Alamance County leaders are considering a variety of potential methods to assist not only with helping to pay for the large projects currently in design through the Alamance Community College and Alamance-Burlington School System bond referendums, but also to help pay for long-term ongoing operating expenses related to the new projects.
“We’ve spent a lot of time throughout the early discussions of these bonds in planning,” Alamance County Manager Bryan Hagood said. “This is a huge deal for the county government.”
At a recent meeting of the county’s Capital Oversight Committee, which includes a variety of local elected officials including County Commissioners and School Board members, Hagood provided a status report on the county’s financial plan for the bond. The County Manager indicated that the formal Alamance County Capital Finance Plan was finalized and reported this past spring. There have been no significant changes or updates to the plan over the summer and early autumn months. The county’s 2019-20 fiscal year budget includes an 8-cent property tax increase that the County Commissioners approved in a contested 3-2 vote earlier this year.
Hagood indicated that all fiscal policies are in place for the issuance of bond money in the coming years, and the fiscal status remains unchanged, with everything fiscally compliant with all who require it. There will be no necessary changes to the Capital Finance plan unless any timelines change several months or a couple years down the road. There are no rating agency considerations at this time, and county financial advisors indicate that their current planning model is still intact regarding interest rates, with potential rates for the county’s debt continuing to hover at or around 4.5 percent.
“Our plan is not to make any changes to our Capital Plan until we get more information from the community college and the school system,” Hagood explained. “We know that this coming spring of 2020 is our first debt issuance. We’re trying to stay aware of our bond rating. We have adopted the policies that the Local Government Commission requires. We’re ready to issue debt. We feel we’re still in a good position, and hopefully we’ll be provided a good bond rating. We want to make sure the money is hitting the plan the way it’s supposed to.”
In order to alleviate potential future property tax increases, which puts more of the burden of paying for the ABSS and ACC projects directly on local homeowners and business owners as opposed to tourists who come through and purchase gas, food, and other supplies from local gas stations and grocery stores, Alamance County leaders are considering placing another sales tax referendum on the ballot at some point in 2020.
They will have two opportunities - either the spring primary in March, or the November general election. The county has until the end of October in order to make up its mind as to whether or not to introduce the sales tax on the March primary ballot as part of the Board of Elections process. A sales tax resolution on the March ballot appears to potentially have the support of at least three County Commissioners - Amy Scott Galey, Eddie Boswell, and Steve Carter - who would like to see some of the tax burden be taken away from local property and business owners paying additional taxes on their residences or places of work. They could vote to approve such a measure at their next scheduled meeting on October 21.
A quarter-cent sales tax increase was rejected by Alamance County voters back in the fall of 2018, even as the ACC and ABSS bond referendums were passed by an overwhelming margin of more than two-to-one. A quarter-cent sales tax increase within Alamance County would include an additional $4.8 million in new revenue for the county to put towards debt service and other bond and school-related expenses.
Possible uses of a new Article 46 Sales Tax Referendum, if passed by Alamance County voters in 2020, could include helping to defray operating costs of new education buildings, reducing the property tax rate for Alamance County homeowners, increasing capital funding to a targeted percentage of replacement value, paying for identified capital projects that are currently not funded, as well as considering increased school security measures such as School Resource Officers, locking systems, and audio-visual monitoring systems.
“The high schools in particular are very open campuses,” Hagood mentioned in regards to possible safety improvements.
According to Hagood, there is a bill in Raleigh currently under consideration by the North Carolina General Assembly that would allow the Alamance County Commissioners and other elected county bodies throughout North Carolina to put language on the local ballot explaining what the revenue for any sales tax increase would be used for.
“This revenue is unrestricted. The county can use this revenue for any purpose at all,” Hagood said of any sales tax revenue increases Alamance County may receive if the voters pass a sales tax bump in 2020.
The Alamance Commissioners passed a resolution committing that the proposed 2018 quarter-cent sales tax increase would be designated strictly for educational use, but it was not allowed to be explained in such a way on the 2018 ballot.
Hagood added that Alamance County is looking at a little over $2 million in new operating costs coming online with the construction of the new high school and completion of the various bond-related improvement projects countywide.
“There is approximately $2.3 million in new expenses that the county will have to figure out how to fund,” Hagood said. “The schools are interested in creating a replacement value model, to make sure we stay ahead of their capital needs.”
ABSS Superintendent Dr. Bruce Benson added that by establishing a percentage of the current replacement value of the school system’s facilities, “it would be predicable for the Commissioners,” in his words, for the elected leaders of the county to budget future operating expenses.
“I’d like us to explore that,” Dr. Benson said. “We’re very thankful for the $3.3 million (in additional operating expense funding) that is in the next six years of the adopted plan. But we know we have buildings that are aging. How do we take care of those buildings in a way that is fiscally responsible?”
“Consistency of predictability is very valuable,” Hagood added. “That is very helpful from the county’s perspective.
If a quarter-cent sales tax increase did get approved by Alamance County voters in March of 2020 in the spring primaries, Hagood and other county leaders could work quickly to use those projected revenues to fund projects in the next upcoming 2020-21 fiscal budget year, which begins in July 2020.
“There is a three-month lag before (sales tax increase) revenues become available to us,” Hagood explained. “If it (the proposed sales tax increase) were in the primary, would we be able to fund the budget (next year with those revenues) if it passed.”