Board of Supervisors County Executive's Recommended Budget   2/19/2016

I call to order the February 19th, 2016 Albemarle County Board of Supervisors and I want to welcome everybody who's joining us today in person and to those joining us online.

I want to make a few introductions first before we get started.

The first is to my far right is Corporal Wallace.

He's going to be our officer joining us today.

On the dais to the right is our county attorney, Larry Davis.

and to my left on the dais is our Director of Office of Management and Budget, Lori Alhouse.

And right behind the dais is our two county clerks, our county clerk Ella Travis, Ella Jordan, and our deputy county clerk Travis Morris.

And the purpose of our work session today is to have our county executive make the presentation of the 2017 budget to the public and to the board

The budget process is a very lengthy one.

County staff has been working on this for an entire year.

And this meeting will be followed on Tuesday the 23rd by the first of three public hearings on the budget.

No, there's going to be three public hearings and there'll be four work sessions over the next several weeks.

And all of these will culminate in the approval of the budget and setting of the tax rate in April.

Thank you.

I actually like that seat better.

We are trying to enhance our communication with the public this year by doing the presentation in this room so that we can have it available for the public to look at at any time so that's the reason why I'm standing here instead of in my normal seat but I'm glad to be here before you today and I joked just a minute ago about people that have my back and of course I got the police over here

but probably more importantly today the budget staff sitting in the audience and I really wanted to start us off by thanking them.

Madam Chair, I appreciate you recognizing the lengthy process we go through really throughout the entire year to get to the point of presenting this budget.

So I want to thank, frankly, all of our staff.

Every department and the employees there work really hard putting in their budget requests, doing the analysis that's necessary to submit.

And then, of course, our budget staff.

And I'd ask them if they would stand up real quick.

They're here with us today.

All right, thank you, Tom.

Andy Bowman, senior budget analyst.

Christy Shifflett, and it is special, I'm trying to think of your title.

Thank you all.

Thank you very much and I wouldn't want to fail to recognize the whole county executive staff.

I can tell you this is all hands on deck process to get us to this point including the communication work that's done under Lee's leadership and Doug and Bill and Lee and all of our staff upstairs do a great job too.

So it's all brought us here today and I'll say that as we as we begin to think about this

This has been a particularly difficult year.

It has been a number of difficult years since we hit the recession.

There's something a little different about it this year, though, that is what we're going to talk about.

And as we begin to take a moment to look at it, you all may recall last year, or at least four of you, having our police chief, our fire chief, our social service director, and one of our principals sitting over here on the dais with you talking about the challenges that we have been facing

the difficult capacity issues that we're dealing with as a community as we try to keep up with maintaining services at a level that this community expects and desires.

I wanna just read to you really quickly something that I said last year in referencing those folks and the challenges that we faced.

And I'm just gonna read from my comments at that point.

The overriding conclusions of all of this

and the way that we started this budget look was we have got to do something different.

We can't continue with the status quo and make any progress.

We have some challenging choices.

These challenging times require that we think differently about the future and that we reconsider both our existing assumptions, our current practices and also our engagement with the public because of the challenges

that we have ahead of us.

That was the message last year and it is really where we start again this year.

As we look to the next year and importantly the next two fiscal years, which is a different approach, our challenge has grown and overcoming this challenge will indeed take leadership to redefine our community's future.

The reality is that we are faced with an environment with very slow revenue growth

and just meeting increased mandates, commitments and obligations and minimizing the impact on existing levels of services has left us with a $3 million budget gap as we begin the process this year.

And as we look beyond FY 17 to FY 18, the gap continues even with some of the measures that are included in this budget to close the FY 17 gap.

And this gap exists while proposing no new positions for local government, no expansions of existing services to keep up with growth, and no proposed new services over the two-year period.

And the gap is not something brand new for us.

We anticipated and discussed it over the past two fiscal years in particular through the five-year financial planning process.

We all recognize the gap and have been struggling to put some measures in place to address it.

We established a Citizens Resource Advisory Committee over the last year and also the local governments and schools worked together on improving some efficiencies.

And beyond that, over the past four years, since the recession, a number of things have been done to try to get our expenditures and our revenues more in line with each other.

However, in addition to the gap that you see before you, due to slower than expected growth in our real estate values,

which is 60% of the local revenue that we generate every year.

The gap is even larger than we had projected even as recent as this past fall in the five-year financial planning process.

This year's budget presents a significant challenge.

While recession was difficult, this represents a more significant long-term imbalance and challenges us in a more significant way.

As we will discuss, this budget in the next two years will indeed require bold political leadership

and strong teamwork between the board and staff and a strong partnership with the community to redefine our future.

We are a resilient community and we have shown that during the recession.

Numbers of changes had been made during that period of time.

We've responded to the evolving pressures mentioned above by taking steps to transform into a leaner, more nimble organization that is tested and positioned to respond to the challenges and opportunities of the future.

We have made strategic choices in building back our staffing following significant reductions made during the recession.

Our staffing shifted from a number of places in the organization to our core needs in the police department and social services.

We've demonstrated significant innovation, reinvention, and partnership.

We've diversified our revenue streams through various revenue recovery measures and have focused on investments that will bring future returns, such as the establishment of an economic development office.

and as you have on the dais with you now, as you look at the next slide, the 2015 report also talks about the most recent things that we have done to try to deal with the challenges and move our organization forward through innovations, reinvention, and partnership.

Some examples of our innovations, we've been through three rounds of using our innovation fund, resulting in 25 projects to reduce costs, improve service,

We have achieved an award-winning Northside library created in a repurposed space, been awarded the Gold National Green Government Challenge for the eighth year in a row, named in the top 10 nationwide for delivering digital government services to our citizens.

