v. 14.1% total year to year–Personal Income collections were down $247 million–Total Tax revenue down $175 million6 Sales Taxes Improving….butLocal dist. growth ytd = 13.9%•Refunds $25 million behind•Shows tax base growth•Shows economic growth2013-14 growth = 4.6%•Refunds 9.7% growth7 State of the StateConclusions•Current year revenue collections down 1.3 % thru 1stQtr•1stQtr provided mixed results–Personal Income tax withholding below target–Sales tax collections running ahead of target•Economy continues to strengthen, but growth pace remains below average–Slow growth pattern more susceptible to economic & policy shocks –Places risk to forecast at higher level•1stQtr behind target, increased pressure on April 2015 collections to rise as taxpayers make higher final payments & receive smaller refunds8 State of the CountiesGeneral Fund Expenditures up 7.9%•1.7% below 2008-09•82 counties report higher GF expenditures •250 new employees, reaching pre-recession employment level•9 counties in revaluation, 7 counties show decrease in valuesPublic schools consume 35% ($3.8 billion), 4.7% increase•74 counties increase CE•PP CE = $1,737Survey reports teachers’ supplements, co.-funded school employeesSurvey reports use of Art. 46 sales tax9 Biennial Budget Begins!•Governor’s 2-year budget expected late Feb.–Requires consensus revenue forecast with NCGA–Focus on infrastructure?–Offer up Medicaid expansion?•State tax revenues?–Below projections–Unknown until April 15•House takes budget lead this biennium10 Legislative Session 1/28(Organization Session 1/14)•New House leadership–Committee chairs unknownRep. Tim Moore (Cleveland)Speaker of the HouseRep. David Lewis (Harnett)Rules ChairRep. Mike Hager (Rutherford)Majority Leader11 Legislative Session 1/28(Organization Session 1/14)•Senate leadership unchanged–Committee chairs unknownSen. Phil Berger (Rockingham)President Pro TemSen. Tom Apodaca (Henderson)Rules Chair (presumed)Sen. Harry Brown (Onslow)Majority Leader12 Key Legislative & Budget Issues?•Tax Reform 2.0?–Shift in local sales tax allocation?–Expansion of sales tax to services?–Replacement for municipal privilege license taxes?•Medicaid Reform & Expansion?–House/Senate differences remain•Education Reform?–Teachers’ salaries–School funding?13 Local Sales Tax—Proposed ChangesWhat’s Being Discussed?•Senate Finance chairs consider reallocation based on per capita only–Effort to help smaller, rural counties–Follow up to end of session sales tax proposal•No other state uses per capita–Constitutionality?–24 counties losing $218 million•NCACC policy opposes redistribution of existing revenues–What other options available to help all counties?14 End of Session Surprise Fails—Sets Stage for 2015?H1224—Senate PCS, Local Sales Tax For Educ./Econ. Dev.•Original pcs eliminated ¼ cent general purpose & replaced with ½ cent educ. and/or transit in ¼ cent increments•Senate adopted version kept general purpose & increased to ½ cent, offered new ed. option at ½ cent & increased transit to ½ cent—either or in ¼ cent increments–Cap combined sales taxes at 2.5%–Grandfathers Durham & Orange at 2.75%–Companion H189 permits Mecklenburg & Wake until 2016 to keep 2.75%15 State Budget Pressures•Little flexibility after years of cuts•State $ for 1-time fed. $ to be restored•Teachers’ salary increases, particularly long-serving teachers•New initiatives from new members?•Medicaid overruns16 Medicaid Expansion•What expansion means?–Medicaid coverage for poor, single, non-custodial•Statewide estimate of 500,000•Feds. fully fund initially & steps down to 90% in 2020•What expansion means for counties?–Additional workload in DSS depts. (75% fed. reimbursement)–Coverage of some jail medical expenses & public health services?•Pressure mounts for Medicaid expansion–Gov. McCrory explores federal waiver?•Mirrors Indiana, Arkansas to design state program? –NC foundations sponsor econ & jobs costs of delaying expansion•Reports 43,000 fewer jobs & $21 billion loss in fed. Funds–BC/BS Exec. calls for expansion•ACA discontinued DSH payments17 Good News!LGERS Fund Stabilizing•New financial reporting shows net assets•Employer contribution to fall•Investment gains support small COLA •Retirement division/actuary recommend setting 5-year ARC (annual retirement contribution)Look for pension spiking notice18 Questions?Comments?19 Trends for Decision-MakingSybil TateAssistant County ManagerJan. 20, 201520 21 22 $46,107$46,334$45,321$42,317$39,000$40,000$41,000$42,000$43,000$44,000$45,000$46,000$47,0002007 2008 2009 2010 2011 2012 2013 2014Median Household Income (adjusted for inflation)StateCounty23 24 25 No diploma17%High School36%Some college22%Associate's9%Bachelor's 12%Graduate or professional4%Educational Attainment, 25+ years (2013)26 27 020004000600080001000012000140001600018000FY 2014FY 2015FY 2020FY 2025FY 2030Population Projections by Age Group0-1718-3435-6465+28 Budget Data29 General Govt.11.1%Public Safety22.9%Human Services28.6%Education20.0%Economic Development1.5%Culture and Rec2.9%Debt7.5%Other 5.5%FY15 Expenditures30 Person County Schools31 Person County Schools32 Piedmont Community College33 34 $0.62$0.63$0.64$0.65$0.66$0.67$0.68$0.69$0.70$0.71FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015Tax Rate, FY2003-2014=Revaluation35 Economic OutlookMichael Wolf, EconomistJanuary 20, 201536 Economics22-10%-8%-6%-4%-2%0%2%4%6%8%10%-10%-8%-6%-4%-2%0%2%4%6%8%10%2000 2002 2004 2006 2008 2010 2012 2014 2016U.S. Real GDP Bars = CAGR Line = Yr/Yr Percent ChangeGDP - CAGR: Q3 @ 5.0%GDP - Yr/Yr Percent Change: Q3 @ 2.7%ForecastGross Domestic ProductReal GDP experienced some volatility in the first half of the year, but growth looks to be firming in the second halfSource: U.S. Department of Commerce and Wells Fargo Securities, LLC37 Government38 Economics4-12%-9%-6%-3%0%3%6%9%12%-12%-9%-6%-3%0%3%6%9%12%2000 2002 2004 2006 2008 2010 2012 2014 2016Real Government Purchases Bars = CAGR Line = Yr/Yr Percent ChangeGovernment Purchases-CAGR: Q3 @ 4.4%Government Purchases-Yr/Yr: Q3 @ 0.3%ForecastGovernment