Budget Work Session Agenda April 17, 2024 6:00 P.M. 1. Call to Order (Dr. Alan Edwards, Board Chair) 2. FY25 Budget Goal is for Board to Finalize its Budget for the April 23rd Regular Meeting Request for Amendments to Proposed Budget Per "Straw Vote" (4 or more votes) April 23rd Regular Meeting at 6:00 PM - Finalize Budget and Authorize PH Notice May 13th at 6:00 PM - PH on FY25 Proposed Budget May 22nd at 6:00 PM - PH on Proposed Real Property Tax Increase (State Code 58.1- 3321) May 28th at 6:00 PM - Budget Adoption Discuss Options for Lowering Real Property Tax Rate (see attached memo) 3. Other Discussion Items Capital Improvement Program (CIP) = See Attached Letter from Amy Carr, Commissioner of Revenue - Elderly Tax Relief Program - See Attached Land Use Impact - $4.1 Million Estimate (Roughly 20 cents on real property tax rate) Unassigned Fund Balance and Budget Stabilization Fund = Need to Build Up Over next few years See Attached Solid Waste Fee - Personal Property Rate VS. Real Property Rate i. Revenue Budgeted = $1.1 Million ii. Personal Property Rate Equivalent - Roughly 63+ cents increase needed iii. Real Property Rate Equivalent - Roughly 5+ cents increase needed New Market Road Smart Scale Project Funding Gap i. Met with VDOT per its request on April 11th ii. Funding gap of approximately $1.2 million iii. County requested to contribute to project iv. Need to let VDOT know yes or no soon V. Ifyes, amount? (Better chance ofbeing funding by CTB) vi. CTB to decide whether to fund or cancel project School Construction Grant/Literary Loan Application - Need to set a special meeting for School System and Davenport to Present/Board Adopt Required Resolution to move forward if Board wishes to proceed - Tuesday, May 7th or Wednesday, May gth (see attached email) 4. Adjourn Southampton County 26022 Administration Center Drive P.O. Box 400 Courtland, Virginia 23837 Phone 757-653-3015 Fax 757-653-0227 1749 Memorandum April 17, 2024 TO: The Honorable Board of Supervisors FROM: Brian S. Thrower, County Administrator BST SUBJECT: FY25 Budget Options Below are options for your consideration as it relates to lowering the proposed $0.86 real property tax rate as recommended in my proposed budget down to $0.79 as some ofyou have suggested. 1 penny on the real property tax rate equates to approximately $213,628. As such, an additional reduction of 7 cents equates to $1,495,396 in needed savings under this scenario. Economic Development Site Study (Remove) $120,000 Water and Sewer Rate Study (Remove) $50,000 Career Tech Funding (Remove) $50,000 Holiday Bonus (Remove) $23,000 Employee APPVelpes/Rerognition (Remove) $25,000 School Funding (Reduce) $411,261 Radio Maintenance (Reduce) $273,000 Human Resources & Risk Management/Satety Position (Remove) $157,798 HR Director Office Supplies (Remove) $3,000 HR Director Equipment (Remove) $2,500 Sheriff s Office Hiring Bonuses (Remove) $62,500 County Buildings Repair (Reduce) $50,000 3 of the New Positions - Fund for % ofYear (Reduce) $169,806 Consulting/Financial Services (Reduce) $1,362 Frankin/Southampton County Fair Projects (Reduce) $2,000 Board of Assessors Office Supplies (Reduce) $3,000 Treasurer Postal Service (Reduce) $5,000 Law Enforcement Hospital Plan (Reduce) $14,169 Detention Hospital Plan (Reduce) $5,812 Inspections Hospital Plan (Reduce) $10,000 Refuse Disposal Contractual Services (Reduce) $56.188 $1,495,396 Recommendation I recommend you adopt my proposed FY25 budget as presented on April 10, 2024 at the $0.86 rate. However, the options presented above allow you to lower the real property tax rate should you choose to do SO. Capital Improvement Plan Requests FY25-29 Department Capital Project/Expense Cost FY Community Dev. Vehicle $43,000 27 Utilities Utility Ext. Turner Tract/PRTI $180,000 26 Utilities Turner Tract Well Construction $400,000 26-29 School System New Elementary School $18,500,000 25 Voter Registrar Office Expansion/New Office TBD TBD AMY B. CARR Commissioner of the Revenue Southampton County P.O. Box 760 Courtland, VA 23837 757-653-3030 ameoufamponomyers February 22, 2024 Mr. Brian Thrower, County Administrator P.O. Box 400 Courtland, VA 23837 Dear Mr. Thrower, There has been a very significant increase in the value of real property this year based on our countywide general reassessment. Even though our tax rate will be lowered to offset some of this increase, it will still result in higher tax bills for a large portion of our residents in 2024. This concerns me, especially for our older residents on a fixed income. strongly believe that we need to be proactive in facing these higher assessments and addressing the manner in which our elderly citizens will be affected. As