We've reinvented ourselves by forming an economic development office and hiring our first director, restructured county departments to streamline operations and create more focus on environmental services, hired a transportation engineer and natural resources manager in response to pressing needs and board priorities, and finally, in terms of partnerships,

This past year, we've worked with our citizens through the Water Resources Committee, the Solid Waste Committee, and the Citizens Resource Advisory Committee, and we've held numerous neighborhood summits and added to improving our connection with the public through video streaming and some other things.

While that strategic and innovative work must and will continue, these measures are not adequate to address the ongoing structural imbalance

caused by the cumulative impacts of expectations and service needs that outpace our available resources.

So we are a great community facing a great challenge, but despite the examples of meaningful progress, the challenges identified over the past two years have increased and signs going forward are not encouraging.

So why are we still here?

Let's talk for just a few minutes about some of the primary reasons and in particular what we're experiencing at the local level and expecting to see at the state and federal level as we go forward and how they're reflected in this budget.

Understanding the ongoing realities, what you see before you are the major challenges that are driving the budget proposal.

Slow growth in our largest revenue source,

projected slowdown in the economy overall over the next two to three years, significant increases in obligations, mandates, and commitments.

The challenge that we face is both short and long term.

It is even impacting us in the current fiscal year.

This is all going to result in a significant challenge and does in this budget for us to maintain existing levels of service as our population grows.

Obviously, just keeping up and challenging there means it's very difficult for us to be able to move forward on board and community aspirations in this environment.

Let's take a look at some of these things quickly.

As you see before you, our slow growth in our largest revenue source, which is our real estate tax base, as you can see from the pie chart, our real estate taxes make up 60% of our total local revenues, the things that we control that are not going to mandated services.

And as you look to the right, you'll see the period from 2008 out to the projected budget year and then beyond.

What that reflects is the recession and the drop in values that we experienced in those early years.

How that began to climb and our values started to grow again in 2014.

And also last calendar year, 2015, you saw that climb again.

As we put our projections together for the current budget year, we were conservative and didn't expect that line to continue to grow.

So we projected a two and a quarter percent increase in our values.

Unfortunately, even that conservative estimate was off.

Our values came in at 1.84%.

which has had an impact on our picture going forward and also affecting us in the current fiscal year.

As you look at the years going out into the assumptions, we have assumed that that decline will not be dramatically different but will pretty much hold at that level.

We have projected 1.4% increase in values in those next fiscal years and that's included in our budget.

There have been some positive signs though.

In fact, you'll hear in the news today about sales tax and some of the other things that are being driven by the broader economy.

Those are recognized in the FY 17 budget through some increases that you'll see.

But if you look at the chart before you, the top line is our real estate and the amount that it makes up of our total base.

You can see the significant separation between that and these other sources of revenue that you're hearing good news about today.

We have not in this budget projected a doomsday scenario in 17.

In fact, you'll see some very healthy numbers in sales tax and meals tax and so forth.

But they are just not large enough to offset the significant change that we're seeing in terms of what we expected in growth in our real estate values.

So that is the big picture.

Again, our major source is impacted even as some of our other sources look positive on a much smaller base.

As we look out a little bit further at the state scene, the General Assembly is in session right now, as you all are well aware, and they are starting to scale back or rethink a little bit the revenue projections that came from the budget that the Governor put together.

There's still a lot of talk going on, but just as recent as last week, these were some of the comments that came to us from the General Assembly through David Blount, our legislative liaison.

As you can see, the revised forecast for the state has been scaled back from the 3.2, only seeing it grow by 2.4%.

Sales tax at the state level, which also obviously impacts our sources, are behind estimates right now for the fiscal year in the state's budgets calculations.

That's the picture from the state overall, even though we're seeing some positive signs here locally.

and basically the General Assembly is saying that they're going to have to take a much more cautious approach over FY17 and 18.

Again, that budget is in the works now.

Things are changing even as we speak.

But that more cautious outlook from the state is also impacting how we look at FY18 and beyond.

At the national level, what you see before you is the duration of US post-World War II expansions.

We came out of the Great Recession and it has now been 79 months that we have been in recovery from that recession.

As you can see, as you look two years out, FY 17 and 18, that green box and that arrow shows you where we will be during this period that we're projecting over the next couple years.

There has only been one

expansion or recovery that has lasted beyond where we would be at that point in time.

So we are anticipating, and I think everyone is seeing some signs, the global environment and so forth, and many economists are predicting that there will be a slowdown and that we're actually overdue for it.

I think this chart really demonstrates that.

It has had an impact on how we've looked at the budget going forward beyond 17.

17 doesn't reflect any dramatic change, but it slows us as we look forward.

And beyond that picture of our revenue situation at the local, state, and federal level, this budget reflects some pretty dramatic increases in our obligations and mandates.

As you see on the chart before you, obligations, mandates, and commitments in this budget total $7.6 million.

The things that we've done in this budget, which we'll talk about in more detail, to minimize impacts to existing levels of service so that we wouldn't have to cut back are requiring $2.1 million.

In total, just for those two items, this budget shows an increase of $9.7 million.

Just for perspective, the total revenues, which we'll talk about more in a minute, total just under $9 million.

We'll tell you how that difference is made up as well in just a moment.

The challenge is also both short and long term as I mentioned before.

In the current fiscal year, we have a revenue shortfall that we've projected that we are going to have to make some decisions on.

We have fortunately strong fund balances.

We even set a revenue contingency aside in case we had any kind of a shortfall.