PurchasesThe public sector has remained a weight on the overall economy, but looks to be turning into a modest contributor to growthSource: U.S. Department of Commerce and Wells Fargo Securities, LLC39 Economics5-$1,600-$1,400-$1,200-$1,000-$800-$600-$400-$200$0$200$400-$1,600-$1,400-$1,200-$1,000-$800-$600-$400-$200$0$200$40000 01 02 03 04 05 06 07 08 09 10 11 12 13 14Federal Budget Surplus or Deficit12-Month Moving Sum in Billions of DollarsSurplus or Deficit: Nov @ -$436 BillionU.S. Budget DeficitDeficit is shrinking, but not nearly fast enoughSource: U.S. Department of the Treasury and Wells Fargo Securities, LLC40 Economics614%16%18%20%22%24%26%14%16%18%20%22%24%26%2013 2015 2017 2019 2021 2023U.S. Budget GapCBO Baseline Scenario Projections, Percent of GDPOutlays: 2024 @ 22.1%Revenues: 2024 @ 18.3%U.S. Budget GapThe larger problem is that there is still no credible plan to move back into a surplusSource: Congressional Budget Office and Wells Fargo Securities, LLC41 Economics77Federal Government Spending: Entitlements in the Driver’s SeatEntitlement programs are the main drivers of growing expendituresSource: Congressional Budget Office and Wells Fargo Securities, LLC$0.0T$0.5T$1.0T$1.5T$2.0T$2.5T$3.0T$3.5T$4.0T$0.0T$0.5T$1.0T$1.5T$2.0T$2.5T$3.0T$3.5T$4.0T2013 2015 2017 2019 2021 2023U.S. Federal Government Mandatory OutlaysTrillions of U.S. Dollars, Projections Begin in 2014Other Programs: 2024 @ $0.2TIncome Security: 2024 @ $0.3TSocial Security: 2024 @ $1.5THealthcare Programs: 2024 @ $1.6T42 Business Investment43 Economics9-40%-30%-20%-10%0%10%20%30%-40%-30%-20%-10%0%10%20%30%2000 2002 2004 2006 2008 2010 2012 2014 2016Real Business Fixed InvestmentBars = CAGR Line = Yr/Yr Percent ChangeNon-Res Fixed Invest - CAGR: Q3 @ 8.9%Non-Res Fixed Invest - Yr/Yr Percent Change: Q3 @ 7.6%ForecastBusiness Investment Business investment looks to be strengthening after a hiccup earlier in the yearSource: U.S. Department of Commerce and Wells Fargo Securities, LLC44 Economics10-30%-20%-10%0%10%20%30%40%-30%-20%-10%0%10%20%30%40%90 92 94 96 98 00 02 04 06 08 10 12 14Commercial and Industrial LoansAt Commercial Banks in the United StatesYear-over-Year Change: Dec @ 13.2%3-Month Annualized Rate: Dec @ 12.0%Business LendingCommercial and industrial lending has surged over the past quarter, helped by easier credit and increased demandSource: Federal Reserve Board and Wells Fargo Securities, LLC45 Economics113035404550556065303540455055606590 92 94 96 98 00 02 04 06 08 10 12 14ISM Manufacturing Composite IndexDiffusion IndexISM Manufacturing Index: Dec @ 55.512-Month Moving Average: Dec @ 55.8Manufacturing Large manufacturers are reporting a sizable pickup in activitySource: Institute for Supply Management and Wells Fargo Securities, LLC46 Economics12-80-60-40-200204060804%5%6%7%8%9%10%11%12%2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Industrial Supply & DemandPercent, Millions of Square FeetIndustrial Net Completions: Q3 @ 22.6M SF (Right Axis)Industrial Net Absorption: Q3 @ 34.6M SF (Right Axis)Industrial Vacancy Rate: Q3 @ 7.0% (Left Axis)CRE: IndustrialA rise in manufacturing and energy production has fueled growth in the industrial real estate marketSource: CoStar Portfolio Strategy, LLC and Wells Fargo Securities, LLC47 Economics131012141618202040608010012080 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14Production & Jobs in Manufacturing SectorIndex, 2007=100 on Left Axis, Right Axis in MillionsManufacturing Production: Nov @ 102.2 (Left Axis)Manufacturing Employment: Dec @ 12.2 Million (Right Axis)NAFTAChina Joins WTOManufacturing: Production and Jobs Gap Rising manufacturing production has not led to huge job gainsSource: U.S. Department of Labor, U.S. Department of Commerce and Wells Fargo Securities, LLC48 Consumption49 Economics1515-8%-6%-4%-2%0%2%4%6%8%-8%-6%-4%-2%0%2%4%6%8%2000 2002 2004 2006 2008 2010 2012 2014 2016Real Personal Consumption ExpendituresBars = CAGR Line = Yr/Yr Percent ChangePCE - CAGR: Q3 @ 2.2%PCE - Yr/Yr Percent Change: Q3 @ 2.4%ForecastPersonal Consumption ExpendituresConsumption should rebound during the forecast period, but growth is likely to remain somewhat subduedSource: U.S. Department of Commerce and Wells Fargo Securities, LLC50 Economics16-1,000-800-600-400-2000200400600-1,000-800-600-400-200020040060000 01 02 03 04 05 06 07 08 09 10 11 12 13 14Nonfarm Employment ChangeChange in Employment, In ThousandsMonthly Change: Dec @ 252KEmploymentTotal employment finally breached its prerecession peak…Source: U.S. Department of Labor and Wells Fargo Securities, LLC51 Economics1710811111411712012312612912813113413714014314614907 08 09 10 11 12 13 14ThousandsFull Time vs. Part Time EmploymentMillions, Seasonally AdjustedTotal Employment: Dec @ 145.1M (Left Axis)Full-Time: Dec @ 119M (Right Axis)Total: 0.7M Above Prerecession PeakFull-Time: 1.7M Below Prerecession PeakEmployment: StructuralWe still have a ways to go before recovering all of the full-time jobs lost in the most recent recessionSource: U.S. Department of Labor and Wells Fargo Securities, LLC52 Economics182%4%6%8%10%12%14%16%18%2%4%6%8%10%12%14%16%18%94 96 98 00 02 04 06 08 10 12 14Unemployment RatesSeasonally AdjustedUnemployment Rate: Dec @ 5.6%U-6 Unemployment Rate: Dec @ 11.2%Unemployment…but the unemployment rate overstates the health of the labor market. Discouraged workers and an abundance of part-time work rein in spendingSource: U.S. Department of Labor and Wells Fargo Securities, LLC53 Economics191%2%3%4%1%2%3%4%2002 2004 2006 2008 2010 2012 2014Employment Cost Index Year-over-Year Percent ChangeWages and Salaries: Q3 @ 2.1%Total Compensation: Q3 @ 2.2%Wages and SalariesIn addition, wage growth has been relatively slow to pick up, though there are small signs of improvementSource: U.S. Department of Labor and Wells Fargo Securities, LLC54 Economics2040%50%60%70%80%90%100%110%120%130%40%50%60%70%80%90%100%110%120%130%60 65 70 75 80 85 90 95 00 05 10 15Household Debt - Consumer & MortgageAs a Percent of Disposable Personal IncomeHousehold