you are aware, we offer a tax relief program for our elderly and lower income homeowners. This program is available to people that are 65 and older, have a yearly household income of $40,300 or less, and have a net financial worth less than $168,501. The relieved amount is in increments of 25%, depending on income, with the maximum amount of relief for which they can qualify capped at $1,000. We currently have approximately 140 residents that take advantage of this program. As we begin processing 2024 applications, we are seeing that citizens that have had to pay nothing in the past could be paying up to $500 this year. People that have been paying $400 could be paying $700 or $800 this year. There are a couple of options that we could possibly consider to lessen the impact for these citizens: 1) Increase the relief cap from $1000 to at least $1500 2) Increase the percentages of relief We need to put some thought into this situation and decide how to best handle this. I am starting the conversation by writing this letter in an attempt to help alleviate the higher tax burden that our elderly citizens of Southampton will inevitably be facing this year. Respectfully, Dmy B. Con Amy B. Carr Commissioner of the Revenue Southampton, Virginia Financial Policy Guidelines 2.05 Unassigned Fund Balance Policy The Board recognizes that the Unassigned Fund Balance Policy should be: A. 25% of the County's General Budgeted Fund Revenues Example Calculation: Based on the County's FY 2024 Budget, 25% translates into approximately $9,724,133 as follows: General Fund Revenues $ 38,896,533 X: 25% = Unassigned Fund Balance Target $ 9,724,133 Funds in excess of the Unassigned Fund Balance Policy target may be considered to supplement "pay-as- you-go" capital outlay expenditures, other non-recurring expenditures or as a greater buffer to General Fund balance. To the extent that funds are available in excess of the minimums described above (i.e., 25%), the Board recognizes that it could strategically utilize these funds, if appropriate. However, the Board also recognizes that maintaining reserves above the minimum Unassigned Fund Balance Policy target may be beneficial to the overall well-being of the County. Should any amounts above the 25% Unassigned Fund Balance Policy target exist, they should only be appropriated for non-recurring expenditures, as they represent prior-year surpluses that may or may not materialize in subsequent fiscal years. Amounts above the 25% Unassigned Fund Balance Policy target could be used for the following purposes (listed in order of priority): A. Increase Assigned, Committed, and Restricted Fund Balances as necessary. B. Fund additional reserves as deemed appropriate by the Board. C. Allocating such amounts toward equity funding of the capital needs, economic development or transfer to a capital project or capital reserve fund. 2.06 Budget Stabilization Fund In addition to the Unassigned Fund Balance, the County shall establish a Budget StabiizationFund, which shall be considered a part of the County's Committed Fund Balance. The Budget Stabilization Fund shall be used for unforeseen, emergency expenditures or unplanned, unforeseen declines in revenues. The Budget Stabilization Fund shall be initially established in an amount equal to 5% of Budgeted General Fund Revenues. Example Calculation as follows: A. Based on the County's FY 2024 Budget, 5% of the County's General Fund Revenues translates into approximately $1,944,827 as follows: General Fund Revenues $ 38,896,533 X! 5% = Unassigned Fund Balance Target > 1,944,827 B. Should future County budgets require additional moneys to be added to meet these requirements, the County will build up the required amounts over 3 Years To the extent needed, the Budget Stabilization Fund shall be used first, in priority before Assigned and Unassigned Fund Balances. See Section 2.08 for Prioritization of use of Fund Balances. - #11,665 960 E, Ttr Bosrel or FY14 Bpt ar75. Southampton, Virginia Financial Policy Guidelines 2.07 Replenishment of Unassigned Fund Balance/Budget Stabilization Fund Upon the use of any Unassigned Fund Balance or Budget Stabilization Fund for temporary funding of unforeseen emergency needs, which causes such fund balance to fall below the Unassigned Fund Balance Policy target or below the Budget Stabilization Fund target, the Board must approve and adopt a plan to restore amounts used within 36 months (i.e. three years). If restoration of the reserve cannot be accomplished within such period without severe hardship to the County, then the Board will establish a different time period. 