So we're in the process of looking at that and we'll be working with the schools to talk about that as well.

They would typically share in a downturn in our revenues or always have in the past.

So we are not ready to make any big decisions today or talk about that, but it's something that we're actually going to have to deal with in the short term.

The reality of FY 17 is that the budget requires a two and a half cent tax increase

to keep up with these requirements, or if you could go back, please, to keep up with the requirements that you see before you, and it includes no new positions, no expansion of current services, and no new programs or services.

That two and a half cents is needed while we hold the line on our expenditures.

This budget also

proposes a maintenance CIP.

There is a one cent tax increase in the budget to keep up with debt service payments that we have an obligation for.

They're included in that $7.6 million number that you see.

Beyond all of that, to balance this budget, it required that we include some expenditure reductions in a number of areas, and we'll talk about that as well in just a minute.

And what's more, in FY18, as we look out just one fiscal year, we are projecting a deficit of approximately $3 million.

Again, that deficit includes no new positions, no expansions of programs, and no new programs or services.

And also, at that point, is a maintenance CIP.

The result of all of this, of course, are two major things.

We are significantly challenged to maintain existing levels of service, even as population grows, and we have an inability to address the board and community's aspirations in this current environment.

Future tax increases or dramatic expenditure reductions are needed into the future just to keep up with existing levels of service.

Strategic plan and community initiatives are unfunded throughout the three years, with a few minor exceptions on some investments.

and the CIP as I've mentioned is funded at a maintenance level with only essential projects funded into the future and even that requires a three cent tax increase over the next five years.

One cent of which is in this proposed budget in 17, two cents which is called for in FY19 in the CIP that's been reviewed and approved by the oversight committee that was submitted to me as a part of this budget process.

So certainly we find ourselves in a very challenging place as we look to the future.

As we develop this budget, we looked beyond FY 17.

And as we face this challenge and look to overcome it, obviously there's various options that we can pursue.

Let's talk about a few of them in leading up to the proposed budget.

First of all, we could adjust the tax rate.

I don't think that there's any question we could do that.

Lori, if you'll go to the next slide.

Due to the challenging environment the counties faced since the recession, in particular with the property values that have changed dramatically over that period, the tax rate has increased 7.7 cents over the past four years to support essential services.

As you look at the graph before you, what you see overlaid on top of each other is the dip, the change in our reassessments over time going back to 2002.

If you look to the left of the screen,

in the light green area, you'll see everything before 2007 which was actually a biannual reassessment.

So we have equalized that, put it out on an annual basis to give you some perspective.

You see the recession hitting us in 2007 and the dramatic decline in our property values and then some recovery which we've already reviewed and our projections going out to 19.

That top line, if you look on the left-hand side,

You'll see the tax rate and how it has changed over time and there's an obvious correlation between

the drop in values and the increase in the tax rate simply to keep up with essential services which is what is really reflected in that 7.7 cents.

In a few minutes we'll actually talk to you how the average homeowner has been affected by this and the fact that through most of those years we've done nothing more than get back to the 2009 tax bill

in spite of the drop in our values, obviously that has required some tax increases to keep us at a place where we could make calls for police services and all the other things that we have to do, essential services in county government.

But that's 7.7 cents.

In addition to that, this proposed budget includes 2.5 cent increase simply to meet current commitments and obligations and current services.

with no new positions, expansions of services, or additional programs or services.

In FY18, it would require as much as an additional 4.5 cent tax increase to close an approximate $3 million deficit that we're projecting in FY18.

That again does not include any new services or positions.

It does assume that 60% of that 4.5 cents would go to the school system as it always does.

They will have their own budget gap to deal with as we've discussed during the five year financial planning process.

But 4.5 cents in addition to the two and a half, just to keep up with it, if this was our strategy going forward,

In FY19, our CIP currently calls for a 2 cent tax increase just to keep up with the maintenance level and a couple essential projects including the court expansion.

Not what the oversight committee had hoped we'd be able to do.

That would move our tax rate up as you see on the slide into those assumed years to 91 cents from its current level at 81.9 cents.

What's important about that is that any desired expansions of existing services or new services beyond what is proposed in 17 will only increase the approximate $3 million budget gap in FY 18 and beyond.

Making progress on the strategic plan and other board and community aspirations through additional tax rate increases will have to come on top of the increases needed

simply to maintain existing levels of services and meet obligations.

Achieving aspirational goals is not realistic in this environment without a change in current policies, practices, and programs, something that we talked about last year.

In regards to this option to solve the problem, staff believes that any dramatic change in the tax rate would require significant board and community direction and support,

and be done through an extensive evaluation and engagement process, not simply by me coming before you in a single year and proposing a dramatic tax increase.

We will talk about a proposal on how we can engage the public to talk about this in a few minutes.

This of course is only one option.

The next option would be to look at our expenditure side and reduce expenditures to try to deal with this.

As you look at the next chart, you'll see our per capita expenditure comparisons against our benchmark localities.

Albemarle is at the bottom, and one up from that is the average.

What that shows you is that our spending per capita is about at the average of our benchmark localities.

What you don't see in this graph are a couple significant things that don't exist in other localities, meaning that our expenditures would be below the line, below the average line, if not for a very robust land use program, a revenue sharing payment to the city that averages around $16 million a year,

and very high levels of human service expenditures to support programs like Bright Stars, which this community highly values.

The point here is that all of our other general government areas of expenditure are below the per capita levels of our comparison localities because these areas add to it and bring us up to.

the average of the other localities.

We talked about the number of police officers being in the bottom five to ten percent in the state of Virginia in terms of per capita police officer staffing.