Debt: Q3 @ 96.6%Consumer Balance SheetHouseholds continue to pay down debts, which further restrains spendingSource: Federal Reserve Board and Wells Fargo Securities, LLC55 Economics2121Household DebtRising student loan debt is crowding out other borrowing, particularly for autos and credit cardsSource: Federal Reserve Board and Wells Fargo Securities, LLC20132003Mortgage, 70.2%Student Loans, 3.1%Auto Loans, 8.7%Credit Card, 8.7%HE Revolving, 3.7%Other, 5.6%Household Debt - 2003Mortgage, 70.0%Student Loans, 9.1%Auto Loans, 7.5%Credit Card, 6.0%HE Revolving, 4.7%Other, 2.7%Household Debt - 201356 Housing Market57 Economics233.03.54.04.55.05.56.06.57.07.53.03.54.04.55.05.56.06.57.07.504 05 06 07 08 09 10 11 12 13 14 15Existing Home Sales Seasonally Adjusted Annual Rate, In MillionsExisting Home Sales: Nov @ 4.93MHousing Market: Existing Home SalesExisting home sales have started to rebound, but remain lower than a year agoSource: U.S. Department of Commerce and Wells Fargo Securities, LLC58 Economics241003005007009001,1001,3001,5001003005007009001,1001,3001,50089 91 93 95 97 99 01 03 05 07 09 11 13 15New Home SalesSeasonally Adjusted Annual Rate, In ThousandsNew Home Sales: Nov @ 438,0003-Month Moving Average: Nov @ 446,000Housing Market: New Home SalesNew home sales have seen only modest improvementSource: U.S. Department of Commerce and Wells Fargo Securities, LLC59 Economics252.5%3.0%3.5%4.0%4.5%5.0%5.5%6.0%6.5%7.0%2.5%3.0%3.5%4.0%4.5%5.0%5.5%6.0%6.5%7.0%2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Conventional 30-Year Mortgage RatePercent, FHLMC Fixed-Rate MortgageConventional 30-Year Fixed Mortg. Rate: Jan-07 @ 3.87%Mortgage RatesMortgage rates remain low by historical standardsSource: Freddie Mac and Wells Fargo Securities, LLC60 Economics261%2%3%4%5%6%7%8%9%10%1%2%3%4%5%6%7%8%9%10%00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15Confidence: Plans to Buy a HomePercent of Consumers, Conference BoardPlans to Buy a Home Within Six Months: Dec @ 4.8%12-Month Moving Average: Dec @ 5.4%Home Purchase ExpectationsAfter months of weakening, plans to buy a home appears to be perking up againSource: The Conference Board and Wells Fargo Securities, LLC61 Economics27-32%-24%-16%-8%0%8%16%24%-32%-24%-16%-8%0%8%16%24%04 05 06 07 08 09 10 11 12 13 14 15Home PricesYear-over-Year Percentage ChangeMedian Sale Price: Nov @ $206,200Median Sales Price 3-M Mov. Avg.: Nov @ 5.5%FHFA (OFHEO) Purchase Only Index: Oct @ 4.5%S&P Case-Shiller Composite 10: Oct @ 4.4%Home PricesHome price gains have moderated considerably, but are still up on a year-ago basisSource: Federal Housing Finance Agency, National Association of Realtors, S&P Corp. and Wells Fargo Securities, LLC62 Economics280.00.30.60.91.21.51.82.12.40.00.30.60.91.21.51.82.12.480 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18Housing StartsMillions of UnitsMultifamily StartsMultifamily ForecastSingle-family StartsSingle-family ForecastForecastHousing Market: Residential ConstructionWe expect residential construction to continue to advance, though a full recovery in the housing market is a long way offSource: U.S. Department of Commerce and Wells Fargo Securities, LLC63 Fed Policy64 Economics300%1%2%3%4%5%0%1%2%3%4%5%90 92 94 96 98 00 02 04 06 08 10 12 14"Core" PCE Deflator Both Series are 3-Month Moving Averages3-Month Annual Rate: Nov @ 1.3%Year-over-Year Percent Change: Nov @ 1.5%InflationInflationary pressures have been muted, mainly due to a drop in oil pricesSource: U.S. Department of Commerce and Wells Fargo Securities, LLC65 Economics310.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17PCE Deflator ForecastFed Central Tendency ForecastCentral Tendency Forecast RangeHistorical PCE DeflatorFOMC Dec. Forecast Q4-over-Q4 Percent ChangeInterest RatesThe Fed’s own forecast for inflation has been revised lowerSource: U.S. Department of Commerce and Wells Fargo Securities, LLC66 Economics320.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%Appropriate Pace of Policy FirmingTarget Federal Funds Rate at Year-End20152016Longer RunDecember 20142017Interest RatesWith the labor market barreling toward full employment while inflation remains low leads to uncertainty regarding the pace of rate hikesSource: U.S. Department of Commerce and Wells Fargo Securities, LLC67 Economics33U.S. ForecastWells Fargo U.S. Economic Forecast201220132014201520161Q 2Q 3Q 4Q 1Q 2Q 3Q 4QReal Gross Domestic Product 1-2.1 4.6 5.0 2.8 2.5 2.6 2.8 2.9 2.3 2.2 2.4 3.1 3.0Personal Consumption1.2 2.5 3.2 4.5 2.5 2.6 2.5 2.5 1.8 2.4 2.5 3.0 2.5Inflation Indicators 2PCE Deflator1.1 1.6 1.5 1.1 0.8 0.7 0.9 1.4 1.8 1.2 1.3 1.0 2.0Consumer Price Index1.4 2.1 1.8 1.2 0.7 0.5 0.8 1.7 2.1 1.5 1.6 0.9 2.4Industrial Production 13.9 5.7 4.0 6.6 6.1 4.9 3.5 3.1 3.8 2.9 4.3 5.2 3.6Corporate Profits Before Taxes 2-4.8 0.1 1.4 3.2 3.7 3.6 4.1 4.6 11.4 4.2 0.1 4.0 5.2Trade Weighted Dollar Index 376.9 75.9 81.3 85.0 83.8 84.8 85.8 86.8 73.5 75.9 78.4 85.3 88.3Unemployment Rate6.7 6.2 6.1 5.8 5.7 5.6 5.5 5.4 8.1 7.4 6.2 5.6 5.2Housing Starts 40.93 0.99 1.03 1.03 1.06 1.13 1.21 1.240.78 0.92 1.01 1.16 1.26Quarter-End Interest Rates 5Federal Funds Target Rate0.25 0.25 0.25 0.25 0.25 0.50 0.75 1.00 0.25 0.25 0.25 0.63 2.00Conventional Mortgage Rate4.34 4.16 4.16 4.00 4.16 4.20 4.30 4.40 3.66 3.98 4.20 4.27 4.9510 Year Note2.73 2.53 2.52 2.17 2.40 2.51 2.59 2.66 1.80 2.35 2.54 2.54 3.20Forecast as of: January 2, 20151 Compound Annual Growth Rate Quarter-over-Quarter2 Year-over-Year Percentage Change3 Federal Reserve Major Currency Index, 1973=100 - Quarter End4 Millions of Units5 Annual Numbers Represent Averages2014Actual2015ForecastActualForecast68 EconomicsPercent change in real GDP by state 2012-2013AK-2.5HI1.9U.S. = 1.83.3–13.4-0.1–1.22.2–3.31.5–2.21.2–1.5WYWVWIWAVTVAUTTXTNSDSCRIPAOROKOHNYNVNMNJNHNENDNCMTMSMOMNMIMEMDMALAKYKSINILIDIAGAFLDEDCCTCOCAAZARAL7.65.11.72.71.90.13.83.70.83.11.21.40.72.74.21.80.71.01.51.10.93.09.72.33.01.60.82.82.00.90.01.61.31.61.92.10.94.12.91.82.21.6-0.50.93.82.01.12.40.869 Economics3535North CarolinaThe