May 28, 2025 Special Call Meeting Budget Presentation The Martin County Board of Commissioners met in a Special Session on Monday, May 28, 2025 at 7:00 p.m. in the Commissioners Boardroom at the Martin County Governmental Center, 305 East Main Street, Williamston, North Carolina, 27892. ASSEMBLY Present in the Boardroom: Chairman Joe R. Ayers, Vice Chair David "Skip" Gurganus, Commissioner Dempsey Bond Jr., Commissioner Jeremiah Taylor, and Commissioner Ronnie Smith. County Manager Drew Batts, County Attorney Benjamin R. Eisner, Clerk to the Board Julia S. Rease, and Finance Officer Angela Raynor. Others in attendance: Sheriff Drew Robinson and Bear Grass Mayor Charlotte Griffin. AGENDA APPROVAL Commissioner Gurganus made the Motion to Approve the Agenda with a Second by Commissioner Smith with The Motion was Carried unanimously (5-0). NEW BUSINESS-PRESENTATION OF PROPOSED BUDGET FISCAL YEAR 2025-2026 Martin County Manager Drew Batts presented the proposed budget for Fiscal Year 2025-2026 and the budget message is as stated: G6 Commissioners: Please accept this budget message in presentation and recommendation of the County Manager's proposed budget for fiscal year 2025-2026 ("FY 2025-2026 Budget" or "Budget"). The FY 2025- 2026 Budget totals $46,690,488.00 for all County fund operations, capital improvements, and debt service. Statutory Requirements North Carolina General Statute $ 159-11(b) requires the County Manager, as the budget officer, to submit a proposed budget and budget message to the governing body by June 1st of each year. On the same day that the budget is presented to the governing body, the budget officer shall file a copy ofit in the office of the clerk for public inspection and schedule a public hearing. This public hearing has been scheduled for the regularly-scheduled Board of Commissioners Meeting on June 11, 2025 at 7:00 p.m. North Carolina General Statute S 159-13 specifies that no earlier than 10 days after the budget is presented to the governing body and not later than July 1st, the governing body shall adopt a budget ordinance. However, pursuant to North Carolina General Statute S 159-16, [In the case adoption of the budget ordinance is delayed until after July 1, the governing board shall make interim appropriations for the purpose of paying salaries, debts service payments, and the usual ordinary 2 expenses of the local government or public authority for the interval between the beginning of the budget year and the adoption oft the budget ordinance.' 99 Budget Development Process Departments and County Agencies met with the County Manager and the Finance Officer throughout the month of March for submittal and discussion of budget requests. Presentations to the Board ofCommissioners oft those requests were made on March 17th. Outside agencies seeking funding from the County delivered requests via mail and were afforded an opportunity for presentations of their requests to the Board of Commissioners on March 18th. On April 14th, the Board of Commissioners held a joint budget meeting with the Board of Education where Dr. Michelle White presented the budget request on behalf of1 the Board of Education. General Fund, Enterprise Funds and Other Funds The Budget is composed of revenues and expenditures for several funds, including the General Fund, the Water District (Enterprise) Funds and Other Funds. The General Fund accounts for resources traditionally associated with government that are not required legally or by sound financial management to be accounted for in other funds. Enterprise funds consist ofa grouping of activities whose expenditures are wholly or partially offset by revenues collected from consumers in form of fees and charges. Enterprise funds are traditionally run more "like a business." 99 Revaluation North Carolina General Statute S 105-274 states all real and personal property located within its jurisdiction shall be subject to taxation unless it is otherwise exempted or excluded from taxation by law. North Carolina General Statute S 105-286 requires each county to conduct a General Reappraisal of all real property at least once every eight years. The primary purpose of any revaluation program is to provide equalization among all property owners, as well as among all classes of property. Martin County's most recent revaluation was concluded as of Jan. 1, 2025. The next revaluation should be completed by January 1, 2033. According to North Carolina General Statute $ 159-lle in each year in which a general reappraisal of real property has been conducted, the budget