You just recently heard a report on the caseloads in social services.

These are things that we have been grappling with for the last number of years.

But this tells you that if our strategy is to cut expenditures

there would be some very tough choices to be made and in comparison there's not a lot of fat in our budgets that doesn't mean we can't be more efficient and we're going to propose that we look at that however they are as I mentioned programs that we that we value if you look at our activities over the last 10 years in the chart before you

Our per capita staffing is actually below the level it was 10 years ago because of some of the reductions that we have made.

So it's not as if we've grown dramatically even though there has been some money put back in and reallocated from some areas of our budget to our police and social services departments.

And finally we haven't been sitting on our hands.

over the last period of time.

This is a list of our efficiency highlights, some examples.

During the recession, we eliminated 75 positions, and they only came back into those critical areas.

We've made significant use of volunteers.

We've privatized some services.

We've gotten more efficient in how we purchase materials through the implementation of purchasing cards, and you can see rebates that we're starting to get back from the savings there.

We've been recognized across the state for energy savings, which has also reduced our budget and allowed us to reallocate to critical areas.

The school system has done a fantastic job in evaluating their transportation system and has reduced their fuel costs and reduced dead time miles.

And we have become more aggressive in our pursuit of grant funding and we're proposing to continue that and step that up a little bit more in this budget that we've proposed.

Obviously, given the gap that we have, efficiencies alone will not free up adequate resources to address growing needs.

Significant program and service elimination would have to be considered if cuts are the strategy to address this gap.

And those are tough choices.

The proposed budget calls for further reductions in efficiencies, which we'll talk about in a minute.

Again, regarding this strategy, staff also believes that any dramatic change in current expenditures would require significant board and community direction and support and be done through an extensive evaluation and engagement process, not simply by me coming before you in a single year budget and suggesting the elimination of services.

A final option, which we believe is the most appropriate one, is the proposed budget.

The budget recognizes that finding a balance between a realistic level of revenues going forward into the future and expenditures which can be supported by that revenue is a large and challenging task that must be accomplished through board and community dialogue and choices.

The budget supports existing services as much as possible in FY 17 while putting building blocks in place to plan for a sustainable future

that provides that realistic balance.

By not adding any local government staff or supporting new programs, this budget does not create additional future obligations that will make it even more difficult to achieve balance in the coming fiscal year, FY18, but rather holds the line to the greatest extent possible while the Board of Supervisors and the community and staff work together in the coming year to create a sustainable future.

So what does this budget calls for?

It calls for concrete steps towards transformational action, investments that catalyze change, the establishment of a process to establish clear board and community priorities that drive future decisions, ultimately aligning our tax structure and our service levels with our desires and needs, and we think it's critically important that we engage the public throughout this process, so we're proposing that as well as a part of this budget proposal.

So we did establish six goals as we work towards a budget proposal for you.

The first three are really about the things that we need to do now.

Meet current commitments and obligations, minimize impacts on current levels of service, and hold the line on existing expenditures.

The last three are about the future and what we need to do differently to move into a more sustainable future.

Invest in meaningful solutions, determine board and citizen priorities, and create a realistic two-year fiscal plan which we are proposing as a part of this proposal so that we don't

Stumble into tax increases year to year because we're not sure what's on the horizon.

The five-year plan process has become something that's difficult to get your arms around because you're looking out far and you think things are going to change.

A two-year look is a very realistic look and it's one that we have spent a lot of time on as we put this budget together.

Let's do a quick overview of the budget as proposed.

This is a $375.2 million budget proposal.

As you see on the pie charts before you, property taxes make up 45% and other local make up just under 20%.

The rest is state revenue and federal revenues and borrowing proceeds for our CIP.

There is a small use of fund balance as a part of the revenues to balance this budget for one-time items.

On the expenditure side, you can see that 58% of our expenditures are school related and 38% are general government related.

The other 4% goes to the city of Charlottesville through the revenue sharing payment.

A few of the high level highlights of this budget on the next slide.

The total combined budget, as I mentioned, is 375.2.

This is actually only an increase of a tenth of a percent of that total budget, or $479,000.

That is primarily because our capital program happens to be smaller this year because of some projects that are going on.

So there's a 27.7% decrease in the one-year planned expenditures for capital.

Again, that is not so much a cutback as it is reflecting just what happens to be in next year's fiscal plan in the CIP.

but in terms of our operating expenditures, which is a better barometer of the change, you can see that our expenditures are up 4.5%.

We'll talk about some of the reasons for that in a minute.

On the revenue side, there is some modest revenue growth overall.

The general fund revenue's up 3.6%, but it does reflect a significant challenge with the real estate property values, which are growing at a slower pace than we had anticipated.

It proposes an 84.4 cent tax rate with a two and a half cent tax increase, one cent dedicated for capital, which is consistent with the CIP that you all have adopted, and 1.5 cents for operations.

And to clarify that, 1.1 cent of that is going to local government operations, and 0.4 tenths of a penny is going to the school system to help them with their current gap

State revenues are increasing by 4.6% primarily for the school division and some good news that they had from the state this year and federal revenues are up about 10% but again primarily for some more mandated types of services and social services in the school division.

This gives you just a quick summary.

The thing I really wanted to point out is that our local revenues are up 3.9%.

You can see in the top section of that, you can see the changes going on with state, federal, and other revenues at 1.9%.

that gets you to the 3.6 we talked about.

As we look at the expenditure sides, it's a little bit more insightful in terms of breaking down that 4.5% that we talked about in operations.

General government operations are up about 2%.

School division operations are up about 3.5%.

Again, the top line under those two headings.

That's our day-to-day expenditures, if you will.