labor market continued to firm in North Carolina during 2014 despite the recent uptick in the unemployment rateSource: U.S. Department of Labor and Wells Fargo Securities, LLCUnemploymentEmployment-8%-6%-4%-2%0%2%4%6%-8%-6%-4%-2%0%2%4%6%90 92 94 96 98 00 02 04 06 08 10 12 14North Carolina Nonfarm Employment3-Month Moving Averages QCEW: Yr/Yr Pct. Change: Jun @ 2.3%North Carolina: Nov @ 2.3%Household: Yr/Yr Pct. Change: Nov @ 1.0%01,0002,0003,0004,0005,0006,0000%2%4%6%8%10%12%90 92 94 96 98 00 02 04 06 08 10 12 14North Carolina Unemployment & Labor ForcePercent, Thousands of Workers, Seasonally AdjustedUnemployed: Nov @ 270.7 (Right Axis)Employed: Nov @ 4,362.8 (Right Axis)Unemployment Rate: Nov @ 5.8% (Left Axis)70 Economics3636North CarolinaEmployment gains have been broad based, but the labor force participation rate continues to move lowerSource: U.S. Department of Labor and Wells Fargo Securities, LLCLabor Force ParticipationEmployment by IndustryNovember 2014-4% -2% 0% 2% 4% 6% 8%InformationOther ServicesConstructionFinancial ActivitiesLeisure and HospitalityManufacturingProf. & Bus. Svcs.Educ. & Health ServicesGovernmentTrade, Trans. & UtilitiesTotal NonfarmNorth Carolina Employment Growth By IndustryYear-over-Year Percent Change, 3-MMANumber of EmployeesLessMore60%61%62%63%64%65%66%67%68%69%70%60%61%62%63%64%65%66%67%68%69%70%80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14Labor Force Participation Rate3-Month Moving Averages, Seasonally AdjustedNorth Carolina: Nov @ 60.2%United States: Nov @ 62.8%71 Economics37-8%-6%-4%-2%0%2%4%6%8%10%-8%-6%-4%-2%0%2%4%6%8%10%91 93 95 97 99 01 03 05 07 09 11 13North Carolina Nonfarm EmploymentYear-over-Year Percent ChangeOffice Employment: Nov @ 5.9%Non-office Employment: Nov @ 1.7%North CarolinaSome of the strongest gains have been seen in office-using employment, which bodes well for related investment in structures and the construction industrySource: U.S. Department of Labor and Wells Fargo Securities, LLC72 Economics38-16%-14%-12%-10%-8%-6%-4%-2%0%2%4%6%-16%-14%-12%-10%-8%-6%-4%-2%0%2%4%6%91 93 95 97 99 01 03 05 07 09 11 13North Carolina Nonfarm EmploymentYear-over-Year Percent ChangeManufacturing Employment: Nov @ 2.3%Non-Manufacturing: Nov @ 2.6%North CarolinaManufacturing employment is also perking up, but…Source: U.S. Department of Labor and Wells Fargo Securities, LLC73 Economics3930040050060070080090030040050060070080090090 92 94 96 98 00 02 04 06 08 10 12 14North Carolina Manufacturing EmploymentIn ThousandsManufacturing Employment: Nov @ 452.1 ThousandNorth Carolina…the industry remains a shadow of its former selfSource: U.S. Department of Labor and Wells Fargo Securities, LLC74 Economics40-8%-6%-4%-2%0%2%4%6%8%10%-8%-6%-4%-2%0%2%4%6%8%10%00 02 04 06 08 10 12 14North Carolina Technical EmploymentYear-over-Year Percent ChangeNorth Carolina: Nov @ 8.9%United States: Nov @ 2.5%North CarolinaThe future of North Carolina rests in the hands of high-tech employers that can take advantage of the state’s highly-skilled workers and research institutionsSource: U.S. Department of Labor and Wells Fargo Securities, LLC75 Economics41951001051101151209510010511011512010 11 12 13 14Nonfarm PayrollsIndex 2010 = 100, Seasonally AdjustedAsheville: Nov @ 110Charlotte: Nov @ 113.8Durham: Nov @ 108.5Fayetteville: Nov @ 100.7Greensboro: Nov @ 105.4Raleigh: Nov @ 115.3Winston Salem: Nov @ 105.2North Carolina: Nov @ 109.4North CarolinaGains in the state have been dominated by Raleigh and Charlotte, though Durham and Asheville have also maintained a respectable paceSource: U.S. Department of Labor and Wells Fargo Securities, LLC76 Economics4242North CarolinaGains in the housing market have moderated in North Carolina just as they have nationwide. Home prices have nearly fully recovered, but residential construction has slowed.Source: CoreLogic, U.S. Department of Commerce and Wells Fargo Securities, LLCResidential ConstructionEmployment by Industry40608010012014016018020022040608010012014016018020022090 92 94 96 98 00 02 04 06 08 10 12 14CoreLogic HPI: NC vs. U.S.Index, 2000=100, Not Seasonally AdjustedUnited States: Nov @ 173.3North Carolina: Nov @ 135.802040608010012002040608010012090 92 94 96 98 00 02 04 06 08 10 12 14North Carolina Housing PermitsThousands of Permits, Seasonally Adjusted Annual RateSingle-Family: Nov @ 27,972Single-Family, 12-MMA: Nov @ 35,022Multifamily, 12-MMA: Nov @ 15,101Single-Family Average (1998-2003): 62,96877 Client/Prospect NameWells Fargo Securities, LLC Economics Group43John E. Silvia … .......................… john.silvia@wellsfargo.comGlobal Head of Research and EconomicsDiane Schumaker-Krieg………………… ……….diane.schumaker@wellsfargo.comGlobal Head of Research & EconomicsChief EconomistMark Vitner, Senior Economist……………....……….. .mark.vitner@wellsfargo.comJay H. Bryson, Global Economist …………………....…… ….jay.bryson@wellsfargo.comSam Bullard, Senior Economistsam.bullard@wellsfargo.comNick Bennenbroek, Currency Strategist……nicholas.bennenbroek@wellsfargo.comEugenio J. Alemán, Senior Economist… ………….eugenio.j.aleman@wellsfargo.comAnika R. Khan, Senior Economist … . anika.khan@wellsfargo.comSenior EconomistsZachary Griffiths, Economic Analyst zachary.griffiths@wellsfargo.comMackenzie Miller, Economic Analyst mackenzie.miller@wellsfargo.comErik Nelson, Economic Analyst erik.f.nelson@wellsfargo.comAlex Moehring, Economic Analyst alex.v.moehring@wellsfargo.comEconomistsAzhar Iqbal, Econometrician………………… ……………azhar.iqbal@wellsfargo.comTim Quinlan, Economist…………………… ……………..tim.quinlan@wellsfargo.comEric J. Viloria, Currency Strategisteric.viloria@wellsfargo.comSarahWatt House, Economist………………………sarah.house@wellsfargo.comMichael A. Brown, Economist…………………michael.a.brown@wellsfargo.comMichael T. Wolf, Economist…………………….michael.t.wolf@wellsfargo.comEconomic AnalystsAdministrative AssistantsWells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S broker-dealer registered with the U.S. Securities and Exchange Commission, theFinancial Industry Regulatory Authority, and the Securities Investor Protection Corp. Wells Fargo Securities, LLC, distributes these publications directly and through subsidiaries including, butnot limited to, Wells Fargo & Company, Wells Fargo Bank N.A., Wells Fargo Advisors, LLC, Wells Fargo Securities International Limited, Wells Fargo Securities Asia Limited and Wells FargoSecurities (Japan) Co. Limited. Wells Fargo Securities, LLC. ("WFS") is registered with the Commodities Futures Trading Commission as a futures commission merchant and is a member ingood standing of the National Futures Association. Wells Fargo Bank, N.A. 