In an attempt to be fair and balanced, I’m posting the editorial that ran in today’s and Sunday’s Independent Tribune from Robert Freeman and Coy Privette. If you read through both of these, you will have been exposed to just about the entire content of the campaign rhetoric for the 2006 Cabarrus County Commissioner’s race. Over the next few days, I will do an on-going analysis of the claims and counter against the available facts. Here is the text of the editorial:
CABARRUS COUNTY- NORTH CAROLINA HIGHEST TAX INCREASE
by Cabarrus County Commissioners Robert M. Freeman and Coy C. Privette
Can you believe it? Conservative Cabarrus County in 2 years will have a 39% increase in property taxes. In 2004 with property re-evaluation, there was a 20% average increase in property values which meant a 20% increase or more in your property tax. For 2005, three commissioners (Carolyn Carpenter, Bob Carruth, and Joni Juba) have added another 19% to the tax burden of senior citizens and working families in this county which will be the highest tax increase of any county this year among the state’s 100 counties.
That’s right!!!! This occurred in Conservative Cabarrus County. This is only one of 7 counties in the state that voted for Republican Presidential Nominee, Barry Goldwater, the father of today’s conservative movement, and one of 17 counties that supported Republican Gerald Ford for President against Jimmy Carter.
OTHER CONSERVATIVE REPUBLICAN COUNTIES
While Cabarrus is raising its tax rate 19%, how do we compare with other counties with a Republican Board of Commissioners? Looking at counties with a comparable population and growth rates, you find this interesting comparison:
- Alamance (Burlington & Graham): 56.5 cents;
- Catawba (Hickory & Newton): 49 cents;
- Davidson (Lexington & Thomasville): 55 cents;
- Iredell (Statesville & Mooresville): 43.5 cents;
- Randolph (Asheboro): 52.75 cents.
- CABARRUS (CONCORD&KANNAPOLIS): 63 CENTS
WHAT HAPPENED????
2004 Budget Debacle
When many counties have a property re-evaluation, they will reduce the property tax rate to result in a revenue neutral situation. County Manager John Day presented a budget without any tax rate reduction. Three members of the board felt that the tax-payers needed some relief in light of this 20% or more tax increase. Therefore, the tax rate was reduced from 56 cents to 53 cents with Commissioners Carruth and Carpenter voting against it.
County Manager John Day sent out an e-mail with the typical bureaucratic scare tactics: “If you reduce the tax rate from 56 cents to 53 cents, we will have to close the veterans office, the senior center, cut the funding for the arts, curtail the operation of our libraries, and on and on the list read.”
We cut the tax rate over the opposition of Carolyn Carpenter and Bob Carruth. Guess what? None of Day’s “doom and gloom” predictions came true.
IS A 19% TAX INCREASE NECESSARY????
NO!!! NO!!! NO!!!
Since property re-evaluations averaged some 20% which provided additional revenues for both the county and the municipalities, City Managers Brian Hiatt of Concord and Mike Legg of Kannapolis produced budgets with NO property tax increases.
Yet, with this additional income, County Manager John Day wanted more.
Government needs to learn to do what tax payers do —- live within its income.
How do you do that?
There are two ways to draft a budget: 1. Determine the amount of anticipated revenues and assign departments their percentage of the budget. 2. You can have departments to present budget requests, and then you fund those requests. You will have departments that always want more and more. Sometimes you have to say: “You get your share and no more.”
If the anticipated revenues of Cabarrus County is going to be $140 million, you make the debt payment first. Then, for example, you allocate to Dept. 1: 11%; Dept. 2: 9% etc. until you allocate the $140 million in anticipated income. You derive a budget with no tax increase.
Some of you can remember when the state legislature used to have a surplus year after year. Some years it would be $200 million; another $400 million; another $600 million; etc.
Now, we see budget short-falls year after year exceeding a billion dollars. What happened?
In the legislature, you have two “money” committees: 1. The Finance Committee which raises revenues and 2. The Appropriation Committee which spends revenues.
There was a time when the Finance Committee would instruct the Appropriation Committee: You have $10 billion in available revenues. Draft your budget within this limitation. Then, with a growth in revenues, you would have a surplus. In recent years, the Appropriation Committee finalizes a budget, and then tells the Finance Committee that we must have $12 billion, and the result is a tax increase.