There are some dramatic increases in debt service, and we'll talk about that in a minute, particularly on the general government side.

And you can see the operations total at 4.5

Overall capital projects down in our revenue sharing payment, believe it or not, is actually down almost $300,000.

Unfortunately, it goes up $300,000 in FY18, which is about a $600,000 swing that's going to impact us as we look forward.

There's that one tenth of a percent change in our total expenditures at the bottom right hand side.

So let's take a look at the tax bill.

If you recall a minute ago, we showed the tax rate change and the reassessment change over time, and that the tax rate has gone up in correlation to the real estate values going down.

If we look at it in terms of our citizens, in terms of their tax bill, you can see back in 2009, and by the way, that is the high watermark for the average

value of a home at $275,000.

The tax bill back in 2009 was $2041.

As you can see during this period that we talked about with the 7.7 cent tax increases, we have stayed about

We haven't exceeded that level.

It's been below.

And even in the FY15 budget, we were only slightly, I'm sorry, in the FY16 budget.

Let me clarify this chart very quickly.

These are calendar years rather than fiscal years because our reassessment is actually a calendar year reassessment that affects two fiscal years.

2015 represents the reassessment that was done last year this time.

It was at 2.6% increase in values on average.

That drove the tax bill along with any tax rate changes that we made.

So the point here is even during this entire period, the tax bill on the average homeowner has changed very little.

In this year, given all that we've talked about, that tax bill is increasing.

Really almost for the first time.

It was slightly higher last year.

Let's take a look at the budget now.

You've looked at kind of the revenue side of things and talk to you a little bit about how we have achieved the budget goals that we talked about a moment ago.

The heart of this budget is in the next two slides.

Meeting our current obligations, mandates, and commitments, support for the school system.

This 3.3 million reflects 60% of the revenues generated on the existing tax base at the existing tax rate.

So they've received some money at the 60%.

Beyond that, the four tenths that I mentioned of the two and a half cent tax increase added to that 60% and totals a $3.3 million increase to the school system.

Our debt service obligations alone total $2.9 million.

And this is debt service not on a bunch of dramatic projects.

We have unfunded projects in our CIP that we've been talking about for years.

These are the things that we've been funding to keep up with.

Things like school maintenance and repair of 27 campuses.

Our fire rescue system with replacement of engines and so forth.

There is some small impact over time for the two libraries, although we paid cash for a good bit of that.

But it really reflects some very basic public safety and school and maintenance kinds of needs.

But it is a dramatic increase in this budget.

and then the Children's Services Act, formerly known as the Comprehensive Services Act or CSA.

We have a dramatic increase between schools and local government.

This just reflects the local government side here.

It is equivalent to a penny on the tax rate.

They have also added some social service workers to invest in ways to keep these costs down.

I want to commend them for some really good work to try to figure out how to reduce our treatment costs for these children and give them services that will cost us less.

So it actually exceeds a penny on the tax rate with everything that's in the budget this year between schools and local government.

But you can see just in this single area 7.6 million dollar increase.

We go to the next slide and the second goal which was to minimize impacts on current services.

There's that 2.06 million we talked about a few minutes ago and the breakdown.

about a million dollar increase to support key regional services through agency support.

Our regional jails expenditures are up because of more inmates that we have to take care of.

Our regional library is a commitment that we made to implementing

A salary survey that's in its final year as well as some other increases just for basic level service.

Jaunt, as an example, is projecting the loss of state revenues.

The alternative to the money that we put in this budget is that we would cut routes.

So we have funded that to keep it level.

and the emergency communication services, again, just expenses related to the normal day-to-day business that they're doing and nothing new in that increase.

So that total is about a million dollars.

The next two items are related to our workforce.

Our local government healthcare costs are up about $621,000.

That's a 14.5% cost increase to maintain our self-insurance pool.

and to pay for the increases in healthcare costs which are being experienced obviously all over the country.

This budget does include a 2% market increase in general government which matches what is included in the school budget.

And our thought here is that with the population growing and not adding staff, we've got to take care of the folks that are providing the services now under some difficult circumstances.

So there's a total there of about $2 million.

Again, that's the amount that actually exceeds our revenue growth between those first two slides.

As we look on to Goal 3, holding the line on existing expenditures, I've mentioned several times no new positions, expansions of services, or new programs and services, and only a CIP maintenance level, CIP at the maintenance level.

Across all of our departments,

In spite of some increases in maintenance costs, maintenance agreements and things like that at the operating level, we've actually reduced our expenditures by $17,000.

It does rely on an additional $400,000 in reductions in our operating costs across the county government over the next two years to help balance this budget in spite of a two and a half cent tax increase.

We also looked closely at one-time expenditures in our departmental budgets and have scaled those back and saved $512,000 reduction in one-time departmental expenditures.

And this budget does reflect, I mentioned, the reduction in the revenue sharing payment.

We also are reflecting savings in fuel and a few other areas.

If you have $9 million in new revenue,

and $9.7 million in increased expenditures at a minimum.

Obviously you've got to save some money somewhere to balance that budget and that's what this reflects.

So we have held the line on our existing expenditures.

On the next slide, we kind of move from what we have to do to what we need to do, investing in meaningful solutions.

This budget, as proposed, includes an efficiency study, which we would like to include doing in concert with the city of Charlottesville.

They're doing us an efficiency study too.

I've talked with the city manager about us coordinating the consultant work on this and seeing how we could identify areas that perhaps the city and county could do together to save money.

It includes some technology investments to streamline services.

It will look more closely at some consolidation of services, perhaps between the schools and local government, an effort that started this past year.