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Such information and opinions are subject to change without notice, are for generalinformation only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. Wells Fargo Securities, LLC is aseparate legal entity and distinct from affiliated banks and is a wholly owned subsidiary of Wells Fargo & Company © 2015 Wells Fargo Securities, LLC.SECURITIES:NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAYLOSE VALUEImportant Information for Non-U.S. RecipientsFor recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited ("WFSIL"). WFSIL is a U.K. incorporated investment firm authorized and regulated by theFinancial Conduct Authority. The content of this report has been approved by WFSIL a regulated person under the Act. For purposes of the U.K. Financial Conduct Authority’s rules, this reportconstitutes impartial investment research. WFSIL does not deal with retail clients as defined in the Markets in Financial Instruments Directive 2007. The FCA rules made under the FinancialServices and Markets Act 2000 for the protection of retail clients will therefore not apply, nor will the Financial Services Compensation Scheme be available. This report is not intended for, andshould not be relied upon by, retail clients. This document and any other materials accompanying this document (collectively, the "Materials") are provided for general informational purposesonly.Donna LaFleur, Executive Assistant. donna.lafleur@wellsfargo.comCyndi Burris, Senior Administrative Assistant cyndi.burris@wellsfargo.com78 1Person County June 30, 2014Audit PresentationWinston, Williams, Creech, Evans & Co. LLP79 2OverviewPerson County has received an unmodified opinion on their June 30, 2014 financial statements.Person County again received the Certificate of Excellence in Financial Reporting for fiscal year 06/30/13 and submitted the 6/30/14 report to GFOA.80 3GASB # 34 HighlightsManagement’s Discussion and AnalysisStatement of Net Position2013 2014Total Assets $ 54,272,537 $ 52,185,130DO of Resources 52,420-Total Liabilities 20,371,478 16,705,208DI of Resources 61,940 79,710Net Position $ 33,891,539 $ 35,400,21281 4Statement of Activities2013 2014Revenues$ 54,178,416 $ 55,924,670Expenditures54,260,081 54,415,997Change in Net Position $ (81,665) $ 1,508,673Beginning Net Position 33,973,204 33,891,539Ending Net Position $ 33,891,539 $ 35,400,21282 Governmental Revenues583 6Governmental Fund Expenditures84 7General Fund Revenues010,000,00020,000,00030,000,00040,000,00050,000,00060,000,00070,000,00080,000,000Original BudgetFinal BudgetActual51,316,860 52,733,674 52,773,481 85 8General Fund Expenditures48,000,00049,000,00050,000,00051,000,00052,000,00053,000,00054,000,00055,000,000Original BudgetFinal BudgetActual51,856,908 54,232,552 50,178,345 86 9General Fund OtherFinancing Sources (Uses)-2,250,000-2,200,000-2,150,000-2,100,000-2,050,000-2,000,000-1,950,000-1,900,000Original BudgetFinal BudgetActual(2,225,018)(2,229,071)(2,010,014)87 10Appropriated Fund Balance0500,0001,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,000Original BudgetFinal BudgetActual2,765,066 3,727,949 -88 11Unassigned Fund Balance-General Fund89 12General Fund UnassignedFund Balance-as a % of Expenditures90 Cash & Investments(Excluding Fiduciary & Agency Funds)1391 14Adjusted Tax Levy05,000,00010,000,00015,000,00020,000,00025,000,00030,000,00035,000,0002005 2006 2007 2008 2009 2010 2011 2012 2013201492 15Tax Collection Percentages95.59696.59797.59898.52005 2006 2007 2008 2009 2010 2011 2012 2013201497.2896.8097.8697.9297.3997.4097.6897.6397.7198.4093 1694 Person CountyFund BalancePerson County Board of Commissioners Annual RetreatJanuary 20, 2015Amy WehrenbergFinance Director95 2Discussion SummaryUnassigned Fund BalanceFund Balance AppropriationCurrent Fund Balance GoalsWhy is a Fund Balance Policy important?Determining Appropriate LevelOther County/City Fund Balance GoalsProposed Fund Balance Policy 96 Unassigned Fund Balance (“UFB”)Portion of fund balance that has not been restricted, committed, or assigned to specific purposes or other funds.The amount remaining at year-end that the Board has control over and can appropriate for any purpose.UFB went from 18.53% to 18.41% at end of FY 2014. A slight increase is anticipated for FY 2015 due to revenue growth, increased DSS revenues and deferral of capital.The large drop-off of debt could possibly generate a large increase in UFB for FY 2016 unless there is a significant reduction in revenues (ie. tax decrease) or large pay-as-you-go capital investment.397 Fund Balance Appropriation (FBA)•The amount of savings that the County pledges in the budget to cover expenditures that are not already covered by other revenues.•10 year trend shows a greater reliance on savings (or FBA) to fund the County’s expenditures.•Pledging large amounts of FBA can further decrease the amount of undesignatedfund balance at year-end.•Ways to address the over-reliance on FBA include reductions in expenditures, deferral of capital projects, or recognition of new or additional revenue sources.•The Board adopted an FBA of $3,064,697 for FY 2015, a tax equivalent total of 7.43 cents. 498 Adopted FBA: 10-year trendThe graph above shows an upward trend since FY 2010 for the heavier reliance on FBA to fund the County’s expenditures, mostly due to the attempt to address deferred capital. New revenue, such as the tax increase in FY 2008, can reduce these levels. Expenditure cuts can also contribute to less reliance, as demonstrated in FY 2010. 