officer shall include in the budget, for comparison purposes, a statement of the revenue-neutral property tax rate for the budget. The revenue-neutral property tax rate is the rate that is estimated to produce revenue for the next fiscal year equal to the revenue that would have been produced for the next fiscal year by the current tax rate if no reappraisal had occurred. To calculate the revenue-neutral tax rate, the budget officer shall first determine a rate that would produce revenues equal to those produced for the current fiscal year and then increase the rate by a growth factor equal to the average annual percentage increase in the tax base due to improvements since the last general reappraisal. This growth factor represents the expected percentage increase in the value ofthe tax base due to improvements during the next fiscal year. The revenue neutral property tax rate for this FY 2025-2026 budget is .0658. 3 Since property taxes are based on value, it is important to have all property valued periodically on a uniform basis, using a modern system of valuation. Property values change with time. Some values go up, some go down, and others remain static. Appraisals must be updated, or inequities in tax distribution will result. Reappraisals cover all residential and commercial land and structures, which includes homes, apartments, condominiums, office buildings, stores and warehouses. Reappraisals do not include what is classified as individual personal property, such as vehicles, boats, airplanes, and business equipment. These property types are valued annually. North Carolina General Statute $ 105-283 requires appraisals to be made of each property's" "true value in money" or "fair market value", which is the most probable price a property would bring in a competitive and open market. Property values for a reappraisal are determined by comparing what similar properties are selling for, what it would cost to replace one's property, the potential income or highest and best use of one's property, as well as many other factors that may affect value. During the revaluation, professional appraisers analyze data by reviewing of properties and establish the estimated fair market value (i.e., the price a willing seller would receive from a willing buyer). FY 2025-2026 Budget Overview Tax Rate: The Budget is based on a reduction in tax rate from .81 to a tax rate of.72 per $100 valuation, plus the applicable fire district tax. Revenues: The County is anticipating general fund revenues totaling 840,481,288.00, which includes ad valorem tax collection of $18,921,913.00, sales tax collection of $5,999,463.00, and use of fund balance ofs $2,661,694.00. o Raises: The Budget includes a four percent (4%) cost of living adjustment (COLA) for employees. Staffing: The budget includes funding for no new, permanent positions. e Health Insurance: The cost of the State Health Plan for employee health insurance is anticipated to increase this year. The overall increase is still unknown at this time. Clerk of Court: This 2025-2026 FY budget includes a sum of $15,000.00 for the clerk of court to make repairs and improvements to the local courtrooms due to age and wear. Board of Education: The Board of Education requested $7,076,910.00 in Current Expenses and $1,043,025.00 in Capital Outlay. Proposed in the Budget is $6,242,400 in Current Expenses and $666,060 in Capital Outlay, which remains at a neutral level to funding that was included in the budget ordinance from FY 2024-2025. Martin Community College: Martin Community College requested $1,150,950 in Current Expenses and $60,000 in Capital Outlay. Proposed in the Budget is $1,098,664 in Current 4 Expenses and $61,200 in Capital Outlay, which amounts to a 0% increase in what was included in the budget ordinance from FY 2024-2025. Jail: The 2024-2025 funding level for the Bertie-Martin Regional Jail of $1,346,486 will be maintained in the Budget. Martin County Sherriff's Office: The FY 2025-2026 budget will include two new F150 trucks for the department at a cost of $50,000 per truck. They are also investing $33,000 into a new K9 as well as a tactical drone, Health Department: Marin-lyrel-Washingion District Health received funding of $477,807.00 in the budget ordinance for FY 2042-2025. The budget for FY 2025-2026 includes $487,363.00, an increase of 2%. Mental Health: This Budget includes maintenance of the current funding of $48,462 for Trillium. Library: This budget reflects a slight increase to $112,168 for the Beaufont-Hyde-Martin (BHM) Regional Library Economic