It does include an urbanization economic development initiatives fund focused on growing our non-residential tax base.

Although there's not some new expenditures in here per se, this budget also supports the Economic Development Office in the completion of its work, again focused on growing our tax base so that our tax rate doesn't see as much pressure.

Obviously that needs to be done in our development areas and done according to some targeted strategies which you all will decide on during the course of this calendar year.

We have implemented a number of the resource

the Citizen Resource Advisory Committee recommendations in this budget and we'll talk to you some more about those specifically but we we need to do more so we're going to continue to look at that as well as the local government and school efficiency study that was done this past year because of the circumstances that we face right now because of the revenue downturn we are

are currently holding all vacancies frozen so that we can do a full evaluation of them and determine if there's more important places where those vacancies might need to go to support priorities.

That's a process that we did extensively during the recession.

We are starting to organize ourselves around doing that again.

Any positions saved in this fiscal year saves us money in 17 and goes towards that deficit in 18.

Finally on this list, our healthcare program needs a full review and evaluation.

We need to determine if a self-insurance pool is still the way that we should provide health insurance to our employees, whether there are other ways to do it, or other changes that we need to make to the program.

There's an extensive review that's already started and underway.

Our Children's Services Act expenditures have skyrocketed, which means we need to look at some different and creative ways that we might get those costs under control.

And there's several other major cost centers that we need to do a full evaluation on.

Again, we are talking about a structural imbalance that doesn't end this year.

It goes on and some of these measures are going to be really important.

Our fifth goal, we are proposing to the board that we bring someone in to help us with what is called priority-based budgeting.

It's a process that engages the community.

fully pulls apart your expenditures to determine if they're done efficiently, looks at the things that you value in your community, and then comes up with a way to allocate future resources to meet priorities in a difficult environment.

This is a heavy process engaging with the public, and we'll talk to you more about it during the budget work sessions.

We think it's critical and it goes beyond the engagement that we have done up to this point.

Finally, goal number six does recommend that going forward we do a realistic two-year plan that has clear priorities that move us towards that sustainable future.

We would suggest that that two-year plan start in FY18 so that we would have not an annual plan, but a two-year fiscal plan.

Obviously only the first year would be appropriated, but it means that every year we're looking at a two-year period to make sure that we don't

find ourselves in the second year in a situation we didn't know about in the first year.

It will, in order to balance that and move it forward, will involve the tough choices that we hope will be discussed with the public and move us towards our aspirations.

Our conclusions, we strongly believe that we need to take action now to address this three year budget imbalance.

That we have to evaluate and make necessary changes to some services based on priorities.

That a priority setting process with the community is critical and we're proposing a way to get to that.

Ultimately that needs to align our tax structure and service levels to our desires, values, and priorities.

We need to strengthen our focus and continue our focus on growing our non-residential tax base and we need to engage the public in tough choices to determine our future.

These are the conclusions and recommendations that we put before you today.

Obviously, we'll spend a lot more time looking at the detail of it.

Overcoming the challenges where we started and where we finish, we believe strongly that we're a resilient community and a great community and that we will overcome this challenge.

It's going to take teamwork between the board and staff and a partnership with the community without question.

As I think about this budget and the reaction of the public, I think if you fall on the conservative side, you're not very happy with what I'm proposing today.

If you fall on the progressive side, you're not very happy with what I'm proposing today.

This budget doesn't include any new positions.

It doesn't move us forward into that aspirational future.

The reality of this budget though is that both the tax increase and holding the line and reducing expenditures is the only way to balance this budget

doesn't mean you all won't make changes that are necessary and that you think are appropriate, but this is not a one-year thing that we can deal with, and unless we take a multi-year approach, overcoming this challenge will be significantly more difficult.

I again want to thank our staff, obviously with the solemn message that we sent.

Okay, thank you, Tom.

I did want to, before I start, also recognize that Laura Van Zant is on our team and isn't here today, but she's a very strong player in the budget office.

She just doesn't happen to be sitting in the audience today, and I wanted to recognize her.

And also just a shout out to our finance department that plays a very strong role in the revenue side of the budget.

So budget has two sides, so I don't want to not recognize the strong work from the finance department as our partners.

I'm going to move to the calendar that's coming up and Madam Chairman had referenced this earlier in the presentation.

The next activity will be a public hearing on the 23rd.

The first work session will be on the 25th and we'll be going over the general broad revenues and expenditures again with a little more detail and then we'll go into the categories of the general government.

After that meeting, the 29th will be the school division bringing their budget proposal to the board and also we'll focus more on healthcare because we think that's such an important topic to continue to talk about.

As we move into March, March 3rd will be your third board work session and this will be a focus on the capital improvement plan.

Also at that time, if we have other areas that we haven't completely covered, we will also catch up if there's anything on the general government or other areas that you'd like more discussion on.

And then on the 8th of March, that's when you will finalize your tax rate for advertisement and you will approve your proposed budget.

and your second public hearing on the board's proposed budget will be on the 30th of March.

Then moving into April, the 12th is very important.

That's our public hearing on the calendar year 16 tax rate.

That's also the time where the board can approve the budget and the tax rate.

I believe the 13th is an option the following day if the board would desire to confirm their tax rate and the budget on that date.

So that's what's ahead of us.

You were going over the calendar.

I have a hard time making sure that I'm reading the right chapters before the right work session, so I just wanted to clarify.

When you talked about on the 25th, so general government is basically all the chapters except CIP.

Yeah, we're gonna basically cover the order of your budget book.

We'll go over your overview of revenues and expenditures.

I will talk a little bit about some things that just cross all your departments, so there'll be some things that'll just be true for all the departments.