599 Fund Balance GoalsFund Balance Policy????Person County has no separate Fund Balance PolicyReference to Board’s fund balance targets in section of 2004 County’s Capital Reserve Fund (CCRF) ResolutionTo maintain an available fund balance as a % of expenditures in the General Fund at a minimum of 18%Any fund balance in excess of 18% should be primary source of funding the County’s capital needsTo fund annually from fund balance in the General Fund the amount that exceeds 21%Creation of CIP Fund has replaced use of CCRF, making this Resolution no longer effectiveLGC’s Recommendation: Maintain minimum of 8%6100 Why is a Fund Balance Policy important?Sufficient cash flowMaintains investment grade bond ratingsOffsets significant gains & lossesProvides for Unforeseen expenditure emergencies;Adheres to LGC’s minimum 8% fund balance recommendation Provide for a stable property tax rate7101 Determining Appropriate LevelConsider government’s own specific circumstancesGFOA recommendation: no less than two months of regular general fund operating expendituresHigher levels needed if:osignificant revenue sources are subject to unpredictable fluctuationsooperating expenditures are highly volatileoevident exposure to significant one-time outlays (ie. Disasters, immediate capital needs, state budget cuts)oneed for higher liquidity: the ability to provide funding for large required payments in the future (ie. significant bond payment, disaster-related events, etc.)Lower levels needed if:osurplus of resources in general fundosurplus of resources in other funds that reduces need from general fund8102 Other County*/City Fund Balance Goals9Mecklenburg County* 28% Orange County* 17% Union County* 20% New Hanover County* 21% Wake County* 15% Person County* 20% (recommended; represents 2.5 months expenditures) Town of Knightdale 25% Village of Whispering Pines 45% Pinehurst Village 15% Town of Tarboro 30% Town of Benson 20% City of Washington 2 months expenditures + $2M Town of Kitty Hawk $3.5M City of Burlington 4 months expenditures Town of Zebulon 50% of projected expenditures City of Monroe 25% of projected expenditures or $7.5M, whichever greater Village of Marvin 31% of projected expenditures City of Clinton 35% to 40% (range) 103 Proposed Fund Balance PolicyTransfer surplus to CIP Fund for future capital improvementsProvide County Manager with 2 year period to provide plan to address fund balance deficitsPolicy to be effective for FY 2014-15 results1020% target for Unassigned Fund Balance (approx. 2.5 months of operating expenditures)Flexibility for Board to adjust minimum target as neededMaintain LGC’s minimum 8% FBA104 Where did the 2014 levy come from?67.58% REAL0.01% OTHER0.35% INVENTORY9.48% MACHINERY21.13% STATE0.49% FARM0.90% OTHER VEHICLE0.07% REGISTEDVEHICLE105 What causes the LEVY to change?Real Property-Growth (new construction), splits of parcels, demolitions, changes in exempt status, changes in acreage in deferred (farm use)State Appraised-Changes each year, unpredictable by the CountyEquipment-Additions/Deletions, depreciationRegistered Vehicles-Transitioned to NCVTS (now collected by NCDMV)106 Changes in FY2016 Real Property ValuesAdded new construction= +33 Million TOTAL value for 2014-2015=$2.75 BillionEstimate value for 2015-2016=$2.783 Billion107 Real Property Value Changes, 2005-20150500,000,0001,000,000,0001,500,000,0002,000,000,0002,500,000,0003,000,000,0002005 2006 2007 2008 2009 2010 2011 2012 201320142015 108 Changes in FY2016 Equipment ValuesReduced for additional depreciation= - $20 MNo numbers available for additional equipmentValue for 2015-2016=$360 M109 Equipment Value Changes, 2005-2015050,000,000100,000,000150,000,000200,000,000250,000,000300,000,000350,000,000400,000,0002005 2006 2007 2008 2009 2010 2011 2012 2013 20142015 110 State Appraised Property Value ChangesAppraised annually by the StatePerson County will not receive valuation until September 2015Value for 2014-2015 was $849 M, an increase from prior yearDeclined in 2010-2011 and 2011-2012, but increased in 2012-2013 by $47 M to $822 MHighest value was in 2009 at $876 MRecommended value for 2015-2016=$815 M111 State Appraised Property Value Changes 2005-2015650,000,000700,000,000750,000,000800,000,000850,000,000900,000,0002005 2006 2007 2008 2009 2010 2011 2012 201320142015 112 All Value Changes, 2005-20153,200,000,0003,300,000,0003,400,000,0003,500,000,0003,600,000,0003,700,000,0003,800,000,0003,900,000,0004,000,000,0004,100,000,0004,200,000,0002005 2006 2007 2008 2009 2010 2011 2012 201320142015 113 Changes in FY2016 Registered Motor VehiclesNow phased in NCVTSCollected by NCDMVOnly 15 months of collections have been reportedCollection rate is better than old system114 Changes in FY2016 Registered Motor Vehicles - 50,000.00 100,000.00 150,000.00 200,000.00 250,000.0020132014115 For FY 16, what will one penny generate?Collection Rate Revenue96.00%$412,80096.25%$413,87596.50%$414,95096.75%$416,02597.00%$417,10097.25%$418,17597.50%$419,25097.75%$420,32598.00%$421,400116 Fire Tax Options1. No Change, Continue to fund Fire Departments out of General Fund 2. Add a Fire Service District, based on property values, distributed based on Fire Commission3. Add a Registered Motor Vehicle Fire Tax (flat rate), distributed based on Fire Commission4. Add a Fire Protection District by Petition and Vote, distributed based on property value117 Fire Tax-A savings to the taxpayer?Year Rating Fire Tax Insurance Total SavingsCurrent 9s$ 0 $ 376 $ 376 $ 0Year 1 9s$ 40 $ 376 $ 416- $ 40Year 2 8$ 40 $ 353 $ 393- $ 17Year 3 7$ 40 $ 318 $ 358 + $ 18Year 4 7$ 40 $ 318 $ 358 + $ 18Year 5 6$ 40 $ 259 $ 299 + $ 77Based on Estimates of Insurance Costs for a $100,000 home and a fire tax of $.04 cents118 Option 1: General FundVFD and Roxboro Fire fundingFY15 FY16Total$890,120 ~$922,296119 Option 2: Fire Tax (property values)Levy a Fire Service District TaxA tax, based on value, charged on all taxable property, excluding personal