Development: This Budget appropriates a contribution of $99,167.00 to Martin County Economic Development Corporation. CADA: The Choanoke Area Development Agency (CADA) is the Community Action Agency and Community Services Block Grant (CSBG) administrator serving Martin County. Its mission is to assist low-income citizens achieve self-sufficiency. CADA requested $30,000, which remains neutral to the budget ordinance for FY 2024-2025. Rescue Squads: In years prior to 2023-2024, the County utilized a funding model which included a flat funding level, plus additional amounts per call and additional amounts for advanced levels of service. In the years following the closure of Martin General Hospital the Budget has included additional funding of $1,358,190.00. This level of funding has not changed from FY 2024-2025 budget ordinance. Use of Savings: The budget includes a Fund Balance appropriation of $2,661,694.00, which is a reduction of $820,991.00 from the previous FY 2024-2025 Budget. Use ofs Savings - Fund Balance and Pre-payment ofLease for Martin General Hospital Fund Balance The County's savings consists ofthe Fund Balance from the General Fund, as well as the Hospital Fund. The state requires a minimum of 8% in the Fund Balance for cash flow purposes. The 8% Fund Balance requirement is the minimum amount needed for cash flow. 5 Martin County's main source of revenue is the property tax, which is mostly collected between November and January. The County needs its cash reserves to pay for bills in July, August, September, and October. Additionally, the county needs to maintain a certain number of reserves for unforeseen events, such as hurricanes. A Fund Balance Policy was established on April 10, 2013 and is intended to address the needs of Martin County in the event of unanticipated and unavoidable occurrences which could adversely affect the financial condition of the county. This policy ensures the county maintains adequate fund balance and reserves in the county's general fund balance to provide sufficient cash flow for daily financial needs, provide funds for unforeseen expenditures, and offset significant economic downturns or revenue shortfalls. The Board of Commissioners adopted a policy / goal of maintaining a Fund Balance of 20%. A year over year balance for the previous eleven years from 2014 through 2024 is as follows: YEAR TOTAL 2024 $25,928,189 2023 $19,456,612 2022 $16,555,104 2021 $14,836,484 2020 $11,849,729 2019 $11,510,902 2018 $11,994,271 2017 $11,972,890 2016 $12,033,819 2015 $10,599,984 2014 $ 8,648,701 Prepayment of Lease for Martin General Hospital Those funds held as the Hospital Fund consists oflease payments paid in advance for a 30-year lease for the Martin General Hospital building, which was entered into in 1998. 1/30" of these funds are considered "earned" for each year of actual use of the hospital building. However, with the filing ofthe Chapter 7 bankruptcy case by Williamston Hospital Corporation, the Chapter 7 Trustee has rejected the lease with the County. Determinations as to remainder amounts of the advance lease payments will be made through the Chapter 7 case which remains open and ongoing in the United States Bankruptcy Court for the District of Delaware. 6 A year over year balance for the previous eleven years from 2014 through 2024 is as follows: YEAR TOTAL EARNED AVAILABLE 2024 $12,635,682 $9,122,226 2023 $12,097,220 $9,122,226 2022 $11,831,387 $8,029,726 2021 $11,824,522 $7,716,194 2020 $12,819,154 $8,144,159 2019 $12,729,912 $7,488,250 2018 $13,516,770 $7,738,441 2017 $12,411,798 $6,036,802 2016 $12,380,235 $5,438,572 2015 $13,115,690 $5,607,359 2014 $14,806,697 $6,731,700 Looking Ahead A number ofissues with potential budget implications are in the foreseeable future for Martin County. These issues include the following: 1. The closure ofMartin General Hospital, through the Chapter 7 bankruptcy case of Williamston Hospital Corporation, placed current and future healthcare in Martin County at a critical juncture. The County is undertaking the process to understand what may be required of the Martin General Hospital building in order for a provider to open in its current state or what alternatives may be available. 2. Martin County continues to struggle with the debt service from Martin County Water Districts #1 and #2, as well as a small customer base. This situation is exacerbated by the debt service and operational costs of the Martin County Regional Water and Sewer Authority (MCRWASA). Martin County is a partner in MCRWASA, and Martin County Water Districts #1 and #2 purchase treated water on a wholesale basis from MCRWASA. 