The Avery County Board of Commissioners met in a Budget Meeting on Thursday, May 11, 2006 at 3:30 p.m. in their offices, Avery County Administrative Complex, Newland, NC.

Members Present: Kenny Poteat, Chairman; Susan Pittman, Vice-Chair; Phyllis Forbes; Joe Strickland and Bill Beuttell
Members Absent: None

Call to Order
Chairman Poteat called the meeting to order at 3:30 p.m.
Chairman Poteat led in prayer.

The Manager advised that the Board will have one or two more budget meetings over the next few weeks. Chairman Poteat suggested budget meetings be held at 3:30 pm on May 18 and again on May 25, if necessary.

The Manager advised that all budget decisions would not be made here tonight and that there are still a lot of budget decisions to be made, such as the Fire Commission, upcoming appropriations, issues from the Commissioners, special appropriations, etc.

Fire Commission Budget Request
Fire Commission Members in attendance were: Daryl Smith, Joe Perry, Danny Clark, Tony Hunter and Keith Gwyn. Chairman Poteat commented that he felt this is a fine group of men and that we truly appreciate how much they have done. He said he felt that we are light years ahead of where we were several years ago and that these men have performed an unbelievable service to this county and have done a fabulous job to this point in his opinion.

Daryl Smith spoke on behalf of the Fire Commission stating that the Fire Commission realizes that they have presented this Board with a very large budget this year. However, we also want you to realize that there are 285 volunteer firemen in the County, 11 fire stations, 124 pieces of rolling equipment, vehicles etc. The Fire Departments answered 1,305 calls from July 1 to February of this year. Out of those calls, 52 were structure fires, 62 woods fires, 38 smoke complaints and 1,154 first response medical calls. That’s where a lot of this money is going. We know you can’t support that through EMS, which is where it belongs.

We don’t rubber stamp these requests when they come in to us, Daryl said, and the departments don’t get a lot of the things they ask for. We feel that we got some really good budgets this year from our departments. We are trying to get some things started such as volume buying and we are also trying to tie their budgets to getting their ratings lowered, which will probably take a couple of years. The Fire Commission has put in about 300 hours in this budget alone, which is worth a lot of money in itself.
According to the newspaper, the county’s tax rate has already been set, Daryl said. Chairman Poteat explained about the press release he sent out. The first release assured people that there would be a substantial tax rate decrease, and there will be. The second press release said that the revenue neutral tax rate was 37.4 cents and that it is not the tax rate. It went on to say that we would keep as close to the revenue neutral tax rate of 37.4 cents as possible. Joe Strickland said the perception in the community seems to be that the tax rate has already been set, which puts us all between a rock and a hard place, so we cannot discount what the community has concluded. The community has concluded that as a result of the action of this Board, that we are going to a revenue neutral budget and that is going to account for a significant reduction in the tax rate, Joe said. Daryl Smith said we understand that the tax rate has not been set, but that is the perception that everybody has. He said that the Fire Commission feels that the Fire Tax is a totally separate issue and should not be tied to the general tax.

Kenny Poteat said that last year the Fire Commission was given $990,000 which represents 4 cents of the total evaluation. This year, at the 2.8 cent revenue neutral rate which has been disclosed up to this point, that amount of money based on this year’s revaluation, without the influence of the Board of E&R, would generate about $1,018,000.00. Joe Strickland commented that we had projected about $900,000 would be in this year’s budget for the Fire Commission, but as of June 30, it will be closer to $1 million.
Tim Greene advised there was a 3-4% growth in this year’s fire budget. Joe Strickland commented on the amount of growth in the County, which will mean additional revenue to the Fire Commission over what is currently projected. Kenny Poteat commented that there will be an automatic increase of some $30,000 if we don’t do anything else, based on growth.