Any other questions for Lori at this time on the scheduling and whatnot?

And how about some clarifying questions for our county executive?

Does anybody have any questions they'd like to ask Tom at this point?

Okay.

We definitely have to take this in.

I do think it's important

and what Tom has presented that we see this as our budget this year, that we move out of a difference between the county executive and the board budget.

There's gonna be an opportunity for us to provide some input.

There may be some adjustments here on the expenditure side.

But I do think it's very important that this budget be one that we collectively own together

as we go forth this year.

I think it's going to be really, really important because of the nature of what we're facing over the next three years.

And I do want to compliment the county executive and the staff on presenting to us today a proactive approach

which was sound budgetary concepts based on the board, the staff and the community establishing priorities for services and for revenue together.

I think that's where we need to go.

instead of this being something that's proposed by the Board of Supervisors and then we go out to sell it to the community.

I think this is one where as we face a very stark potentially fiscal environment over the next three years that we all have to be in this together and work together through the challenge that we're facing.

So I thank you for doing that.

I was going to say we do want to get some input at the right time on how you all would like to proceed with that and certainly there's been town hall meetings in the past and there's been thought about maybe making them regional meetings so we can engage the public in different ways at the high schools or something and certainly Lee Catlin is anxious to

Well, and if we're ready to talk about that kind of stuff, I can't hear myself talk.

If we're ready to talk about that stuff, then I have some thoughts that I'd like to share with the rest of the board.

But without a doubt, I suggested to Tom that maybe a new approach this year is the county leadership going out

and doing kind of a road show kind of approach to where they are presenting this information unfortunately dozens of times, say unfortunately for the time consuming efforts that they'll have to put into this.

But the result is instead of it, like Rick was saying, instead of its individualized supervisor budget presentations and discussions, it's us and county staff engaging the public

throughout the community.

That doesn't mean we can't still have our own little meetings before or after.

It just means that we're getting everybody in the room that can help with the discussion so that the public has multiple opportunities to listen to what's going on.

I think the benefit is it's the same information.

So if someone can't make one meeting, they can

If they can't make it at KTEC, they can go out to Crozet a week later or a few days later and see the same presentation.

What I would hope, and this might be a public meeting nightmare for Larry, but I would hope that more than three of us would actually show up at these meetings and be there to listen to everybody's feedback instead of just our constituents in our districts.

I think it would be an interesting approach.

I don't think it's ever been done before.

The workload that might be on staff might be a little daunting, but I think the outcome is we would hear more robust discussion.

I think if the public knows that more than one or two of us are gonna be at a meeting, they're probably gonna show up more likely to make sure we all hear their thoughts.

And then I'll end with, I sent a link to y'all today that someone had referenced to me.

It's an excellent link, the Smart Seaville

or SevilleSmart.com, I forget what it is.

If you look at me on Twitter, I put the link on Twitter, it's a very, very good tool to simplify this big book of information and it really makes it not just information that

the public looks at, but it's an interface that allows them to drill down at different department levels to understand that when we're funding the police department, where does that money actually go?

That it's not going to frivolous expenses.

Mainly it's to staff and what those staff are for.

It's a really interesting tool and I would encourage us to think about finding a way to input that data.

Thank you.

I do think that the high school presentations are a great idea and to even if people have come to a neighborhood meeting this will be another way for them to then take what they begin to learn at some smaller group and take it to a bigger meeting or have multiple chances so whichever comes first the big or the small attendance it'll still be better because there's so much to take in and there's so many different things to discuss there's no way to do it all in two or three hours anyway so

Two years ago when the new board took over, you all were very important.

It was very important about engaging the public.

And I think we had 18 town hall meetings back then in that first time.

So actually, if we move to these other kinds of meetings,

Staff has actually done this type of thing in the past, and it's been a number of years, but we typically were doing more of that kind of work than we were lots of town hall meetings, so I think, I know you'll still wanna do your town hall meetings, but if we can get organized around these, I think it's actually gonna make it even more manageable for staff, particularly if we're not then going to individual town hall meetings.

That would be kinda overwhelming.

and I think it's gonna, I'd like to see certainly us reaching out to other stakeholder groups.

I think the idea of staff and administration and our board working together is wonderful.

But we also have stakeholder groups, the chamber, some of the rotary clubs.

I'd like to see us presenting this information to groups like that.

I will mention that that is a normal part of our process to bring stakeholders together.

I'm just simply saying that we want to make sure that we reach those groups somehow or another.

There may be different ways to reach different groups.

Again, I think expanding that's good.

Any other comments or questions from anybody?

Okay, well, thank you very, very much for the

Someone in the press, we did a briefing for the press yesterday, which they had to hold until today, and one of the questions was, is there any good news?

And there was a little chuckle on that.

Thank you for all the work.

So we have take a deep breath and have one more thing before we adjourn and And this I wanted to just take a few minutes at the end of this meeting to give the board an opportunity to weigh in if they'd like as a group on the City County on the joint meeting that we're going to be having on our

March 1st and this is going to be a two hour lunch meeting.

We're planning to stay at the 30,000 foot level and we hope to leave that joint meeting with some general agreements on where we can work together best and broadly how that should be accomplished.

The topics that we are looking at are transportation, education confined to KTEC and Pre-K, the environment and redevelopment and affordable housing.

And although the city and the county work well together in most areas, there is some room for improvement.

and we are thinking about using transportation as an example where communication can be improved so that we will probably spend a bit more time we will spend a bit more time on transportation and a very important aspect of the discussion with the city will be an agreement that each each jurisdiction staff will evaluate how decisions are

that are made by that jurisdiction affect the other jurisdiction.

