Board Agenda Packet Feb 18 2013PERSON 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
February 18, 2013
Piedmont Community College- room S-100
1715 College Drive, Roxboro
8:00-8:30 Arrival
8:30-8:45 Welcome Chairman Clayton & Heidi York
8:45-9:45 Economic Outlook Dr. Mike Walden, NCSU
9:45-10:45 State Legislative Update Kevin Leonard, NCACC
10:45-11:00 Break
11:00-12:00 Property Revaluation Michael Brown, Dept. of Revenue
12:00-1:00 Lunch
1:00-2:00 Creating a County Vision Heidi York &
Warren Miller, Fountainworks
2:00-3:00 Revenue Projections Russell Jones
3:00-4:00 Expenditure Projections Amy Wehrenberg
4:00-4:15 Break
4:15-4:45 Budget Wrap-up Sybil Tate
4:45-5:00 Closing Remarks & Evaluation Chairman Clayton
Note: All Items on the Agenda are for Discussion and Action as deemed appropriate by the Board.
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8:45-9:45 Economic Outlook Dr. Mike Walden, NCSU
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ECONOMIC OUTLOOK:ARE HAPPIER DAYS HERE?Dr. Mike WaldenReynolds DistinguishedProfessorNorth Carolina StateUniversity13
USEFUL TO THINK OF ECONOMIC ISSUES IN TWO PARTS1. SHORT-RUN “CYCLICAL”ISSUE RELATED TO THE RECESSION AND RECOVERY2. LONG-RUN “STRUCTURAL”ISSUES RELATED TO OUR ECONOMIC PATH FOR NEXT 50 TO 75 YEARS24
AGGREGATE PRODUCTION HAS TOTALLY RECOVERED35
THE JOB MARKET IS ALMOST HALF WAY BACK46
MANUFACTURING HAS BEEN A BIG PLUS57
….. AS HAVE EXPORTSbillions of real 2005 $68
BANK LOANS HAVE ALSO INCREASED(BILLIONS OF DOLLARS)79
AND CONSUMERS ARE SPENDING MORE(INFLATION-ADJUSTED PERCENTAGE CHANGES)810
AN IMPORTANT FACTOR IS THE IMPROVEMENT IN HOUSEHOLD WEALTH911
AND HOUSEHOLDS HAVE REDUCED DEBTBIG QUESTION: ARE WE THERE YET?1012
HOME PRICES HAVE STOPPED DECLINING 1113
HOME INVENTORIES HAVE DROPPED(MONTHS TO SELL EXISTING INVENTORY)1214
AND SOME OPTIMISM FROM IMPROVED HOMESALES AND CONSTRUCTION (sales are of existing units and permits for planned units)1315
TOTAL INFLATION HAS BEEN VOLATILE, BUT TAME(CPI, total, annual % chg.)1416
GAS PRICE TRENDS1517
THE “BITE” FROM GAS PRICES HAS BEEN INCREASING – BUT NOT YET A RECORD(GAS SPENDING AS A % OF TOTAL SPENDING)1618
FUNDAMENTAL ISSUE – OIL DEMAND INCREASING FASTER THAN OIL SUPPLY(WORLD CONDITIONS, MILLIONS OF BARRELS PER DAY)1719
COULD RISING GAS PRICESDERAIL THE RECOVERY?EVERY 10 CENT RISE IN GAS PRICE REDUCES GDP GROWTH RATE BY 0.2%GAS PRICE ABOVE $5/GALLON WOULD STALL THE RECOVERY1820
INTEREST RATES CONTINUE AT HISTORIC LOWS(YIELDS ON TREASURY SECURITIES)1921
THE “TRI-FECTA” OF IMPROVEMENTBETTER HOUSINGMARKETBETTER HOUSEHOLDNET WORTHMORE JOBS2022
NATIONAL FORECASTS 150,000 – 170,000 JOBS CREATED PER MONTH2.0% TO 2.25% GDP GROWTH RTCONSUMERS SPENDING MOREDELEVERAGINGALMOST COMPLETEWILDCARD – ENERGY PRICES AND POTENTIAL MIDEAST CONFLICT2123
KEY ECONOMIC POLICY ISSUESDEBATE OVER LONG RUNFISCAL PLAN* tax rates* “tax expenditures”* entitlements* defense 2224
GOVERNMENT POLICY2325
The Fed’s Monetary Policy2426
FISCAL POLICY HAS ADDED TO THE DEBT(% of GDP)2527
GOVERNMENT CYCLICAL POLICY QUESTIONSFor monetary policy:- creating another “bubble”?- creating more inflation?- exit strategy?For fiscal policy:- more stimulus needed?- long run fiscal plan needed?- or austerity needed?2628
FIVE BIG STRUCTURAL ISSUESGLOBALIZATION AND SKILLSDEMOGRAPHY AND PUBLIC SPENDINGEFFICIENT PUBLIC REVENUE COLLECTIONINFRASTRUCTURE UPGRADINGENERGY TRANSITION2729
NORTH CAROLINA ECONOMY 2830
USING GDP, NC’S ECONOMY HAS RECENTLY ACCELERATED FASTER THAN THE NATION’S2931
