Cabarrus budget battle to heat up again Monday night

CONCORD, N.C. (WBTV) - The controversy over county budget proposals in Cabarrus County continues, and for many the question is will the budget plan put forth by Commissioner Jason Oesterreich result in deep cuts to vital county services, or as Oesterreich said, are county leaders simply taking on the role of Chicken Little screaming about the sky falling?

Commissioners are set to meet on Monday night for further discussions of the budget.

Last week a called meeting of commissioners and county staff took place to lay out three budget proposals.  One of the proposals is the plan presented by Oesterreich.  Following that meeting and presentation Oesterreich wrote to WBTV saying that he felt that his plan had not been accurately represented.

"I would say that the primary point of my plan is not necessarily to save the $12 million over a period of time as you mentioned, it is to fund a lot of new construction requirements that we know are coming," Oesterreich wrote.  "Currently, the county has ZERO dollars budgeted this year, and for the next 5 years, for new construction of schools.  We know we are going to need to build schools and yet we have nothing budgeted for them.  The primary purpose of my plan is to provide for the needs of our community."

Oesterreich provided a statement that was originally published in the Concord-Kannapolis Independent Tribune, and is posted here, unedited:

"Cabarrus County is at a fork in the road ," Oesterreich wrote.   "On Monday night, (referring to the March 17 meeting) the commissioners will decide which side of the fork to take. One side of the fork uses common-sense solutions to meet the needs of the county while dramatically reducing debt and not raising tax bills. The other side of the fork maintains status quo for government — expensive long-term debt and a planned tax increase in 2017."

"Over the past six months, I presented and refined a cash-for-schools plan. It was simply an idea when it was first proposed in October, and since that time feedback from fellow commissioners, staff, members of both school boards and RCCC has allowed me to make a few revisions to better meet the needs of those entities."

"In short, the cash plan combines $29.5 million in surplus funds (not our $32 million reserve fund), funds that will no longer be required from expiring debt service payments over the next decade, and $7 million cash per year from the county to achieve a $208 million cash fund through 2025 to build our schools and other county facilities."

"Timing of those funds was one issue of the plan that needed revision. Cash for some projects would not be available until 2018-2019, which was too late. I worked with our finance department to make funds available earlier. We could do very short-term financing (four- and five-year terms), fund the projects within the first two years, and then pay the short-term financing back out of the pool of money created by the cash-for-schools plan."

"This plan will save the county approximately $21.5 million in interest on three projects alone. Specifically, our deputy county manager confirmed that if we do this short-term financing on $41 million, the total interest paid back is $1.4 million. If we borrow that same $41 million with a bond for a 20 year term at 4.75 percent interest, the total interest paid back is $22.9 million."

"We would save tens of millions of dollars, and in the first two years of the plan we would fund all of the following: the new CCS elementary school, Mount Pleasant Middle School, Royal Oaks replacement school, KCS Middle School, RCCC cosmetology school and the RCCC Advanced Technology Center. In addition to funding all of those facilities/programs, we would have approximately $22 million cash through 2020 to fund less expensive priority items. From 2021 through 2025, we would have an additional $97.5 million cash for facilities. Although we are legally required to hold a bond vote if requested, we can still do this plan (I don't have room here to give a full explanation)."

"In 2020, this short-term financing would be fully repaid, and our total debt would be reduced from approximately $469 million to $196 million — a 58.2 percent reduction."

"The other plans being considered all rely on a tax increase in 2017. In 2013, the tax rate was raised, but our board chairman and staff stated that you did not pay a tax increase because your bill did not increase (your property value decreased and you still paid the same amount of tax). Let's be clear — in 2017, the other plans require your tax bills to increase."

"Unlike the other plans being considered, no tax increase is needed to fund this plan."

"What is required to do this? From 2013 to 2014, the county budget increased from $211 million to $226 million, a $15 million increase. If we roll back $7 million of that $15 million increase, we can fund this plan."

"Saving tens of millions of dollars while meeting our needs, dramatically reducing our debt and not increasing taxes is the fork for which I will vote,"  Oesterreich concluded.

That plan was passed on March 17 by a 3-2 vote, prompting county leaders to go to work looking at what would have to be done in order to meet the numbers presented.  That meeting, held last Tuesday, included a detailed presentation in which county staff warned that vital services would potentially have to be cut, including the elimination of the Cooperative Extension office, closure of the Mt. Pleasant and Harrisburg libraries, and closing the Senior Center in Mt. Pleasant.

"All the proposed plans," said County Manager Mike Downs, "will require deep cuts into the county's operational budget. They are long-term or recurring cuts," Downs said.

Three budget plans, including the Oesterreich plan, were presented and discussed in the called meeting.

All three had to meet particular guidelines, including placing three projects, the $9 million Rowan-Cabarrus Community College Advanced Technology Center,  $11 million for the replacement of Royal Oaks Elementary School, and Kannapolis City Schools $23 million middle school, on the proposed bond list.  The bond list to be drafted so that if alternative financing is provided for these projects, financing for the bond will no longer be available; for RCCC to receive an additional $2 million in cash for the Advanced Technology Center; to provide short-term financing of up to $23 million to KCS if it withdraws its resolution to support a bond; for the fiscal year 2015 budget to have a revenue neutral tax rate for the revaluation year, an additional $2 million in cash for Mount Pleasant Middle School, and for $1.5 million in cash for the RCCC Cosmetology program's relocation.

All three plans presented Tuesday would include an additional $2 million for RCCC; an additional $2 million for Mount Pleasant Middle School; $1.5 million for the relocation of RCCC's cosmetology program; and a revenue neutral tax rate in fiscal year 2017.

The plans also all have an outstanding debt of about $163.3 million as of June 30, 2021.

Plan E calls for  $2.7 million in required reductions for a tax rate of 70 cents for fiscal years 2015 and 2016 and a rate of about 67.9 cents in 2017. It would have net accumulated cash of about $14.6 million.

Plan F would require about $5.2 million in reductions and would have the same tax rates by fiscal year as Plan E. It would accumulate about $20.3 million in net cash.

Plan C, which Oesterreich has presented, results in about $12.6 million in reductions with a tax rate of 68.5 cents for fiscal year 2015; 66.5 cents for fiscal year 2016; and 63.4 cents for fiscal year 2017. It would create about $30.1 million in net cash.

Deputy County Manager Pam Dubois made the bulk of the presentation to commissioners, showing detailed charts and taking questions.  In her remarks Dubois said the two options for reduction are to cut categories by percentage or reduce specific programs and services, and that along those lines,  Plan E would require a 1.78 percent reduction; Plan F would require a 3.48 percent reduction; and Plan C would require an 8.33 percent reduction, according to the presentation.

"Across the board cuts are effective," Dubois told commissioners.  "All they are going to do is disrupt services that are going on.  If the goal is to go down this road then we need to address it in a different fashion and that is to evaluate services and programs."

Oesterreich took issue with several points in the presentation.

"We have had almost $50 million in surpluses in the last four years," Oesterreich said. "I think this is all about show. This is a big show in order to make people that want some fiscal responsibility look bad."

After about 90 minutes the meeting concluded.  Commissioners could not take any action because it was a special meeting.

The board suggested that Oesterreich make a motion at the beginning of its regular April 21 meeting to amend the agenda to go through the normal budget process. By doing so, the alternative budget plans would be removed from the agenda.

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