Operating Revenues Property Tax Property tax revenues are expected to remain strong with a projected FY 08 growth rate of 8.7% mainly due to growth in reassessments. Since 2000, the average home sale price for both new and existing homes increased by nearly $190,000 or 10.8% compounded annually. In FY 08 $22.1 million of real property tax revenue was directly appropriated to the capital budget. In FY 06 the Homestead Tax credit was lowered from 110% to 107%, which both provided tax relief and reduced revenue volatility. A new senior tax credit, a local supplement to the existing State program, provides additional relief for seniors. Local Income Tax The current income tax rate is 3.05%, leaving 0.15% available before reaching the State tax cap of 3.20%. A change in the State's methodology for distributing income taxes resulted in growth of 1.7% in FY 07. Income tax growth is expected to rebound to 4.9% in FY 08. Recordation Tax Recordation revenue dropped by 17% in FY 07 and is expected to fall another 5% in FY 08. While the drop in revenue exceeded expectations, the impact of the drop is largely limited as the increased revenue realized during the housing boom was not used to fund on-going commitments. In FY 08, Recordation revenue is forecasted at $18 million. This amount is considered sustainable. Revenues that exceed the projection will be considered one-time revenue and will be used for one-time expenditures. See Exhibits 20, 21 and 22 20
GENERAL FUND General Fund revenues increased by $22,093,096 from $261,204,962 in FY 06 to $283,298,058 in FY 07. The primary reason for the increase was during FY 06 a one-time appropriation of $30.9 million was made to the capital fund. General Fund expenditures increased $17,181,241 from $269,177,847 in FY 06 to $286,359,088 in FY 07 (Note: FY06 expenditures were increased by $5,937,730, the amount originally classified as a transfer out to the Pension Fund). Other Financing Sources (Uses) increased $5,583,738 for these primary reasons: The transfer to the Capital Fund increased by $2,212,216. The transfer to the Enterprise Fund increased by $30,670. Long term notes payable increased by $2,720,226 for Agricultural Preservation Installment Purchase Agreements issued during the year. Bonds issued during FY 07 for general fund projects decreased by $4,232,347 of which $1,017,347 was from the January 2007 refunding of the 1995, 1998 and 2000 bond issues. The net change in fund balance is an increase of 1,207,029 for FY 07. Property Taxes During FY 05 the County implemented GASB Statement No. 44 Economic Conditions Reporting: The Statistical Section. When delinquent taxes are collected, they are applied to the year in which the levy occurred. As of fiscal year 2007 the percentage of Outstanding Delinquent taxes as a percent of total levy: 2003.04% 2004.04% 2005.06% 2006.07% 2007.28% The total outstanding delinquent taxes for the years listed above equals.49%. 21
GENERAL FUND continued Carroll County continues to maintain its excellence in financial reporting. We received our 22nd GFOA Certificate for Excellence in Financial Reporting for our FY 06 Comprehensive Annual Financial Report (CAFR). To ensure our desire for full disclosure and reporting, the County continues with DAC (Digital Assurance Certification) to make our financial reporting and disclosures accessible at all times. Fund Balance The County is committed to maintaining unreserved fund balance at 5% to 8% of general fund revenues: 2003 6.6% 2004 10.6% 2005 10.2% 2006 10.8% 2007 8.2% In FY 92, The County established a Stabilization Fund as part of Fund Balance. The Fund increased from $7,900,000 in FY 04 to $9,500,000 in FY 05 and to $9,900,000 in FY 07. The goal is to keep the Fund at 3% of the following year s budget. The Fund is 3.14% of the FY 07 budget and 3.01% of the FY 08 budget. In FY 00 the County established a Secondary Reserve Fund as part of Fund Balance. The goal is to maintain this Fund at about 1.5% of the following year s budget. The Fund increased from $5,250,000 to $6,000,000 in FY 07. The fund is 1.73% of the FY 07 budget and 1.83% of the FY 08 budget. For FY 07 the unreserved/undesignated fund balance is $7,302,102 or 2.58% of general fund revenues. Along with the Stabilization Fund of $9,900,000 and the Secondary Reserve Fund of $6,000,000, this provides almost $23.2 million in unreserved fund balances, which equates to 8.19% of general fund revenues. 22