property owned by State Appraised Companies, and property inside the City of Roxboro.Will only affect 9 months of DMV renewals for FY16One penny will generate $262,089 for FY16To get the funding needed for FY16, a rate of .035 would be needed. (3 ½ cents)120 Option 2: Fire Tax (property values)Must establish a Fire Commission to determine distribution of revenuesNeed to update taxing districts on tax recordsWill need guidance before March 15thto update situs(change tax records to identify all properties that are in the fire tax district so that new tax is charged correctly)121 Option 3: Fire Tax (vehicles)Add a motorized vehicle fire tax feeRequires special action from NC General AssemblyWill provide less revenue in first year due to tag renewal timing35,000 vehicles will be affectedTo replace current funding, a fee of $26.35 per vehicle would be needed for first year, along with $230,609 from the General FundNo funding needed from General Fund for following year, due to full year of vehicles included122 Option 4: Fire Protection DistrictStarts with a Petition signed by 35% of resident freeholdersOnce petition is verified to meet this 35% threshold, commissioners must call for voteAll voting citizens in the fire protection district may vote, and not limited to resident freeholdersNext Primary is May 2016, and General election November 2016Fire district lines may need to be redone even before petition is started.123 Option 4: Fire Protection District124 Fire Tax-Option 1Department FY15 FY16Rescue Squad 44,106 44,988Allensville 43,533 44,404Ceffo87,046 88,787Hurdle Mills 87,073 88,814Moriah86,956 88,695Semora13,958 14,237Timberlake 45,107 46,009Triple Springs 43,551 44,422Woodsdale 64,826 87,976Subtotal516,156548,332Roxboro 373,964 373,964Total890,120922,296125 Person CountyFiscal Review & ProjectionsPerson County Board of Commissioners Annual RetreatJanuary 20, 2015Amy WehrenbergFinance Director126 2Discussion SummaryMid-Year Comparisons: Revenues and ExpendituresSales and Use Tax DistributionUFB Projection for FY 2015Potential CIP ProjectsDebt Service ImpactsThe next six months: What’s it look like?127 Revenues: Mid-Year ComparisonREVENUESDec'13 Dec'14 Difference % Change Comments Ad Valorem Taxes 26,628,703 27,270,813 642,110 2.4%Increase in current year collections for Ad Valorem and DMV revenuesSales & Other Taxes 2,261,101 2,354,374 93,273 4.1%Sales Tax collections (4 mos.) are $77K higher; Occ Tax collections are 16% higher, surplus of $13K over prior yearFees & Licenses2,106,884 2,357,157 250,273 11.9%Billings in Health Dept. caught up since last year, increase of $390K; EMS fees up by $100K; Inspection fees higher due to significant permitting fee received by Spuntechfor $84KState & Federal Funding 3,658,241 3,734,661 76,420 2.1%Increase reflects lottery drawdown for school painting project $225K; more state & federal revs received in Health and DSS Departments.Other Revenues 143,977 338,560 194,583 135.1%PCC Contribution of $200K through December for the Kirby Rebirth ProjectTOTAL34,798,906 36,055,565 1,256,659 3.6%Increase in Revenues YTD128 Expenditures: Mid-Year ComparisonEXPENDITURESDec'13 Dec'14 Difference % Change Comments Personnel10,396,815 11,057,763 660,949 6.4%Inc in Group Health Ins ($100K); Overtime ($113K); On-call pay ($11K); other increases due to merit pay, longevity, certification, and probationary changes.Operating11,549,633 11,484,399 (65,234) -0.6%Large reduction in Health Dept expenditures due to completion of major grant(-$232K), offsetting increases in most other departmentsCapital349,466 663,793 314,327 89.9%Purchase of ambulance ($174K); Kirby Rebirth Project ($268K)Debt Service2,073,705 2,112,759 39,053 1.9%Increase in scheduled Courthouse Renovation debt over prior year, offsetting decreases in other debt paymentsTransfers to Other Funds 1,172,211 680,120 (492,091) -42.0%Decrease due to deferral of capital projects, requiring less to be transferred to CIP FundTOTAL25,541,830 25,998,833 457,004 1.8%Increase in ExpendituresNET (Revs over Exp) 9,257,077 10,056,732 799,655 8.6%Larger increase in revenues than expenditures129 5Sales and Use Tax Distribution-Prior and Projected130 6Unassigned Fund Balance – General Fundas a % of Total Expenditures21.1%17.7%29.2%23.4%30.7%26.3%18.5%18.4%20.5%*0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%2007 2008 2009 2010 2011 2012 2013 2014 2015*% of Total ExpendituresFiscal YearUnassigned Fund Balance as a % of Total Expenditures* Estimated131 FY16 Potential CIP Projects7Project Title:Total Cost:Potential Financing Projects:Recreation & Senior Center* 6,000,000 Cell Tower & Broadband Project * 3,600,000 Equipment Lease Project:Telephone System (2nd of 5 pyts) 70,000 Miscellaneous Projects:Roxboro Little League320,000 Library Satellite at Helena 335,000 Voting equipment231,010 Replace carpet and tile - PCOB 57,000 943,010 Roofing Projects:Board of Elections/IT102,489 Emergency Medical Services 150,368 Huck Sansbury283,000 South Elementary School268,991 PCC Bldg D & Walkway Structure 226,156 Oak Lane Elementary School 207,532 1,238,536 132 Recreation & SeniorCenter Project•Project Fund was established when Bond Referendum was passed in 2008 for $6M •General Obligation (G.O.) Bonds are the least costly financing option available to the County for projects. •The maximum of $6M project’s debt would currently generate almost 1 cent on the tax rate. Operating cost impacts should also be considered since this would be an expansion project.