One cent on the tax rate would generate approximately $356,000 at a 96% collection rate, Robert Wiseman said. Tim Greene advised that if the Fire Tax were set at 4 cents, it would generate $1,446,145.00. Kenny Poteat said the Fire Commission is hoping to get $1,476,272.00. He added that 4.5 cents would not quite cover that total request.
Discussion held regarding the request for funds to move 8 people from part time to full time status as supervisors. Discussion on their retirement and medical plans and how those are covered.
Joe Strickland asked if page 3 in the handout was a wish list for the Commission as it is around $3 million. Joe Perry advised this was a 20 year plan/projection which we requested from our departments as to their needs. They gave us the number of vehicles, age, loan amounts, etc. and did a 20 year plan. Maintenance and upkeep of buildings is also included. This is projected through year 2024.

Bill Beuttell came into the meeting at 4 p.m.

Joe Strickland commented on the $778,000 debt which the new Fire Association has inherited. There is a $341,845 payment on this debt, which hamstrings you on planning, Joe said. He added that we need to find some way to address your capital vs. operational needs.

Robert Wiseman said he has been involved with the Fire Commission since Joe Strickland urged its conception back in 2003. We met for about 6 months and came up with a document which was acceptable to the Board and the Fire Association and it became law by act of the Legislature. It is one of the best things that have happened to Avery County. It has been hard to get to the point they are at now. The point they are at is just allowing them to make the progress they are capable of. He said that we have a situation with the Fire Commission regarding budgets; one is operational budget as opposed to the capital budget. I don’t foresee now or in the future the operational budget being a problem, Robert said. If it is valid, viable, conservative but adequate, that is okay. The problem here is that they are almost $400,000 a year in debt. We have a debt schedule there and the longest running one is paid off in year 2030. Fifteen to 20 years is the expected life of a piece of equipment. If we keep on doing what we have been doing with this debt incurrence, we will get what we have been getting, and we will never get out of this black hole, Robert said. I think it is imperative that the Fire Commission and the Board of Commissioners devise something and set a goal as to what we are going to do with this debt. It will take cooperation from both sides. These men inherited this debt for the most part. We cannot continue paying the minimum amount yearly and keep on incurring more and more debt. These men need to set a goal and define how to reach it. We need to reduce to the fullest extent possible the purchase of new equipment, Robert said. We need to reduce our long term debt as much as we can, as quickly as we can. Robert said he felt that substantial money could be cut from this current budget without putting anybody in a critical position. He suggested cutting the paid personnel line item. Robert then suggested that the Fire Commission revisit this budget and bring it back and let the figures stand on their own and that we agree to work together this coming year on a plan to reduce this debt so it won’t continue to hobble our firemen.

Joe Strickland discussed the possibility of transferring equipment from one fire department to another, if needed. Daryl said equipment could be transferred but just in a short term situation. We don’t presently do such transfers on a long term, Daryl said. He added that somewhere in the future, this equipment is going to have to be titled to Avery County or the Fire Commission and leased to these fire departments.
Discussion on the fact that some of the firemen have their own personal money invested in some of this equipment. Joe said that if funds are co-mingled, that makes an entirely different situation. Daryl said that from this point on, they won’t be co-mingled, but in previous years they have been.

Susan Pittman said she has talked to these men before about this budget and she feels it is a pretty reasonable budget; however, the Commissioners still need to discuss it among themselves. Phyllis Forbes said she has also discussed their budget with them and one thing she has thought about is that instead of making 9 people full time all at once, that it could be done gradually, as long as everybody understood that. She suggested putting the full time people in positions where the Fire Commission deems they are most needed at this time. Bill Beuttell said he also spoke with the Fire Commission about their budget and that he agrees with the other County Commissioners. The Fire Assoc. is running into a situation almost like credit card debt, minimal payments, etc. They can really get into trouble on down the road like this. It is obvious that fire protection need is increasing in the County with all the new homes, etc. I think the Fire Commission does need additional monies, Bill said. I would be in favor of allocating them more funds, up to the amount they need to reduce their debt. But, I do hope we can get tighter budgets in these departments where tightening is needed, Bill said. Phyllis commented that we need to be cautious because growth is going by leaps and bounds in this County and we have to keep up with services and can’t afford to get behind, because it costs more to catch up.