3. The budget relies significantly on the use of savings to balance the budget. This situation needs to be continuously monitored over the next few years and appropriately managed, SO Martin County does not grow overly reliant on savings. We are working to reduce the amount of fund balance appropriations year on year. Such a practice is not sustainable. 4. In order to retain and recruit high performing employees, Martin County will need to keep an eye on the market rate of salaries, across all County positions, in nearby jurisdictions. 7 While Martin County has some challenges, a number of positive factors also provide some optimism for the future: 1. As part of this year's budget process the County Manager and Finance reviewed each departments request and provided funding where appropriate and necessary. In following the steps of the budgeting process, we are able to propose a lower tax rate for Martin County; we will propose to reduce the rate from $0.81 per $100 valuation to a tax rate of $0.72 per $100 valuation. We hope that the county can adopt this lower rate as way to enhance the quality of life of the tax payers in the county, as well as enhance Martin Counties' appeal to those outside ofthe county. 2. Numerous improvements funded through grants are being made to the Martin County Airport (MCZ), which will assist in bringing aviation related business and tourism to the County. 3. The County has received a request for proposal for the Hospital from ECU Health. We will continue to nurture our relationship with ECU Health and provide any assistance that we can as the process moves forward. Conclusion Since March 2022 I have enjoyed working with the Board of Commissioners, County staff, and citizens as the County Attorney. But it has been a truly great honor to have served as the Interim County Manger since November 1, 2023. This tenure has been made easier by the fact that the County is fortunate to have a dedicated staff, diligent citizenry, and continued leadership from the Board of Commissioners. I would like to offer special thanks to Finance Officer Cindy Ange in what is her final budget preparation cycle prior to her retirement at the end ofthe fiscal year. Respectfully submitted, Drew Batts Martin County Manager 99 County Manager Batts thanked all department heads for assisting him. Commissioner Smith asked to state a comment and said that the County Manager did a great job. Chairman Ayers thanked County Manager Drew Batts, Angela Raynor, Cindy Ange, and Donna Zube. Chairman Ayers stated that the revaluation process had a late start, there were new staff members in the Finance and Tax Assessor's Office, and a new County Manager. The issue with the revaluation running late, was due to a contractual reason and the Finance Office had to configure numbers and there were over 700 appeals. Some of them may be approved and if sO, the exact amount of revenue is unknown. There could be changes as appeals are handled. The public hearing for the budget was announced to take place on June 11, 2025. The Finance Officer and County Manager would reportedly be able to have more data from the revaluation at that time. 8 The Board was presented the budget and were asked if there were any questions that need to be addressed. Chairman Ayers asked County Attorney Benjamin Eisner if there were any legal aspects that needed to be addressed in regards to the budget and there were none. Commissioner Smith thanked all of those involved with the budget process and he was happy with the tax rate as it would make a slight difference. Commissioner Smith stated his appreciation to the Board. Commissioner Bond Jr. thanked the staff and wanted to take some time to review the proposed budget and come back to the Board for discussion, if the Board was in agreeance. Commissioner Taylor thanked the staff and commended County Manager Batts for his efforts in creating a budget, especially because he had just started in his position as County Manager. Commissioner Gurganus commended County Manager Drew Batts and County Attorney Benjamin Eisner. Chairman Ayers reiterated his comments and expressions of appreciation for staff and their hard work on the purposed budget for Fiscal Year 25-26. ADJOURNMENT At: 8:05 p.m. Vice Chairman Gurganus made the Motion to Adjourn the meeting, with a Second by Commissioner Taylor. The Motion was Carried unanimously (5-0). S - Rhers Joe R. Ayers, Chairman Martin County Board of Commissioners Bali Slans Julia S. Rease Clerk to the Board