The county was projecting a steady increase in sales tax revenue and prepared to invest major funds into a long-term capital improvement plan, but County Manager Derek Roland told commissioners May 12 that the COVID-19 Pandemic has caused a lot of uncertainty that will no doubt play out in the upcoming budget process.
“You can ask 10 different people ‘what is our future with respect to the COVID-19 Pandemic?’ and it’s safe to say — as we’ve seen in the media and throughout the nation — you’ll get 10 different answers,” he said. “There’s great uncertainty from a public health standpoint and from an economic standpoint.”
Thanks to a collaborative effort from the county’s health department, social services, sheriff’s office and emergency services teams, Roland said Macon County has been fortunate to only have five confirmed cases of the virus. While he is hopeful the health impact has been mitigated, he said the economic impact will be ongoing.
“Unemployment has skyrocketed with 30 million people filling for benefits — North Carolinians have accounted for almost 800,000 of those. For perspective, in 2009 during what many Americans now refer to as the Great Recession, 221,763 North Carolinians filed unemployment claims in the months of March and April,” Roland said.
He then presented commissioners with a preliminary 2020-21 budget of $52.3 million, which includes $951,000 less in expenses over the current fiscal year budget due to projected decreases in several revenue streams.
Roland said sales tax revenues will be hit the hardest with the county projecting a 5 percent decrease — $442,000 less than the current budget. The budget also anticipates a $290,000 loss in current year property tax loss and $322,000 decrease in revenue from services fees from inspections, register of deeds and permitting.
The proposed budget would maintain the current property tax rate of 37.47 cents per $100 of assessed property value. Commissioners did approve a tax increase last year from 34.9 cents to the current rate.
Department heads turned in their budget requests March 13, but the country was under a State of Emergency by March 23, leaving Roland with the difficult task of choosing what projects and needs take top priority. Finding $951,000 to cut from an already lean budget isn’t possible without sacrifices, Roland told commissioners. He said the proposed budget maintained current levels of services but didn’t add any new programs or initiatives.
About $100,000 was saved by eliminating the county’s adult dental care clinic — a program that served 366 people in the last year. However, it has seen a 48 percent decrease in usage since 2018. Roland said the program was started at a time when dentists didn’t accept Medicaid, but now they do and the county’s program isn’t utilized as much. It’s also become more challenging to recruit and retain staff.
Other savings were found by cutting $68,000 from various operating supplies and $250,000 worth of cost saving measures at the detention center. Sheriff Robert Holland told commissioners the inmate population is down right now, which means the county isn’t spending extra money to house inmates in other county jails. That factor combined with the fact the county recently hired a third party to handle transportation for inmates, has significantly brought down costs. The current budget has $300,000 allocated for inmate transportation while the new proposal only has $100,000. Another $50,000 in savings was found by reducing the medical services line item at the detention center. According to the budget message, medical costs at the jail have decreased significantly since the county began contracting with a full-time registered nurse who works alongside the part-time medical director.
Roland also proposed a 50 percent reduction to the county’s nonprofit contributions — the Community Funding Pool is reduced to $37,500; Scaly Mountain Community development reduced to $2,500; Macon County Historical Society reduced to $10,000 and Cowee School reduced to $18,000.
The Department of Social Services and Senior Services budget will decrease by about $55,000 and the Health Department budget will decrease by $107,575, though additional COVID-19 related expenses will have its own line item. Economic and Physical Development budget will decrease by about $84,000 while the county contribution to the Fontana Regional Library System will remain the same at just over $1 million.
When it comes to Macon County Schools, the proposed budget decreases the system’s annual capital outlay budget by $275,000 — a 9.5 percent reduction.
“While this reduction is substantial, reduced overhead costs and annual wear and tear at facilities resulting from extended closures in FY20’ combined with nearly $200M in COVID-19 statewide school relief, should help offset this reduction,” Roland wrote in his budget message. “This reduction, which will be re-evaluated mid-year as well, does not adversely affect the learning opportunities of students or the livelihoods of locally supported school system employees.”
Roland said Macon County is fortunate to have such a healthy fund balance of $23.5 million — representing 44 percent of its annual budget. When the county created its Capital Improvement Plan and prioritized $150 million worth of infrastructure projects over the next five to 10 years, the plan was to rely on some money from the fund balance to complete one-time projects without impacting the operating budget.
The fund balance is often referred to as a “rainy day” fund a county can use in emergency situations, and operating a county government during a global pandemic definitely constitutes an emergency. For this reason, Roland said he left out $1.3 million in requested capital projects from the proposed budget. However, he said commissioners could revisit the budget mid-year to decide whether any of those projects can be added back when they know the actual economic impact of the virus.
“I’m hesitant to move forward with any other capital projects that are not critical because we don’t know how long it’s going to rain,” Roland said. “We have to keep in mind it’s taken a lot of years to get the fund where it is now. There’s going to be life after COVID and we want to be in a situation where we’ve maintained the fund balance as best we can.”
The proposed budget includes a $702,312 appropriation from fund balance to fund three capital projects — $400,000 to convert and install new tax collection software; $218,600 to upgrade the county’s data storage and $83,712 in matching funds to construct a 1,200-square-foot addition to the county transit administrative offices.
Roland pointed out that the county’s general fund debt will still be decreased by $262,860 in the 2020-21 budget. The county’s total debt load is about $3.7 million.
County commissioners will hold a public hearing regarding the proposed 2020-21 budget at 6 p.m. June 9 in the commission boardroom on the third floor of the Macon County Courthouse. Meetings are also recorded and available at the county’s website www.maconnc.org. The next budget workshop will be held at 6 p.m. May 26.
To review the complete draft budget, visit www.maconnc.org/budget.html.