Tony Hunter commented that if you have an average home in Avery County it would be valued at around $100,000 and your fire tax would cost $40 for that home at 4 cents. If you had a $10,000 vehicle, the fire tax would be $4. If you paid $60 in tax for the home and vehicle and lived in a 6-mile rated fire district, you would save approximately $100 on your insurance and would have a net profit of $40, Tony said.

Tony explained about the equipment needed in a fire department in order for it to be a rated fire district. We want people to be in a 5 or 6-mile rated district so their insurance won’t go up. To be a rated station, it has to have a Class A pumper and a Class A tanker. Some of the debt we incurred is just sheer cost for a piece of fire fighting equipment. The $2.7 million debt is high, but if you divided it among 11 departments, it is not as mind boggling as it seems for the price of equipment. A brush truck is one of the cheapest pieces of equipment we buy, and it costs $70,000. Some of our problem is inherited from bad management, but most of it is just the sheer cost of equipment, Tony said. Discussion continued regarding requirements to be a rated department. Bob Garland commented that fire departments are no longer just fire departments. We do emergency medical and first responder as well. We are the first to be called for floods, snow storms, etc. It has changed over the years since I first got into the fire department. The Board needs to look at what they are getting for their money. We are a subcontractor for this County and are paid through a fire tax. I think the Fire Departments know better what they need in their area than some of these folks on the Fire Commission, Bob said. The Fire Commission has worked with us this year and I think we have had the most honest year that has ever been put into a budget process. To put in the paper that you have already set the tax rate without seeing what is needed is insane, Bob said. I am all for getting our debts down though, Bob said.

Robert Wiseman commented that he deeply appreciates all of this new responsibility the Fire Departments have assumed, but by the same token, from 5 years ago when you had a budget of $660,000; it is now up to a proposed $1, 500,000.00 today. I think we have been doing pretty well to keep up with that pace. If it goes up the next 10 years at the same rate, where is the stopping place, Robert said. Bob Garland said the stopping place is when we get caught up. As long as there are more people, we will need more personnel to operate more stations, Bob said. The only way to stop it is to get less people. Our call ratio goes up every year.

Ms. Grace Calhoun commented regarding the press release in the newspaper. I realize most people would not scrutinize it as closely as I would, due to my responsibility for the school budget, but if you read down to the end of the article, it plainly stated that this was not set in concrete, but it said there would still be budget hearings, she said. So, I didn’t get upset about it being in the paper. It stated that there would be budget meetings and that it may stay the same or that it could change, Ms. Calhoun said.

The Chairman thanked the Manager for his recommendation regarding the Fire Commission budget; namely, that these men take this budget back and do some more tweaking.

Joe Strickland had some possible scenarios and solutions that we discussed, the Chairman said.
Joe said that the tax rate is not set yet, regardless of what is in the paper. We put this information in the paper to dispel some of the erroneous information floating around the County during the election, Joe said. He added that he thinks there was a strong commitment by this Board to hold it as it was presented to us, regardless of what has been said. One of the things we can consider is to do nothing; which is not a palatable solution. Another solution is the Manager’s recommendation to go back to the drawing board and reduce the number of paid personnel and then come back to the Commissioners. The third option is to take 1 cent out of the General Fund and transfer it to the Fire Commission as we did before. This equates to $356,000. But we don’t know if we can do that or not. Or, we could consider taking over your debt services, transfer your $2.7 million debt service and add it to our current $8 million debt service. Another option would be to raise the Fire Tax to 4.5 cents, but I won’t vote for that, Joe said. My final recommendation, which I think has merit, would be for the Board to place at its earliest convenient time on the ballot box a bond referendum which could be determined by the Fire Commission and supported by the Fire Association. A suggested figure of $5 million or $8 million or whatever you feel would get you out of debt. It would basically transfer the debt to the County anyway since bond referendums come from the County. I think a bond referendum would give the Fire Commission and the Fire Association an opportunity to involve the community and let them know what they are getting for their money. If you package it correctly and the community supports it, then I would have no problem (with taxpayers’ sanction) to raise the tax rate to whatever it takes to pay off the bond, Joe said.

