More from The Totem

I am sending this e-mail to address the flood of inquiries I have received regarding budgeting/taxes. Please let me know any additional questions you have.
The last BOC worked to save all the funds needed to cover the three agreed to capital projects.app. $18-$24 million for the Shawboro(Sligo) and Jarvisburg elementary schools. (This figure was based on the BOE's projections of costs they received from the architect).app. $18million for rec/center(projected costs by the architect)The Moyock library need was determined to be met in the short term by a leased facility to be paid for largely by occupancy tax. Any additional costs were covered in the current budget and were not considered in the savings.The school projections for the two Elementary schools from the BOE increased substantially in the last few months but bids were not opened and actual numbers known until December, 2006.Those numbers reflected an increase from the projected BOE number of app. $24million to app. $35 million. As a result there was about a $1million dollar difference between savings and costs for these three buildings that whoever was going to be on the BOC after the numbers came in from the bids would have to manage.In the meantime, the newly elected members of the BOC decided to scrap the leased library system to be paid largely from occupancy tax and commit to a cost from the general fund of over a million dollars and an immediate construction timetable. I believe that figure is very conservative and likely to be more. This decision was sold to the public with assurances the costs would be covered by “found” transfer tax revenues to quash complaints about losing the already planned, budgeted and more imediately available leased library facility. The truth is those land transfer revenues were calculated in to the savings already projected to be used on the three capital improvement projects, the two schools and the Rec center. In addition, our land transfer revenues are down 48% over the last year as the real estate market is in a lull.Now the County has a deficit between savings and costs for commitments to capital improvements of approximately $2.2 million, which assumes that the library construction costs will not be more when bid, that according to the County Manager will require either a 3cent tax increase or borrowing. In addition, we may be required to delay the recreation/senior center project.The former BOC did not intend to borrow any money for these three projects they committed to. In fact, even with the dramatically increased school projections, there could be in my estimation with over 20 years government experience, savings found to make up a difference up to a million dollars. However, when you need to make up over $2 million, it is a different story. For example, both the new elementary schools are using the same prototype design plans to save money on developing new designs. However there are significant costs in adapting those plans to our specific locations like engineering and site plan work requirements. The school board bids out through two options, one has one company bidding the whole project, then that company subs, or, option two, you take sub bids, total them, hire a construction management firm to oversee(MBKahn). The BOE chose option two at a cost SAVINGS over the bid for the first option of $69,728 for Jarvisburg elementary. The last time the BOE went with option one with no construction manager was when the new high school was constructed which resulted in millions in cost overruns and two years delay. In contrast, when option two was selected and MB Kahn hired by Currituck for the Moyock Middle School, that project was delivered on time and on budget.Chairman Nelms proposed looking at eliminating MB Kahn from option two and possibly having County staff oversee the project. I have contacted New Hanover County which has such in-house staff for projects and they have recently decided to contract out capital construction project oversight.Now to the new high school. The former BOC fully intended that the moneys currently committed to the current high school’s bond debt service rollover to help finance the costs of the new high school’s debt service. We have very successfully funded our schools this way while balancing the interest to keep taxes low. Additional required funds would come from our continued accumulating savings programs and other resources we have used in the past.The former BOC worked very diligently and remarkably successfully in my estimation at balancing the interest in keeping Currituck taxes low while meeting needs for services. The BOC did this and still provided two tax DECREASES. The former BOC did the following projects:1. Constructed a new Judicial Center, Health Department, Moyock Middle School, major Airport Expansion projects, Southern Outer Banks Water System, Maple Park facilities, Southern Currituck Sound Park facilities, Crawford Fire Station, Waterlily Fire Station2. Major renovations to Griggs Elementary, animal shelter facilities, Central Elementary, Moyock Elementary, Knotts Island Elementary, historic Courthouse facility, Whalehead Club, Maple Jail and law enforcement center, Moyock Fire StationWhile some complain about the Horse Farm purchase and the temporary Moyock library, these projects were funded with occupancy tax which by law can only be used for very restricted purposes but we looked at using those funds in ways to accomplish goals without causing a deficit in our general funds which would result in what we face now, a tax increase or borrowing. There is no deficit in occupancy tax revenues like we now face in general fund revenues. In fact, we have a very healthy occupancy tax fund balance which is exactly why the former BOC wanted to use occupancy tax funds to bridge and meet the immediate Moyock library needs.It was a prudent response, not lack of proper due diligence as Chairman Nelms claims, to what our projected revenues are, what our projected needs/costs are and the best balance of the use of varied funds. It is my opinion that we could avoid a tax increase or more borrowing if we prudently managed the use of occupancy tax dollars to fund a temporary Moyock library facility as planned by the former BOC, continued forward with our current promised capital improvement projects using savings and continued the planned savings and financing for the new High School.In NC, by law, a County must re-evaluate property values once every eight years. Also by law, the tax rate must after such a reevaluation, be set at a “revenue neutral rate“. That simply means the rate is set to provide the County only the same amount of tax revenue as the previous rate did. The former rate before the re-evaluation was 62 cents per hundred. The law required nothing less than revenue neutral which the BOC complied with when it set the new tax rate at 32cents. This rate met the legal requirements following a re-evaluation and met the County’s projected needs and recommended savings obligation.I hope that provides an understanding of where we are and how we got here.
Best Regards,
Owen Etheridge