I think that's going to be very important.

I will say that Brad and Diantha have been working with Chip Poyles from the TJPDC and counselors in how to kind of set up and present the transportation aspect of this.

I think that the small introduction to the transit is a great way to start and then from there hopefully there will be a targeted next step which the larger groups can spend a lot more time on to solve a particular issue if one comes up and is identified.

Just what's not on the agenda, for me dealing with or getting in front of this aging dynamic, we're still wrestling with what really determined it because it's not

We're not talking about health issues anymore as much as people like Rick over here who are very active 60 plus year olds who are going to demand quite a bit from our community and we want them to live here of course and what that really means for Charlottesville and Albemarle.

It's a regional issue.

I think it's on the

on the very beginning edge of a discussion but clearly we don't have time to discuss it on March 1st but I think at some point we really need to figure out how to get it on the city and county discussion before my fear is is that the city and the county are going to start to make decisions on this these topics or topic

in isolation of each other and then five years from now we'll find ourselves to where we have conflicting decisions or decisions that don't quite line up that we're trying to figure out how now to line up.

So to get together before we are starting to make critical decisions and then 10 years from now maybe some people will praise us for actually getting ahead of some issues.

I was going to say aging really touches on a lot of what we're talking about as well.

It does.

We need to really make sure it's at the forefront, or at least part of the discussion, Brad.

Yeah, and I think it's like economic development.

We shouldn't see it as a silo as much as it does have its vertical, but it has its horizontal impacts as well.

Someday maybe we'll start seeing these things as a matrix.

One other question.

Excuse me.

Is there a time on the agenda for an update, perhaps from the some staff level of the kinds of things that have been in process over the last year and if they've been resolved?

I mean, the Woollen Mills is an example that I would like to know from the city staff what they've done to engage to help resolve that issue.

And so if they have an advance warning that that's a question that's coming,

I would say that's extremely important and we need to get an answer.

I don't know that this will be the venue to get that, but I think we should try to do that as soon as possible.

today or tomorrow or next week.

There we go.

I'll get you an update.

I was gonna comment on Brad's point, which I think is a good one, working towards a goal of policy alignment.

That kind of policy alignment will also factor into the kind of efficiencies you're looking for.

One of the costs that, we're looking at the cost for government, that's gonna be a priority for us, but it also, we should be looking at the same time, Neil's not in the room, so I'm gonna insert Neil in the discussion.

to provide also ways that the policy alignment that we can create efficiencies for citizens utilizing governmental services and look at that and look at discrepancies in fee structure between the two and try to reach greater compatibility.

But I do think if we can get buy-in on these four topics, we can start then moving from 30,000 feet

down gradually coming in maybe a 10,000 to have discussion about what kind of groups should be put together by the city and the county to start looking for ways to achieve greater policy alignment between the two and then making recommendations based on the legal implications to codes in the city and the county which are not in sync and some of those

Discrepancies may be relatively easy to fix, others much more challenging.

But we know already, and this is where there's a good side of this, when we go into this process we need to remind ourselves that we do have a lot of policy alignment in the police department.

in Fire Rescue, in Social Services, not all areas, but there's a lot of handoff between the city and the county on Social Services and clients that they're working with.

So we're doing some of this already, and we need to build on that spirit, because it's not as though we're Johnny Appleseed spreading seed out in the wilderness.

The fact of the matter is there's a lot already of sprouted

the timber and trees out there that have been planted previously in other policy areas.

Yeah indeed.

So that could be circulated beforehand to both counselors and to the board members.

Okay, not for this meeting necessarily, we just get it.

I think anything that we can give ahead of time to both groups for them to look at, which is what I think Ann's talking about.

Not that it would necessarily be a part of the discussion because we have limited time for this meeting, but I think the information is helpful and I think that's what you were getting at.

We talked about that, remember, and we said one of those documents I just happened to remember was where we stood on pre-K was one example

because we received a report and one of us asked, has Charlottesville seen this report?

Because we could both be on the same page at least and Ann had a few other documents as well.

And the social services and housing are the ones that are particularly, the jurisdictions are in different entitlement categories federally and so combining those efforts and the funds would never combine and so we need to just walk

away from that particular issue and go on and find something else that we can fix.

You're referring to the whole process.

Yes, there was education, fire and rescue, and our social services was the third one.

And each one has a report that's very easy to read and would

Understood, sure, yep.

Is there any other staff support needed on this?

What I'd like to do is meet with you later just to discuss some of the agenda items and how staff can help set that up if it's possible.

We're trying to limit your time consumption in this but we do have some suggestions and I'd like to meet with you with that and we can go through that.

Yeah, the background information will be compiled right away.

The background information, yeah.

When you talk 15 minutes on housing, I guess the question is whether you're looking for staff support or something.

No, no.

This is a general conversation and the staff support really will really be confined to the transportation thing with the TJPDC.

Chip is prepared to do that.

I think another 30,000 square foot, or not square foot, that's my other world, 30,000 altitude look at things along with the economic development and the aging, the kind of underlying theme is kind of a quality of life, for lack of a better cliche, but it seems like with the city, well that article that you sent, Diantha, about the 11 things that indicate that a city is

a wonderful place to be.

One of them was having a, that's a great article from Atlantic Magazine, but that referred to having a downtown area that was a central point and clearly Charlottesville is our downtown area.

But I think, you know, especially in budget season we can get kind of bogged down and everything is about numbers and dollars and

We are that silent partner in all those awards that they get.

That's exactly right.

Okay.

Is the discussion finished?

Do we have anything else?