NC’s ECONOMIC RIDE IS BUMPIER(% CHANGE IN SEAS. ADJ. NON-FARM EMPLOYMENT)3032
Metro NC Job Gains Since Bottom of Recession (seasonally-adjusted)Charlotte7.2%Raleigh-Cary6.4%Burlington5.4%Durham-CH 5.1%Asheville4.6%Greensboro-HP 3.7%Rocky Mount 3.6%Fayetteville 3.6%Hickory 2.6%Jacksonville 2.5%Goldsboro 2.1%Winston-Salem 1.6%Greenville 1.3%Wilmington 0.0% 3133
3234
NC ECONOMIC FORECAST FOR 2013BETTER GROWTH80,000 –90,000 JOBS CREATED8.2% JOBLESS RATE BY YEAR’SEND3335
PUBLIC ISSUES FOR N.C.’s LEADERSMORE TECH TRAINING IN HIGH SCHOOLMOVING STUDENTS THROUGH COLLEGE FASTERMORE $ FOR ROADSREVAMPING MEDICAIDTAX REFORM3436
PERSON COUNTYLOST 6% OF JOB BASE DURING RECESSIONTO DATE (2012), HASRE-GAINED 4.8%BUILDING PERMITS FELL 78% DURING HOUSING CRASH – NO REBOUND YET3537
9:45-10:45 State Legislative Update Kevin Leonard, NCACC
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NCACC Legislative UpdateKevin Leonard, Deputy Director39
Topics for Today•A changing political environment•2013 legislative issues–Paying the state’s $2.5 billion UI debt–Fiscal modernization?–State budget–Others•NCACC prepares for 2013-14 biennium–Association Goals40
A Changing Political Environment41
Executive Branch•Gubernatorial party switch•Turnover throughout cabinet agencies•Relationship with legislature?•Council of State – little turnover42
NC General Assembly•House majority up by 9 to 77-43•Senate majority up by 2 to 33-17•Both chambers have veto-proof majorities•House – 44 freshmen; 72 members serving 1stor 2ndterm•Senate –10 freshmen; 26 members serving 1stor 2ndterm43
NC General Assembly•Over 600 years legislative experience lost•Democrat minority in both chambers predominantly African-American•8 current or former county commissioners won seats – 1 in Senate; 7 in House•25 former commissioners in GA44
County Changes121 – New Commissioners304 – Republican County Commissioners270 – Democrat County Commissioners6 – Unaffiliated County Commissioners54 – Republican majority boards44 – Democrat majority boards2 – no majority45
What This Means?•New Relationships!•Get to know your legislators•NCACC outreach•Lots of education!•County orientation for new legislators, new state agency heads & administrators•New commissioners up to speed on critical county issues46
2013 Legislative Issues47
Unemployment Insurance Changes48
What Is Unemployment Insurance (UI)?Federal-State partnership–Broad federal guidelines–State-designed program–State pays 100% regular benefits, 50/50 extended benefits, feds pay 100% emergency benefitsFunded through–Private employers’ payroll taxes based on experienced rating; also pay federal payroll taxes–Govts, non-profits given option of direct reimbursement of claims or experienced rated; pay no federal payroll taxes1149
What is the Problem?Why Does the System Need to Change?•Economic recession & high unemployment costs necessitates $2.5 billion federal loan•Outstanding loan balance triggers escalating private employer federal taxes—from $21/employee 2011 to $189/employee 2019•Benefits package “richer” than in neighboring states–NC = $535 max weekly; SC = $326; VA = $3781250
How Will UI Benefits Change?•Maximum weekly reduced from $535 to $350•Maximum duration reduced from 26 weeks to 20 weeks & tied to unemployment rate•Good cause provisions eliminated except domestic violence & military spousal relocation•Suitable work requirements strengthened1351