•The County will have 7 years (until November 2015 and can be extended to 10 years until November 2018) to issue/sell the bonds at a 20 year term. •There is $310,948.82 remaining in this Project Fund.8133 Cell Tower & Broadband ProjectThe Board set aside $100K for environmental studies to be done on 4 towers (currently $73,750 remaining).The State will construct 1 tower; leaving 3 towers funded by the County.Latest estimate to construct 3 towers with Broadband equipment is $3,495,000 (includes costs for environmental studies and engineering/consulting costs). Will consider financing options for this projectTimeline for construction commencement is FY 20169134 How do we pay for this?Roofing Costs - next four years2016 $1,238,5362017 532,5912018 152,1402019 195,400Totals $2,118,66710135 Debt Service Impacts – FY 201611DescriptionFY 16 Impact CostDebt Reduction(2,448,546)$ New: Recycling Center & Various Roofing 460,480 Potential:Cell Towers & Broadband Equipment 235,000 Recreation & Senior Center330,000 Total Debt Reduction(1,423,066)$ Reminder: A total of $1.9M of other new projects are proposed on the current CIP for FY 2016. If the Board commits to new projects, it would be recommended to consider a financing method given the County’s low debt ratio (approx. 6 to 7%) versus a pay-as-you-go option that could negatively impact UFB.136 12The next six months: What’s it look like?Revenues from Ad Valorem, sales and occupancy tax, Health and DSS are coming in stronger compared to previous year. Primary drivers for the increase in expenditures include the Kirby Rebirth Project, ambulance purchase, group health insurance, overtime and other personnel costs.A short-term analysis of revenues and expenditures tentatively indicates an increase of Unassigned Fund Balance at FYE. Timing in when revenues are received can greatly influence this outlook.Over $1.2M in roofing projects are on the CIP for FY 2016 to be considered, as well as other larger capital projects (ie. Cell Towers & Broadband, Recreation & Senior Center, Library Satellite at Helena, etc.).A large debt reduction will greatly reduce expenditures for FY 2016 subject to significant decreases in revenues or increases in expenditures.137 Impacting the Person County Government Workforce138 Items for Discussion:Classification and Compensation Update (Springsted Study)County Health BenefitsHiring Freeze/New Positions139 Job Classification & Employee Compensation StudyEnsure that compensation is equitable and competitive in the labor marketEnsure that job descriptions are accurate- aids in recruitmentAddress salary compression issuesHelps reduce employee turnoverEnsure federal regulations are met (FLSA and ADA)Ensure equity for pay and workAs a general rule, these studies should be conducted about every five years140 SpringstedStudy-Implementation ImpactsFull Year Implementation for All Employees Employees Below Minimum 206 Employees Within Range 185 Option 1—Move to minimum of salary range (206) $411,612.30Option 2—Move to min., or 2% increase (all)$585,489.12Option 3—Move to min.+.5% increase per year of service (all)$1,246,250.50141 Phased in implementation by group over 3 years: Year 1 Public Safety Option 1-Move to Minimum $227,868.01Option 2- min or 2% increase $277,988.47Option 3- min+ .5% increase per Years of Service $515,324.78Year 2 Health & DSS Option 1-Move to Minimum $96,543.01Option 2- min or 2% increase $153,610.86Option 3- min + .5% increase per Years of Service $392,210.04Year 3 All others Option 1-Move to Minimum $87,201.28Option 2- min or 2% increase $153,889.80Option 3- min + .5% increase per Years of Service $338,715.70142 County Health InsuranceCoventry options presented by Scott Benefit Services for July 2015-June 2016:Fully insured traditional PPOCurrent Rates Projected Renewal Rates-no Plan design changes; 16.27% increaseEmployee$507.45$589.99Employee/Child$687.63$799.48Employee/Spouse $1,077.36 $1,252.60Employee/Family $1,262.03 $1,467.31143 Coventry CareLink PlansOnly offered as Fully insured;Reduces cost of chronic conditions; Employee must elect primary care physician; Providers in Person, Alamance, Orange, Durham, Granville, Vance, Wake counties; Care Coordinator assigned at Primary Care Practice; 10% savings compared to traditional PPO planApproximate cost for Employee only: $530.99County Health Insurance144 Self-Funded8% savings from a fully insured plan due to NOT having to pay carrier profits, Affordable Care Act health insurance industry fee, and premium tax. County Health Insurance145 Hiring Freeze/New PositionsCurrent Vacant Full-Time Positions:GIS Department - GIS ManagerHealth Department – Public Health Nurse IIPublic Health Nurse III/Home, Health and HospiceTotal Number of Full Time Employees: 408Average Salary: $38,071 Average Costs of Benefits per Employee: $1,903 for 401K $6,488 Health, Dental & Life InsuranceTurnover Rate: 8% 146 ITEMS SURVEYED THROUGHOUT THE RETREAT Fund Balance Survey 1. Please respond to the following questions about fund balance: Yes No Do you want to create a fund balance policy with a target UFB of 20%? Do you want to limit spending for capital projects to only the amount above the 20% UFB target? Do you want to reduce the amount of Fund Balance allocated in the operating budget? 147 Revenue Survey 1. What changes do you want to make to the tax rate? Decrease the tax rate by 1 cent. (-$418,175 revenues) Increase the tax rate by 1 cent. (+$418,175 revenues) No changes, maintain the tax rate. 2. Do you want to move forward with creating a fire tax or a fire protection district? No change; continue to fund fire costs through the General Fund - OPTION #1 Levy a Fire tax based on property values - OPTION #2 Levy a Fire tax per vehicle - OPTION #3 Allow districts to petition for a Fire Protection District - OPTION #4 3. How much revenue should the fire tax generate? $922,297, equal to estimated allocation for FY16 (.035 cents) $1,048,356 (.04 cents) $1,310,445 (.05 cents) 148 Capital Survey 1. How would you like to fund education? Public Schools (K-12) PCC Increase funding Hold funding flat Decrease funding 1. Which capital projects would you like to fund in the FY16 CIP? Yes No Senior Center (~$1M) Recreation Center (~$6M) Public Safety Communication/Broadband project ($3.6M) Satellite Library at Helena ($335K) Roofing projects ($1.23M) 149 Workforce Survey 1. Do you want to implement the following items in the FY16 budget? Yes No Implement Springsted Study ($227,868) Fully-insured program (10%-16% increase) Self-funded insurance program (8% increase) No new positions Hiring freeze 150