06/16/17 — County poised to adopt budget

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County poised to adopt budget

By Steve Herring
Published in News on June 16, 2017 7:37 AM

Wayne County Manager George Wood says he is "cautiously optimistic" that $2 million in education funding for the county's schools will survive the state budget process.

But just in case, he will have two budget options ready for Wayne County commissioners when they meet Tuesday morning.

One will be an interim budget -- basically a one-month continuation of the current budget, but lacking several components such as a tax levy, transfers between funds, capital outlay projects and merit pay increases.

The other will be his roughly $157 million budget recommendation, minus a few changes commissioners made during work sessions. It does not include any increase in taxes or fees.

Which of the two will be adopted depends on whether state lawmakers have approved a budget with provisions for the $2 million.

The money being replaced is $2 million in low-wealth education funding the county stands to lose because its tax rate does not meet the state threshold.

The allocation is based on a complicated formula comparing local tax rates to the average effective tax rate for North Carolina.

Wayne County's tax rate falls just below the threshold and would cost the county $4 million in low-wealth funding over the next two years since the state operates on a biennial budget.

Wood called the threshold a moving target that the county would never be able to reach without hefty tax increases.

It would be cheaper to increase the tax rate just enough to make up the $2 million annually, he said.

If lawmakers fail to approve the $2 million, then the county faces the prospect of a 2.46 cent property tax increase to replace the lost funding.

However, commissioners will not know if that increase is needed until after the state budget is approved, hence the need for an interim budget.

An interim budget would allow the county to continue to operate while forestalling setting a tax levy. Once a tax levy is set it cannot be changed until the following budget.

"The last we heard has been about a week ago," Wood said Thursday morning. "Supposedly everything is set to go, and we should be in good shape. If the state has approved their budget, and we have had time to look at the language and the $2 million is in there, then we will go ahead with our regular budget. That is option one.

"Option two is if they don't, we do have the interim budget. It is one-twelfth of the (current) budget. We are going to a 30-day interim budget. What we are hearing is that the (state) budget process is going very well."

There does not appear to be that many points of disagreement between the House and Senate versions of the budget as opposed to past years where the leadership was so far apart that the budget dragged on, he said.

"We are not hearing that this time," Wood said. "We are hearing there are some differences, but we don't think there is anything that will cause it to drag out.

"So actually we are a little optimistic that between now and Monday night they may actually get it adopted. That is why I wanted to have the regular one ready to go."

There was a reason for settling for just one month, he said. Longer than that it starts creating a problem for the tax office.

The county needs to adopt the tax levy so that the tax office can get the tax bills prepared since they need to be in the mail in August, Wood said.

Even if the interim budget is approved, commissioners could meet in special session before the 30 days are up and approve the full budget and tax rate, Wood said.

That would make the interim budget null and void, he said.

Wood praised Rep. John Bell of Goldsboro for his efforts to secure the $2 million. Bell and Sen. Louis Pate of Mount Olive having been working together, he said.

The budget amendment to fund the $2 million gets the issue on the floor in the budget discussions, he said.

"He wants to use that as a means to amend the budget bill with the population figure we talked about and that covers both years," Wood said.

Wood was referring to a budget provision that provides an exception to the tax rate threshold for counties where military bases are located as long as the county schools have an average daily membership of more than 23,000 students.

Currently that would apply only to Cumberland County, home of Fort Bragg, and Onslow County, home of Camp Lejeune.

In those cases, the schools in those counties would receive the same amount of supplemental funding for low-wealth counties that they received in fiscal year 2012-13.

Commissioners want to keep that provision in the final budget, but have the number reduced to 17,000 or 17,500 in order for Wayne County to fall under the exemption.

Wayne County's current average daily membership is around 18,826.

Neither the amendment nor the exemption provision are included in the Senate version of the budget.

Bell thinks he has it worked out so that provision will be in the budget, Wood said.

"If so, then our problem is solved for both years," Wood said.

And there will be no need for a tax increase, he said.

Tuesday's meeting will get underway with an agenda briefing at 8 a.m. followed by the formal session at 9 a.m. Both will be held in the commissioners' meeting room on the fourth floor of the Wayne County Courthouse Annex.