Proposed Changes:Key Points for Counties•FY 2014, counties establish a UI Benefit Account with 1% of their taxable wages per employee (capped at $20,900)–In October 2013, & on quarterly basis thereafter, counties contribute 1% of taxable wages –Counties have until January 2015 to fully fund the account•FY2013 claims paid directly; FY2014 claims debited against UI account –Only 100% of claims allowed; no 120% of charged claims•Original 20% surcharge excluded from final proposal1452
Fiscal Modernization(i.e. Tax Reform)•House & Senate leadership and staff working for several months•Attempted a number of times before•Legislative goal of “Revenue Stability”•NCACC goals to be part of conversation and avoid shifting of responsibilities to counties•Corporate & individual income tax, sales tax, tax on services, property tax…•Exemptions & Exclusions•Chances of success???53
State Budget•Governor’s budget released mid-March•Senate gets first shot; then moves to House•House and Senate coordination•No expected deficit this year•Possible small surplus1654
Things We’re Watching•Charter school capital funding•Adult Care Homes•Vehicle Property Tax collection•Sovereign Immunity•MPO/RPO ethics requirements•ABC privatization•Commercial dog breeder regulation1755
NCACC Preparation for Next BienniumAdopted Legislative Goals56
NCACC Legislative Goals•All counties asked to submit goals thru Sept. 17•Goals vetted by NCACC steering committee, legislative goals committee, NCACC board of directors, all counties via NCACC Legislative Goals Conference57
NCACC Legislative Goals Process(Adopted Goals Remain in Place for 2-Yr. Biennial Session)OctOctCountiesSubmit Pro-posed GoalsGoals Referredto SteeringCommitteeSteering Comms.Consider & RecommendSteering Comms.Consider & RecommendGoals Referred to LegislativeGoals Comm.Legis. GoalsComm. Considers & RecommendsLegis. GoalsComm. Considers & RecommendsGoals Referred to Board of DirectorsGoals Referred to Board of DirectorsBoard Considers& Approves GoalsBoard Considers& Approves GoalsGoals Referredto MemberCounty BoardsNew BoardsTake Office,Consider & Select DelegatesNew BoardsTake Office,Consider & Select DelegatesDelegates ApproveGoals at Legis Goals ConferenceDelegates ApproveGoals at Legis Goals ConferenceDecDecJan, 24Jan, 24--2525DecDecGeneral Assembly Convenes Jan. 30, 2013General Assembly Convenes Jan. 30, 2013July July --SeptSeptNov 14Nov 14--151558
Goals Adoption Process59
Top Five Legislative Goals -Ranked by Counties at Jan. 25 NCACC Legislative Conference 1. Oppose shift of state transportation responsibilities to counties. 2. Reinstate ADM and lottery funds for school construction. 3. Oppose unfunded mandates and shifts of state responsibilities to counties. 4. Ensure adequate mental health funding.5. Preserve the existing local revenue base. 60
Other Goals•Restore school construction funding•Restore school calendar local control•Sales tax refunds to exemptions•LME/MCO governance•Allow electronic public notices•Electronic gaming regulation•Options for cost effective runoff elections•Expand 911 fund uses2361
Questions / CommentsThank You!62
1:00-2:00 Creating a County Vision Heidi York &
Warren Miller, Fountainworks
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Person Futures – Strategic Plan
Top Five Priorities from each strategic area
Subcommittee Name: Protect our Land
Priority Goal # Objective # Description
1 2 3 Enhance existing programs and create new programs that promote
locally grown foods such as CSA’s.