Discussion held on Joe Strickland’s suggestions. Daryl Smith said he has no problem with it personally but does not see the need because we have a statute in place that allows you to set the fire tax rate from 0-20 cents. Danny Clark commented that the community voted to have the fire tax rate between 1 and 10 cents. Discussion. Daryl Smith commented that the Fire Tax is separate and should not be considered as part of the General Tax. It should not be manipulated back and forth to make the General Tax do what you need it to do for political reasons or any other reasons, Daryl said. He added that they would like to see the Fire Tax around 4 cents-4.5 cents, or somewhere in that neighborhood. We see that as a way to get some of this debt paid and we don’t feel that you can eliminate buying new equipment. A lot of these departments started in the 1970’s; they need new equipment and need to work on their facilities as well.
We can’t say that we won’t buy anything for the next 10 years because that just won’t work. We realize that full time paid personnel cost a lot of money, but if you are having a heart attack and the paid person gets there 5 minutes early and saves your life, then it’s worth it. Fire Departments are providing and paying for a service that is EMS related, that we have no business doing, but we are there and there is no way to get out. Public relations wise there is no way for the Fire Departments to get out of it and you can’t raise the taxes high enough to pay for it through EMS, in my opinion, Daryl said. Years ago there was a turf problem between some of the fire departments. There may still be a little of that right now, but not a lot. It has improved greatly and the departments are working together, Daryl said. If there are a few harsh words between some of them, when there is a fire call, those men are right there and all of it is forgotten. Fire Tax is probably the greatest buy in Avery County for the taxpayers.

Danny Clark said Robert had talked about comparing this year’s budget with the previous year’s budgets, but I don’t think you can do that because a lump sum was given to the departments and they could split it and spend it however they wanted to. Some of them didn’t get enough to operate on and had to have fundraisers in order to operate their departments. This budget represents what it takes to operate these departments. We have done our homework and we know what it will take to run these departments. It is our job to critique the type of equipment they are buying and to make them manage their departments the best they can. This budget is coming to you for funding. However you want to fund it is fine. Everybody hangs up on the 4 cent fire tax. I don’t care what the Fire Tax is set at as long as the departments get what they need to operate. To ask us to go back after spending 300 hours on this budget and dig into it and cut it some more is not a good idea, in my opinion. I know what position you guys are sitting in on that side of the table, but if you don’t trust this budget and don’t trust us, you need to find somebody else to fill these positions. If you do trust us, we need this amount of money.
Fire Commission members Joe Perry and Keith Gwyn briefly commented in support of the proposed budget presented by the Fire Commission.

Chairman Poteat thanked the members of the Fire Commission for the excellent job they have done on their budget and lobbying for their position on the budget.

Employee Benefit Proposals – Joe Strickland
Joe Strickland advised that, as previously discussed, we need to authorize the Manager to move on with some things that have been mentioned regarding employee benefits.

Longevity Pay
We discussed this matter at length, Joe said. In order for the Manager and Finance Officer to move on, we need authorization from this Board for them to establish the guidelines and financial indicators for a Longevity Program.

Motion by Joe Strickland to authorize the Manager and Finance Director to establish a Longevity Program for Avery County, to be determined by a policy guideline adopted by either the Board or the Manager in the Personnel Policy. Motion seconded by Susan Pittman.

Discussion. The Finance Officer presented the Board with information which he has compiled regarding a Longevity Program. Tim advised that he ran a length of service and a 2 week compensation for a 25 year plus employee. He had figures showing compensation for years of service:
25 + year employee – 2 week compensation
20 + year employee – 1 ½ week compensation
15 year employee - 1 week compensation
10 year employee - ½ week compensation

Total cost would be about $23,000 to $25,000 annually, Tim said, which is a very reasonable amount.

Joe advised that we are just voting today to authorize the Manager to move on with this. When the budget is adopted you will be voting in favor of it unless you take it out of the budget, Joe said.
Vote: Motion unanimously approved.