3 As of. June 30, 2023, the County's Unassigned Fund Balance is $10,639,678. The County's adopted FY 2024 budget incorporates a $1,248,713 transfer from the General Fund Reserve. Incorporating this transfer, the County's Unassigned Fund Balance is projected to be at a level ($9,390,965) that is below the previously stated policies. The County will build up the required fund balance to be in compliance with the policies over the next 36 months (.e. three years). If restoration of the reserve cannot be accomplished within such period without severe hardship to the County, then the Board will establish a 4 different time period. 2.08 Prioritization of Fund Balances As indicated, the fund balance classifications outlined above are based on the level of restriction. In the 5 event expenditures qualify for disbursement from more than one fund balance category, it shall be the policy of the County that the most constrained or limited fund balance be used first. Funds shall be used in the following order: Restricted, Committed, Assigned, and Unassigned as they are needed. 6 2.09 Carryover Funds Carryover funds are unspent funds requested by departments to move out oft the previous fiscal year and into the new fiscal year raising the overall budget from adopted to amended budget classification. Reasons could include projects which were not completed in the previous year as expected or changes which occurred after the upcoming fiscal year acceptance of the new budget. 7 General operation funds typically should not be carried over from one fiscal year to the next unless funds are tied to a Grant. It is the responsibility of the departments to properly budget upcoming expenses for the new fiscal year. Capital Improvement funds, may be carried over if a project is not completed within the year, upon 8 recommendation of the County Administrator and approved by the Board. 9 7 5 Dg $4,556,070 ags $4,496,704 Dg $4,950,960 bbs S6,355,498 ag S6,537,278 Db $6,139,833 F0o $6,408,068 D;, $6,202,179 be $4,440,258 o o $3,927,758 a $3,843,732 Dis $4,701,416 0j0 $5,351,087 bj $6,154,109 Do $6,929,283 00 $8,402,056 D $8,879,596 b, $9,878,930 bs $11,379,969 bs $10,639,678 b $9,390,965 bs $9,605,465 Brian Thrower From: Brian Thrower Sent: Tuesday, April 16, 2024 5:46 PM To: Board of Supervisors Cc: Eric Gregory; Lynette Lowe Subject: Literary Loan Application Resolution = School Construction Grant/New Elementary School Honorable Board of Supervisors, Good evening. This is to let you know that Lynette and met (virtually) with Davenport and Company and school administration yesterday afternoon to discuss and gain a better understanding of the processes and timing involved with the school construction grant the school system applied for and was awarded. As you are aware, it is our understanding the school system was awarded a $5.5 million grant (30% of project costs) to construct a new elementary school to replace Capron Elementary. Kent Dickey, Deputy Superintendent with the Virginia DOE also virtually attended the meeting and answered several questions regarding process and timeline, should you wish to proceed with this project. In addition to the grant itself, the governing body (Board of Supervisors) also may also apply for a literary loan at 2% interest to cover the other 70% of project costs. Per Kent Dickey, the next literary loan funding application submittal deadline is May 23rd. In order to apply, both the Board of Supervisors and School Board would need to adopt resolutions authorizing the literary loan application prior to May 23rd. Furthermore, it was brought to our attention that the grant portion the school received should have been obligated within 6 months of award date. The school system was initially awarded the grant in June 2023. As such, that 6 month obligation window has passed. With that said, there appears to be wiggle room in regards to that 6 month obligation date and the school system can move forward accordingly, should the Board of Supervisors authorize such via the required resolution to apply for literary loan funds. The Board of Supervisors would need to set a special called meeting to discuss the project with the school system, i.e. school administration would be in attendance to explain and justify its request for this project to proceed. David Rose with Davenport would also be in attendance to summarize future impacts to the budget and tax rates. As of right nowy we are looking at the nights of May 7th and May gth to hold this meeting pending the Board's availability. Lynette and will be discussing this with you at tomorrow's budget work session. Thank you, Brian Brian S. Thrower County Administrator Southampton County 26022 Administration Center Drive P. O. Box 400 Courtland, VA 23837 757-653-3015 (Work) 1