2 2 4 Create a local brand for Person County grown products
3 1 2,3,4 Create and implement a Beautify Person county program; utilize
volunteers to promote county beautification efforts; create a Person
County “Gateway Committee”, which will examine the major
entrances into Person County and create a plan to improve their
aesthetic appeal and uniformity.
4 4 new Locate a C&D landfill for yard waste collection
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Subcommittee Name: Learning for Life and Lifelong Learning
Priority Goal # Objective # Description
1 2 1 Develop strategies to increase parental and community involvement in
the county’s educational activities: Commit to a culture of valuing
education.
Financial support for the development of a County-wide initiative to
raise the culture of valuing education utilizing a broad-base and
diverse collection of Person County leaders.
1. Initiative Leader - $50,000
2. Initiative Expenses - $50,000
Total allocation request - $100,000.
2 1 1 Develop systems and strategies to maximize the educational potential
of Person County citizens: Provide a comprehensive selection of
technical/career certification and licensure programs to meet the
needs of 21st Century employees. (biotechnology, health sciences,
career and technical education programs)
3 1 3 Develop systems and strategies to maximize the educational potential
of Person County citizens: Implement strategies and programs to
increase the number of citizens with a high school diploma or
equivalency.
4 1 5 Implement strategies and programs to increase the literacy rate of
citizens in Person County.
5 1 9 Develop systems and strategies to maximize the educational potential
of Person County citizens: Implement strategies and programs to
increase the literacy rate of citizens in Person County.
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Subcommittee Name: Re-Imagine our County for a Better Future
Priority Goal # Objective # Description
1 3 3 Leverage the existing unused North/South Rail Corridor to create
walking trails throughout the County.
2 2 1 Increase proliferation of the existing city neighborhood watch and
create a county community watch.
3 new Create a portal website for events in Person County that has a
centralized calendar of events and allows individuals to sign up for
email notifications.
4 5 1 Create more community cultural opportunities that raise awareness
about global diversity and how it may benefit Person County
5 5 2 Create and expand on existing mentoring programs within the County
Subcommittee Name: Foster a Sense of Community
Priority Goal # Objective # Description
1 2 1 Continue Recreation and Senior Center progress
2 4 new Programming for diversity, such as a multi-cultural festival.
3 1 3 Explore implementation of a crop walk, Tomato Festival, car show or
other themed festivals.
4 3 1 Create community watch programs and alternative programs to gangs
and crime.
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Subcommittee Name: Economic Development* - The priorities listed below were generated by staff. An Economic
Development Summit is scheduled for March, at which point, the economic development group will establish priorities.
Priority Goal # Objective # Description
1 new Construct a 100,000 sq ft shell building
2 1 3 Continue to discuss an industry/business park in southern Person
County with Durham County Government.
3 1 Create jobs in and near Person County by developing, growing and
supporting local initiatives and new, small businesses; by growing,
supporting and retaining existing businesses and industries; and by
recruiting outside investment in new businesses and industries.
4 2 Create a Person County Workforce that is educated and trained to
succeed in the jobs and careers in Person County and throughout the
region.
5 3 Create in Person County a community of informed, involved citizens
who valued and seek to preserve the good things this County offers,
who understand the challenges posed by the future economy, who
support investment in education, public services, and economic
growth and development required to meet those challenges.