Vacation Pay-Out
Joe Strickland said that we have a lot of employees who are unable to take accrued benefits and we have the “use it or lose it” policy. We are missing an opportunity in good employee relations because if we have employees who do not have the time or will not take the time to use their vacation, I would like to see them have the opportunity to exercise a little discretion on their own and be able to cash in on that
Vacation time. Tim has run some numbers on that as well.
Tim said this will vary greatly based upon the assumption. We had 22 full-time employees this past December who had over 240 hours of accrued vacation that rolled over into their sick leave. (Anything over 240 hours of accrued vacation rolls over into sick leave, per our policy). We have 47 employees who had 160 hours or up and 63 employees that had 120 hours accrued vacation time or more.
This is a moving target. If you use an average annual salary of $27,000 and pay out 2 weeks of it for an estimated 50 people, it could cost $50,000, Tim said. However, these people might only be cashing in 1 week or 1 day, etc., so these figures are just estimates. Joe said that half of that figure would probably be a more realistic amount. Tim said it could go beyond the $50k or it could go well below that amount, we don’t know. However, he said he really didn’t think it would ever go over the $50k. Joe added that this gives the employee the latitude to manage their benefits instead of telling them what we feel is good for them. They are perfectly capable of handling this themselves, Joe said. Discussion continued.
Joe said if their vacation rolls over into sick time and they don’t retire, then they are going to lose a bundle of time in accrued sick time.

Brief discussion also held regarding salary increase for the school system through the State.

Motion by Joe Strickland to give the Manager the authority to develop a policy on Vacation Pay Out and put it in the budget process for additional consideration. Motion seconded by Bill Beuttell. Vote: Joe Strickland, Bill Beuttell and Susan Pittman – in favor. Opposed: Phyllis Forbes and Kenny Poteat. Motion carried by majority vote.

Supplemental Insurance
Joe Strickland said he felt the County should do exactly what the State and other counties do for their retirees, provide income for a supplemental insurance. I have reached a compromise with Tim in deliberating on this issue. It can be a costly item, which Tim will explain. I am suggesting to place a cap on it so that we do at least participate. We might consider a cap of $2,000. I suggest that as the insurance continues to go up, the boards will have the opportunity to determine as it does with its current health plan, the level of involvement for the employee vs. the County.

We could set a cap of around $2,000 or we could allow the Manager and Finance Officer to determine what level would be appropriate for the employee and the County, Joe said. Joe said that many counties do this. I am the recipient of such a benefit myself, as Kenny is through the school system and Phyllis will be once she retires.

Motion by Joe Strickland that the County Manager be authorized to place into the budget process revenues for a supplemental insurance plan for retirees with a specific cap – to be determined by the County Manager and Finance Officer as to appropriateness. Also, this is not an entitlement. The Board has the right to revisit this subject every fiscal year to see what the cap should be.
Motion died for lack of a second.

Chairman Poteat advised he must leave the meeting in order to attend another meeting in Boone this evening.

Meeting Schedule
It as agreed to hold Budget Meetings on May 18, 2006 at 3:30 pm and May 25, 2006 at 3:30 pm.

Astroturf – Avery High Field
Bill Beuttell commented on the request in the School Budget for Astroturf for the High School field. He said there is so much play on the High School field that it has deteriorated and that in the future the Board of Ed may have to limit the amount of recreational play to reserve it for High School soccer, football, etc.
He said he realizes that Astroturf is probably last on the totem pole, but if we get that rock busted up and get dirt hauled up there to make another field, we could probably get a lot accomplished with some additional available space for the children in the County.

The Manager asked the Board to take their budgets home with them and think about what we need to do on some of these requests.

Adjourn
Motion by Joe Strickland to adjourn this budget meeting at 5:30 p.m. Second by Susan Pittman and unanimously approved.

_________________________________
Kenny Poteat, Chairman
Avery County Board of Commissioners
ATTEST: _____________________________
Nancy H. Cook, Clerk to the Board