ENTERPRISE FUNDS Bureau of Utilities The Bureau of Utilities made a positive change in net assets for FY 07 of $2,984,543. Usage rates to maintain the operations for FY 07 were adopted and implemented in July 1, 2006. Usage rates for FY 08 have been adopted with an effective date of July 1, 2007. Area Connection charges and a Maintenance Fee are being collected that are designed to fully fund the systems capital program for most projects proposed to build-out of the system. Some additional projects will be funded by issuance of debt. A complete review of the water and sewer usage rates was conducted prior to the adoption of the fiscal year 2006/2007 budget. The average water and sewer customer (25,000/gals per quarter) paid $212.86 per quarter last year and $258.00 per quarter after July 1, 2006. The increase of $45.14 per quarter equates to a 21% increase. During FY 07, a review of the water and sewer rates was completed resulting in increases to both the water and the sewer rate. The average user now pays $273.69 for 25,000/gals per quarter of usage, a 6.08% increase over FY 07 rates. A complete review of the Area Connection charges was conducted prior to adoption of the fiscal year 2006/2007 budget. Based on this review, the water and sewer area connection fees were not adjusted for FY 07 and remain $8,222.00 and $7,159.00 respectively. These charges, along with the maintenance fee and some minimal bond funds are programmed to fund the capital needs of the water and sewer system for the next five (5) to ten (10) years. See Exhibits 33 and 35 23
ENTERPRISE FUNDS continued Solid Waste Management For FY 02 through FY 07, the County transferred $2,645,000 annually from the General Fund to the Solid Waste Management Enterprise Fund. Approximately $450,000 was to cover debt service payments on old landfills closed before an enterprise fund was established. The remaining amount was to cover freebies such as coupons to citizens allowing free hauling of waste to the landfill and free use by the State, County, and Board of Education. During FY 07, a review of the rates was conducted and the tipping fee was increased to $61.00 per ton effective July 1, 2007. The commercial yard waste fee rate of $15.00 per ton remains in effect. Also increasing is the hauling charge to the Board of Education effective July 1, 2007. Airport Facility This Fund showed a positive change in net assets of $6,787,123 for FY 07. $5,603,372 of this positive change in net assets was the result of transferring 461 acres of land from the general government land to the Airport Enterprise Fund. The transfer was done to accurately reflect the Airport Land asset to the Airport layout plan. During FY 07, the Airport sold 12.7021 acres of excess property resulting in a gain of $277,267. See Exhibits 34, 36, 37 and 40 24
ENTERPRISE FUNDS continued OTHER NON-MAJOR ENTERPRISE FUNDS Septage Fund The Septage Fund showed a positive change in net assets of $146,284 for FY 07 based on the year end financial statements. Fees are collected based on the number of gallons reported by the haulers. The septage fee is $.055 per gallon. Firearms Facility During FY 07, the Fund had a positive change in net assets of $5,688 based on the year end financial statements. See Exhibits 38 and 39 25
GOVERNMENT-WIDE STATEMENTS The County early implemented GASB Statement No. 44, Economic Condition Reporting: The Statistical Section. This Statement improves the understandability and usefulness of statistical section information. The following tables have been included to show trend information on how the County s financial performance and well-being has changed over time. Net Assets by Component Changes in Net Assets Fund Balances, Governmental Funds Changes in fund Balances, Governmental Funds Local Tax Revenues by Source, Governmental Funds See Appendix 26
Operating Plan Expenditures Carroll County Public Schools are projected to receive in excess of $1 billion in county funds between FY 08-13. Planned expenses include the opening of an elementary school, a middle school and a high school. The second largest fund in the Operating budget is Public Safety with over $231 million in funding. An additional three Sheriff s Deputies are planned each year to maintain the adequate facilities ratio of 1.3 officers per 1,000 citizens. Emergency Medical Services are provided on a 24/7 basis throughout the county. One time revenues in the amount of $3 million were applied to Other Post Employment Benefits. FY08 - FY13 Operating Plan Total Debt Service, 11.4% includes BOE Debt Service All Other Funding, 32.5% Public Schools, 46.1% Public Safety, 10.0% Source: Carroll County, Maryland FY 08 Adopted Operating Budget Book See Exhibits 23 and 24 27
Current CIP Revenue In the FY 08-FY 13 Adopted Community Investment Plan, an average of $7.6 million of real property tax is directly appropriated for capital purposes. For FY 08, an additional $22.1 million of one-time revenues are appropriated. An average of $11.1 million of local income tax revenue is projected annually and is dedicated to the Capital Budget for paygo and debt service on school construction. Carroll County maintains a strong commitment to funding its CIP with paygo dollars. For FY 08-FY 13, paygo is $125.2 million or 19.22% of total funding sources. FY 08-FY 13 Community Investment Plan Revenues Bonds 55.19% State 12.69% Paygo 19.22% Other 1.53% Federal 11.37% Source: Carroll County FY 08-FY 13 Adopted CIP Note: Chart does not include income taxes transferred to the operating budget for debt service. See Exhibit 25 28