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2:00-3:00 Revenue Projections Russell Jones
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Where did the 2012 levy come from?67
What causes the LEVY to change? Real Property-2013Revaluation, 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 County Equipment-Additions/Deletions, depreciation Registered Vehicles-New purchases, depreciation, HB 1779 changes68
Changes in FY14 Real Property Values Revaluation=+$125 Million Added new construction= +$20 Million TOTAL new value = $145 Million TOTAL value for 2013-2014=$2.64 Billion$145 Million total increase (new construction +revaluation) or a 5.75% increase over last year69
Revenues Due to Revaluation Revaluation will add approximately $125 Million to the taxable base This is only an estimate at this time, as appeals will not be completed until later in current fiscal year At a .70 tax rate and a 97% collection rate (current fiscal year rates) =$848,750 in additional revenues due to revaluation70
Real Property Value Changes 2001-201371
Changes in FY14 Equipment Values Reduced for additional depreciation= - $37 M Eaton estimated at $25 M in additions Value for 2013-2014=$343 MOverall decrease of $13M, or .3%72
Equipment Value Changes 2001-201373
Changes in FY14 Registered Motor Vehicles Reduced for additional depreciation Added for new purchases Decline over the past couple of years has flattened out Slight increase in value for 2011-2012 Value for 2013-2014=$293 Million74
Registered Motor Vehicle Value Changes, 2001-201375
State Appraised Property Value Changes Appraised annually by the State Person County will not receive valuation until September 2013 Decline over the past couple of years indicates that this number needs to be conservative Declined in 2010-2011 and 2011-2012, but increased in 2012-2013 by $47 M to $822 M Highest value was in 2009 at $876 M Recommended value for 2013-2014=$800 M76
State Appraised Property Value Changes 2001-201377
All Value Changes, 2001-201378
Total Levy, Budget vs. ActualFiscal YearBudgetedActualPercent Difference2012$3.865 B$3.879 B.3% ($14 M)2013$3.990 B$4.075 B2.1% ($85 M)2014$4.175 B??79
TOTAL LEVY-BUDGET VS ACTUAL, 2001-201380
At a $4.175 Billion Base, what will one penny generate?Collection Rate Revenue96.00%$400,80096.25%$401,84496.50%$402,88896.75%$403,93197.00%$404,97597.25%$406,01997.50%$407,06397.75%$408,10698.00%$409,15081
What are the impacts of HB1779 on the Registered Motor Vehicle Tax?Old SystemNew SystemVehicle Value$300,000,000$300,000,000Taxes Due$2,100,000$2,100,000Collection Rate88.63%99.00%Total Collected$1,861,230$2,079,000Additional Collections$217,77082
HB1779 impacts on the collection rate2011-2012 Tax Year (used for estimates) Overall Collection RateCollection Rate Excluding VehiclesCollection Rate Vehicles OnlyOld System97.63%98.37%88.63%New System98.85%98.37%99.00%83
Summary of Revenue Changes•New revenue from revaluation:$848,750 •New Tax Base: $4.175Billion•Collection Rate: 97.00%•One Penny Generates:$404,975•Revenue Neutral Rate: Estimated revenue neutral tax rate will be between a .02 and .03 cent decrease. It is too early to calculate at this time. 84
Questions?85
3:00-4:00 Expenditure Projections Amy Wehrenberg
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Person CountyFiscal Review & Projections2013 Person County Board of Commissioners Annual RetreatFebruary 18, 2013Amy Wehrenberg, Finance DirectorHeidi York, County Manager87
Adopted Budget Comparisons(Millions)Since FY09, the Adopted Budget has been reduced by $2.5M. New capital, economic incentives, and stormwater are the primary drivers that increased the FY13 budget by $4.3M. 88
3Sales and Use Tax Distribution-Prior and ProjectedConsumer purchasing has waned somewhat this fiscal year compared to the prior year through February sales tax collections. Some economists are predicting lower holiday sales due to catastrophic events (Hurricane Sandy; Sandy Hook Elementary shootings). Through February 2013 (6 mos. through December), sales tax collected is 2.2% below, or $66K less, than what was budgeted for that same period. Even so, the collections are trending higher than they did during the economic fallout, an indicator of growth, albeit slight. 89
