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County Council, May 22

Is Council bending too far to avoid millage increases?
Potential conflict between Council and PRC
Warwick Jones

There were some tense moments in yesterday's special meeting of the Finance Committee. They were generated in the final shaping of the fiscal 2008 budget. The amount of a specific item was never a large issue. It was the broader implications, in particular, how far should Council go to avoid a millage increase? In the minds of some, Council it was going too far.

Much ado about not much
Following the last meeting of the Finance Committee, staff was requested to find about $290,000 for extra funding for some agencies, most connected with the Courts. Yesterday, the Committee deliberated for some time, pruning and grafting. Some of us were grateful that so much time was not spent on all of the other items in the originally-proposed $179 million budget. Ultimately, the Committee cut the $290,000 figure to $240,000 by including spending for only 9 months of some of the items, and by transferring funds previously provided for reimbursement of tuition expenses and other items.

But major change in fund transfers
Although there was no discussion, a staff memorandum noted a $7 million reduction in the transfer out of the General Fund to the Debt Service Fund. The transfer now becomes $1.5 million, allowing total disbursements of the General Fund to fall from a previous projected $179 million, to about $172 million. And in a way that we don’t understand, the Debt Service Fund was also able to reduce its transfers out. The upshot of it all is that no millage increase is requested for fiscal-2008 Debt Servicing. Staff had suggested a 0.7 millage increase in previous submissions to cover the increased obligations of Debt Servicing.

The problem of debt service is primarily related to the construction cost of the proposed County Jail. The 5 year Capital Improvement Plan projects a cost for the jail of $99.2 million. Other spending – Consolidated Dispatch, repairs to the Judicial Center etc. - are projected to add another $45.7 million to capital costs, bringing the cumulative total cost to $144.93 million by 2012. To cover the cost of the 5 year program, the County anticipates making bond issues totaling $125 million.

The Committee discussed the need for the jail and the uncertainty as to the final cost figure. But work was underway on design and engineering. A better idea of cost could be had later this year. Council could then react accordingly in relation for future financing.

All too much for Council member Darby
This all became too much for Council member Darby. There was no doubt that he thought the Committee was bending too far. He read a note that had been sent by the County's financial advisor, First Southwest Company of Charlotte. It related to what Council was doing in its budget deliberations. Delaying a millage increase and drawing down on fund balances to finance the budget could have an adverse impact on the County’s high credit rating, the note said. The Council member suggested that although there may be short term advantages in avoiding a millage increase, the long term cost could be high. Translation – the interest that investors would require on County issued bonds would be higher if its credit rating was cut. This higher overall cost would negate any benefit from delaying a small millage increase.

Based on the projected future operating causes associated with the detention facility, the County will likely need to increase tax rates sometime in the next five years. One option is to delay those increases as long as possible, while relying on draws from the fund balance to support operating costs. Such a strategy in the long-term, risks weakening the County’s strong financial position and if continued over a period of time, could result in a downgrade of the current County's credit rating.

Because the County's prime revenue source is divided between property and sales taxes, the rating agencies may question whether an undesignated fund balance amount equal to one month is sufficient to weather an economic downturn. An amount equal to two months would be looked upon more favorably in the eyes of the rating agencies. First Southwest.

The message Council member Darby delivered was clear. But it had little visible impact. At other Committee meetings, County Administrator Canterbury also had warned of the necessity of a large millage increase within the next few years to meet spending requirements. After Council member Darby’s interjection, Council went back to its deliberations and in the final vote, only Council member Pryor joined the Council member in voting against the General Fund budget.

Council member Condon again asks for discussion on Attorney position
The Budget deliberations and a comment by Council member Condon also provoked Council memberDarby. Council member Condon again suggested that some funds could be saved by making changes to the County Attorney’s position. She made the same point in the previous Committee meeting. Indeed, the County Attorney’s position has been debated a number of times over the last 2 years or so, and the frequency is probably irritating some Council members. The issue is seemingly simple – the Attorney is paid on an hourly basis but because of the volume of work, he spends most of his time on County matters. In consequence, he draws considerable income from the County. Obviously in the view of Council member Condon and some others, the remuneration is too high. They suggest the attorney should be a staff position.

Council member Darby, long a critic of some of the contracts awarded by the County specifically asked/demanded that if the attorney’s remuneration come up for discussion, so should the salaries of the LPA group – consultant to the County’s Roadwise program.

Council member Bostic successfully attempted to defuse an ugly looking situation by suggesting that discussion of the attorney’s position was not appropriate at this time. It was a legitimate subject but should not be part of the budget process. Let’s discuss it at a later date, he suggested. He also was complementary of the attorney and asked that any discussion be respectful. Council member Thurmond made similar requests.

PRC and Council at odds?
We were expecting to see some progress on the potential conflict between the Parks and Recreation Commission (PRC) and the Council. There no doubt has been much discussion, but only in executive sessions of each of the bodies. Completion of the executive sessions has been followed by only bland comments or motions from members. We were told to expect PRC members to speak at last night's Council meeting. But none showed up. Whether it was because of this, we don’t know, but there was no discussion.

The issue begins with a State Supreme Court decision relating to Richland County that gives the right to select members of PRCs within the State to respective Legislative Delegations. This means that Charleston County Council will have to give up its right to select members. But what then about the approval of purchases of land for parks etc? It seems that the Charleston County PRC feels it should be independent of the County Council and allowed to act accordingly. (Our surmise and not a fact!) But Council feels, particularly in relation to the half-cent sales tax funds of which the PRC is about to spend $36 million, it should have the final say.

The spending of the $36 million is to be discussed at the Finance Committee meeting next week.

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