CIP Appropriations Highlights of the CIP: Carroll Community College continues to grow with $36.5 million planned for Classroom Building #4, including expanded parking. This project is in addition to existing funding of $2.2 million for computer technology improvements. A Criminal Justice Building for $25.0M and a Minimum Security Facility for $4.7M are in the plan. Sheriff s Services and other court related functions will be relocated to the Criminal Justice Building. The Minimum Security Facility will help alleviate overcrowding at the existing detention center. In order to address water development issues in Carroll County, $45.0M is planned in the FY 08-13 CIP for the acquisition of land and engineering of two planned reservoir areas, Gillis Falls and Union Mills. The Commissioners maintain an aggressive approach to preserve Carroll s agricultural open space with $62.3 million planned for Agricultural Land Preservation. $19.7 million for the building and completion of connector roads is included in the CIP. FY 08 - FY 13 Community Investment Plan Appropriations Public Schools 37.12% Culture and Recreation 1.42% Conservation 20.69% General Government 12.80% En te rpri se Funds 17.13% Bridges 0.87% Roads 9.97% Source: Carroll County FY 08-FY 13 Adopted CIP Notes: General Government includes Community College, County Facilities, Public Safety, Farm Museum, Senior Centers and the Public Libraries. Does not include income taxes transferred to the operating budget for debt service. See Exhibit 25 29
CIP Funding Capital funding sources consist of paygo, state participation, bonds, and others such as grants, federal participation, and other contributions. Since FY 2000, paygo funding has been greater than 30% of the CIP. For FY 08-FY 13, the percentage of paygo funding averages 19.22%. Bond funding terms are typically 15 years and averages 49.87% for fiscal years 2004 through 2013. The current FY 08 CIP funding consists of 26.36% paygo, 14.06% State participation, 55.82% bonds, and 3.77% other. The decrease in paygo was anticipated due to the planned use of one-time revenues resulting from the housing boom. Capital Funding Sources 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Paygo Bonds State Other Source: Carroll County Adopted CIP Notes: Beginning in 1997, a portion of the property tax is dedicated to capital projects. Beginning in 1997, a portion of the income tax is dedicated to capital projects and BOE debt service. Since 1998 that percentage of income tax dedicated to capital has been approximately 9.1%. Does not include impact fees and income taxes transferred to the operating budget for debt service. See Exhibit 26 30
Public Schools CIP Funding/Appropriations Paygo funding in the FY 08-FY 13 CIP is $54.3 million or 22.47%. Paygo funding averages $9.1 million annually in the FY 08-FY 13 CIP. FY 08 - FY 13 CIP Planned School Funding Sources 64.08% 13.45% 22.47% Total Paygo Bonds State New construction, additions, and modernizations account for $183.2 million or 75.76% in the FY 08-FY 13 CIP including three new schools, a North Carroll area high school, and South Carroll area elementary and middle schools. HVAC replacements and improvements total $37.1 million or 15.36% including replacement for Westminster High School. Included in other projects is $24.7 million for a Fine Arts addition for South Carroll High School. FY 08 - FY 13 CIP Planned Appropriations 75.76% 15.36% 8.88% New Construction, Additions and Modernizations HVAC Improvements and Replacements Other Projects Source: Carroll County, Maryland FY 08-FY 13 Adopted CIP Note: Does not include income taxes transferred to the operating budget for debt service. See Exhibit 27 31
Agricultural Preservation Carroll County s geographical area encompasses 289,000 acres of land. 168,000 acres is agricultural land. As of the end of FY 07, with 50,711 acres permanently preserved through easements, the County has reached over half of its goal of 100,000 acres preserved. 50,000 acres of permanent easements is approximately 3,400 residential lots that cannot be developed, thereby reducing the strain placed on the County s infrastructure. The Agricultural Preservation Program is primarily funded by the Carroll County Government. The funding sources and programs offered to landowners include the following: County held easements Installment Purchase Agreements Maryland Agricultural Land Preservation Foundation (MALPF) Little Pipe Creek Rural Legacy Program Upper Patapsco Rural Legacy Program At the end of FY 07, the average cost per acre was $6,700, or approximately 70% of Fair Market Value. Agricultural Acres Preserved 60,000 50,000 40,000 30,000 20,000 10,000 - FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 See Exhibit 29 32
Other Post Employment Benefits (OPEB) $4.9 million has been set aside in FY 08 which includes $1.9 million for the current year expense for Carroll County Government employees. The initial $3 million will be grown at $0.5 million per year in the FY 09-FY 14 Operating Plan. Conceptual agreements have been reached with the component units of Carroll County Government: Carroll County Public Schools and Carroll Community College. $1.5 million of the Board of Education FY 07 surplus will be applied to the BOE OPEB trust. 33