What is Unassigned Fund Balance (“UFB”)? Portion of fund balance that has not been restricted, committed, or assigned to specific purposes or other funds. The amount that the County has remaining at year-end that the Board has control over and can appropriate for any purpose. Although Person County reported a slightly higher total fund balance at FYE 2012, the UFB portion dropped from 31% to 26% at end of FY12, and forecasted to drop to 22% at current spending levels at FYE. This will cause it to be below State (24%) and Population group (26%) averages.490
Fund Balance Policy Person County has no separate Fund Balance Policy The 2004 County’s Capital Reserve Fund (CCRF) Resolution provides guidance on Unassigned Fund Balance use: To maintain a minimum fund balance level in the General Fund of 18% Any fund balance in excess of 18% should be primary source of funding the County’s capital needs Any fund balance in excess of 21%can be used to fund discretionary projects Creation of CIP Fund has replaced use of CCRF, making this Resolution no longer effective Average county fund balance level (FY10-11) across the State is around 24%, comparative population & budget size groups is 26%(having largest % of tax base in state utilities, mandates higher %) LGC’s Recommendation: Maintain minimum of 8% Staff Recommendation: Maintain minimum of 26%591
6UFB: Comparison and ForecastRecommended level92
Fund BalanceAppropriated YTD7Fund balance (FB) appropriated – 2013 YTD:$ amountFB Approp: Adopted4,493,237 Reduction for Conting item-Apptd Boards Travel(11,508)Sheriff equip from restricted fund60,000 Recreation & Sr. Center Project Fund476,850 Carryforward commitments241,075 Old Helena School Site Improvements Proj Fund28,000 Old Landfill trench installation & monitoring40,000 LEC water heater repair40,000 Local match for Bulletproof Vest Grant4,492 Total FB Approp YTD$5,372,146 Items highlighted in blue are Unassigned Fund Balance93
Why the anticipated drop in the UFB?! Current Adopted Budget is $4.3M higher than prior year to cover new costs Appropriated $4.5M in Fund Balance to balance FY12-13’s budget Estimating another large FBA for FY13-14 to meet anticipated capital needs, new debt, and operating costs at current levels. Even though this is a budgetary item for next year, it affects the % of unassigned and available at current year-end.8TRIPLE WHAMMY!!94
FY 13-14 ProjectionsRevenues: Fund Balance (est. $4M)$493,273 Sales Tax Distribution($100,000) Build America Bond Int Credit($13,158) QSCB Int Credit($48,047) Property Tax Collections$848,750 State & Federal Inmates$55,000 Stormwater Fee Implementation $240,000(if fees assessed)95
FY 13-14 ProjectionsExpenditures: New Debt Service-Rec & Sr Center, PHS & Huck Sansbury Roofing$ 460,000 Replacement Vehicles $ 112,100 CIP Projects(est. $1.3M) ($725,000) project delays? Unemployment contribution$ 90,000 Stormwater costs$ 240,000 Broadband contract$ 276,750 Multi-Jurisdictional Site Cert.$ 17,500 Note: Other cost elements (ie. Schools current expense, health insurance, workers comp, overtime & part-time expenses) are unknown at this time. More to come soon!96
11Forecasting the next six months: Property Tax Collections– forecast to come in higher The spring should bring in even stronger fee-related revenues Sales Tax Collections–projecting a $100K reduction based on current YTD collections Public Safety operating constraints Increase in CIP projects being requested Forecasting another decrease in unassigned fund balance Possible State impacts can further burden fund balance Budget Strategies needed to address next year’s challenges and the declining UFB!!97
Budget ProcessStrategy is the name of the game! While some minimal revenue growth is evident, reliance on Fund Balance cannot continue Reductions are still necessary Some cost restoration (ie. maintenance & repair, supplies, training) and new personnel is critical All requests must be justified, with data to support the need for any restorations or increases during the Manager’s conferences with Department Heads The zero-based budgeting process will continue on specific line-items98
Major Headlines!! Increase in property tax revenues may help offset some reliance on fund balance or other increases in operating costs (Rec & Sr Center, etc.) Sales tax is below projections. Forecasting reduction of $200K at current collection levels. Departments cannot sustain flat operating budgets as costs and service demands increase. Continuing to address deferred maintenance of facilities through CIP, but may not be able to sustain spending levels. Unassigned Fund Balance dropped to 26% in FY12, and is expected to drop further. Need to find ways to meet capital & operational needs without hampering our ability to sustain reductions from State.99