There is a difference in spending what you are going to receive than spending in what you like to spend. In your personal life, you don’t go to your employer and say: “I need a $5,000 raise. I have been living beyond my means.” You are grateful for the job you have, and you live within your means. Government should do no less.
FUND BALANCE
We have heard a lot about the fund balance or the savings account. The state recommends that the county maintain an 8% fund balance in case of emergencies. Cabarrus County established a fund balance policy of 15% which is almost twice the amount the state recommends.
In the Audit Presentation prepared by our Finance Department for the year ended, June 30, 2004, it was noted that our budget expenditures were $134,618,398, less 15% fund balance policy of $20,192.745. This left $8,196,185. additional revenues to apply to our 2005 budget. We used $4,062,835 to reduce the tax rate from 56 cents to 53 cents. This made available $4,133.350 to apply to the 2005 budget.
Moody, one of our bond rating agencies, said that we fell below our 15% fund balance policy. According to the information from our Finance Department, we had set aside the ample funds.
Why the discrepancy? Someone else will need to answer that.
Questions have surfaced about the use of our Fund Balance or savings account. At one time, we did have $100 million in the fund balance. Yes, we did use some of it for the purchase of land and architectural fees to build 14 schools. Yet, our Finance Director reported to the commission on June 30, 2004, we had $36,720,936. in our fund balance which is around 26% of our budgeted expenditures.
14 NEW SCHOOLS
Our critics are right. When we campaigned for this office, we said let’s PUT KID’S FIRST. Our records proves it: 14 new schools. Commissioner Bob Carruth (I.T. June 19th) appears to be upset that the county issued Certificates of Participation (COPS) to build 14 schools in the last 10 years: one high school; 4 middle schools; and 9 elementary schools. Since Carruth joined the board, he has voted in favor of these measures (COPS).
In addition to the 14 schools, we funded a new school administration building and 5 auxiliary gyms.
It appears to us that we have PUT KIDS FIRST and did it without raising taxes.
SCHOOL ADEQUACY FEES
Furthermore, since unprecedented growth was creating the need for more schools, we felt that if you are a contributing cause of a problem, you should help to pay to alleviate it.
In this light, we provided the leadership to enact a $4,038 school adequacy fee for new homes in subdivisions. This is the largest such fee in the state and will help to pay the debt on the new schools. Rumors are now floating around that some commissioners would like to reduce this fee. We hope not. Even other counties are now exploring this option to fund building schools.
USING THE FUND BALANCE
Carruth raises questions about the wisdom of using the fund balance. When is it permissible to use the fund balance or savings account? The standard accounting guideline is:
Fund balance represents the excess of current assets over current liabilities. For accounting purposes fund balance is calculated as of year-end and is based on the difference between actual revenues and expenditures for the fiscal year. If revenues exceed expenditures, fund balance is positive. Fund balance may be carried forward and appropriated to finance expenditures in the next fiscal year.
This is exactly what we have done. We have used these funds to purchase land and pay architectural fees for 14 schools and even to provide some tax relief.
A SPENDING PROBLEM
Governmental bodies ought to do as taxpayers do - live within its income.
It is interesting from reading Carruth’s article you would think that we have a revenue problem in Cabarrus County. He is wrong. We have a spending problem. In the last 10 years county revenues have increased a whopping 63.5%. County Manager John Day is responsible for providing a budget to the commission. If you know Day, you will agree with me that he is a likeable person. He wants everyone to like him. In order to feed this personality trait, he can’t say NO. Budget requests are made, and he approves them and passes them along to the commission. If the commission doesn’t approve them, he can say: “It is not my fault. I made the request.”
When you pay someone the salary and benefits that he receives, you would expect some administrative discipline. He lacks that quality, and that is sad because he has so many other positive traits.
CARRUTH ATTACKS THE 53 CENT BUDGET REQUEST
When we saw the improper procedures being implemented during the budget hearings, we felt that such needed to be corrected.
When we heard from the first department’s explanation, Commission Chair Carolyn Carpenter asked for a motion to approve that request.
Budget procedures require a public hearing before you vote on any budget matters. Her actions were totally out of order.
Vice Chairman Carruth then asked for a motion to give tentative approval for each department’s request. After doing some additional research, we have discovered that no votes on budget matters are permitted until you have a public hearing.
After this charade was conducted, we made the motion to set the tax rate the same as it has been this year: 53 cents. Of course, it was defeated by a 3 to 2 vote. If it had passed, it would have required County Manager Day and his staff to bring the budget in line with the 53 cents tax rate.
In Carruth’s article (I.T. June 6th), he went on a tirade that 50 cents of the 53 cents would be needed for debt payment, mandated services, and critical governmental functions. He contended that would only leave 3 cents for other functions such as parks, veterans, aging, libraries, etc.
He ought to know better. What he did not tell you that In this year’s budget, only 47.5% will come from property taxes (53 cents tax rate). The other 52.5% will come from sales taxes, cable franchise fees, intergovernmental revenues (state and federal grant moneys), permits and fees, investment income and other revenues for various activities. and revenues which will pay for the other services. The county has more money than you have been led to believe.
UNPRECEDENTED WASTE
It has been disturbing to us of the waste and unethical tactics that have been so prevalent during the year.
LEGAL FEES: When the county had a case before the State Personnel Commission on June 17, 2003, regarding a personnel matter, County Attorney Fletcher Hartsell could not represent the county due to legislative duties. His designee did not show up, and the commission ruled against the county resulting in a $130,000 settlement that the county had to pay. He promised the commission: “I will assure you that this will not cost the county a dime.”
To this day, the county has not received a “dime” to repay toward this settlement.
When we also learned that the county had paid Hartsell-Williams around $300,000 for part-time legal services, we decided that it was time to employ a full-time staff attorney. Marilyn Porter, who had done so much contract legal work for the county, was employed at a salary of $90,000 a year.
UNETHICAL TACTICS: When the county was involved in a dispute over the providing of water for unincorporated areas of the county, Porter was informed that County Manager John Day, Carolyn Carpenter, Bob Carruth, and Joni Juba had a secret meeting with Concord officials thus violating the integrity of the State’s Open Meeting Law. When Porter informed other members of the commission of this matter, the “wheels” began to turn to fire Porter, and they did. Former County Attorney Fletcher Hartsell was brought back as an interim County Attorney and still remains today.
WASTED LEGAL FEES: When the county manager along with Carruth, Carpenter, and Juba decided to drop the legal challenge on the water dispute, the county had invested some $75,000 in legal fees. More tax-payers money went down the “drain”.
IMPROPER USE OF SCHOOL BOND FUNDS: When the commission agreed to purchase 66.7 acres of land for the new Hickory Ridge High School at $30,000 an acre, County Manager John Day recommended that the county purchase an additional 40 acres be purchased at $30,000 an acre for a greenway. Then, we learned that this land was in a flood plain. Because flood plain property is basically worthless because you can’t build on it, it normally sells for one to five thousand dollars an acre, according to land purchasers.
When the county manager was asked: “Since we have such a tight budget, where are we getting the money to make such a purchase?”
His reply was: “School Bond Revenues.”
It was our thinking that the voters approved a $98 million school bond referendum for those revenues to be used to build schools and not land for a greenway.
Be that as it may - the commission voted 3 to 2 to approve the purchase.
CLASSIC EXAMPLES: These are just a few examples how our county government under the leadership of John Day, Carolyn Carpenter, Bob Carruth, and Joni Juba have been wasting your tax dollars. We can see why they think that we must have the largest tax increase of any county this year in the state.
CONCLUSION
After 15 years as an elected official, you learn some valuable lessons. Some officials have never seen a tax increase that they did not like. They give in to this group and that group in order to win their favor. We have some who can not identify or will not seek to understand the heavy burdens a lot of senior citizens and working families are under. Many seniors are really struggling, and it seems no one really cares. Hundreds of families have had to take major reductions in their family incomes due to job losses. Many have lost their homes.
If city governments can tighten their belts and impose no tax increases, county government ought to do the same.
Public office is a sacred trust, and we take that obligation very seriously.
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