Proposed county budget unveiled, adjustments to be made as needed

By Debbie Hall and Brandon Martin

Henry County Administrator Tim Hall on Tuesday rolled out the countys proposed spending plan for Fiscal Year 20-21.

The proposed $157,204,902 is an increase of 4.2 percent over the current fiscal year budget of $150,808,768.

Essentially all of the proposed increase is due to mandated expenses, Hall said when presenting the budget during to the Henry County Board of Supervisors.

The plan does not include a tax hike of any sort, with the proposed increase to be paid from current fiscal year revenue, according to Assistant County Administrator Dale Wagoner.

Our revenue this year was actually better than we budgeted, he said.

Hall said level funding is recommended for nearly every aspect of county operations” in the upcoming fiscal year that begins July 1. That means level funding to the school division, no raises for county employees and only one outside agency recommended for a requested funding increase.

He said the school budget drives more than half of the increase, along with other factors such as substantially rising costs under the Children’s Services Act (CSA) and increases in the countys self-insurance program.

He proposed allocating $18,925,432 to the school division which represents level local funding and is roughly $1.1 million less than the school system requested in its March 5 request.

Clearly things have changed drastically since that request was made, and to fully fund this request at this time would be inconceivable, Hall said, adding that the overall proposed school budget is $88,073,018.

Even before the recent economic crisis wrought by the COVID-19 pandemic, Hall said county staff noted that the school system was to receive additional state funding of nearly $3.5 million in each of the next two fiscal years. Clearly any changes coming from the April 22 General Assembly veto session will have significant impacts on the school budget, and there may be further local adjustments required after that, he said.

Costs associated with the Children’s Services Act (CSA) will nearly double, to an estimated $2,050,201, Hall said. We also will face the task of filling CSA cost overruns in the current budget. These costs are rising unabated, because of increases in foster care cases, service provider fees, and other issues. We are told that our costs are better than those of numerous surrounding localities, but that doesn’t make us feel better.

The Henry County Sheriff’s Office requested nearly $2 million in additional funding, both for startup and operational costs and personnel associated with the construction of the new adult detention center, Hall said. These needs, particularly the tasks associated with the new jail, are essential and included hiring and training more than 100 new personnel, establishing the managerial staff and training them for enhanced correctional opportunities.

However, the money to fully implement these updates simply is not available as we write this narrative. Again, as we wander our way out of the haze over the next six months, we hope to readdress these issues, Hall said.

The budget includes no raises for county employee, Hall said, adding that it is the administrative staff’s hope that we can address this issue at some point during the year, most likely with a stipend to all employees.

He said the county’s share of the school system carryover could be tapped to fund the stipends. However, We think it is prudent to hold onto that funding for now, just in case the world goes even more haywire than it already has.

Self-insured health-care costs have increased more than 12 percent compared to a year ago, primarily because of numerous large claims, Hall said. If that increase is annualized over the five years of our self-insurance policy, it is fairly reasonable. However, the past two years have seen significant increases in claims and cost.

A 16 percent increase in payments into the Virginia Retirement System also was noted.

We recommend the county continue to pay 100 percent of the single-subscriber insurance, and for the first time we recommend subsidizing those employees with various levels of family coverage, Hall said. Currently, each employee with that additional coverage is paying for that extra coverage, but this year’s increases are so large that the administrative staff felt we needed to help ease that pressure on employees.

Even if the county subsidizes the increase, Hall said anyone with the family coverage still will pay more than he or she is paying right now; the proposed subsidy would help ease, but not erase, that burden.

Of the 29 outside agencies funded, 14 requested an increase, there simply isn’t enough money to go down that road this year, particularly in light of the uncertain health and economic path we are walking, Hall said.

He recommended the ANCHOR Commission receive its requested increase from $66,192 in current funding to $81,566 in this proposed budget.

Ricky Walker, Director of Operations at ANCHOR, indicated that ANCHOR began 24/7 operations in January. The additional funding is needed to continue that effort, Hall said, adding that the City of Martinsville also helps pay for ANCHOR’s operations.

County staff recommends our increase for ANCHOR be contingent upon the City of Martinsville’s increased participation, Hall said.

A second recommended change is to give the Smith River Sports Complex a $16,000 supplement for one year.

The Sports Complex generates about 54 percent of its operating revenue through field rentals and concessions, and gets about 46 percent of its funding through a three-year grant with the Harvest Foundation, Hall said.

However, he noted that the latest Harvest grant includes a reduction in operational funding to the complex over the three-year period.

Beginning July 1, 2020 SRSC will get a $40,000 reduction in funding, from Harvest, dropping from $200,000 to $160,000. For FY 21-22 the funding will drop to $120,000 and after that go to zero, Hall said.

Again, the recommendation on the county providing funds to the complex is contingent on the City of Martinsville providing $8,000, and the SRSC staff and its board create $16,000 in revenue increases or expense decreases to fill in that $40,000 gap, Hall said.

The bigger question is what happens to the SRSC moving forward. That’s a discussion for another day, but this recommended funding plan for FY 20 ‘21 would at least buy some time to have that discussion, he added.

The proposed spending plan will be reconsidered when things return to normal and we can better gauge the financial impacts on our budget, Hall said, adding that the General Assembly goes back into session on April 22 for what usually is just a veto session. But this year’s return will be chock full of budget adjustments and a realignment of priorities. We will know more then, but we probably won’t like it at all.

The proposed spending plan makes no one happy, Hall said.

Teachers deserve more consideration; public safety professionals, law enforcement and other county employees do too. During the pandemic we are told that only essential employees were exempt from some of the mandates. As it turned out, some of the essential employees are our most underpaid,” Hall  said.

In addition to the pandemic, other challenges highlighted by Hall include the City of Martinsville’s plan to revert to a town, which means certain functions of its governmental responsibilities will be shifted to the county,” Hall said. Reversion, and its mean cousin annexation, will bring change to Henry County for years to come.

Hall said that changes in the political landscape hit us with warp speed this year. Democrats took control of the Virginia General Assembly away from the Republicans, and a host of bills that never saw the outside of a committee room are suddenly the law of the land. Gun-law changes? Yep. Minimum wage increase? Check. Gas tax increase? Check. Changing the Commonwealth’s Right-to-Work status? Not this year, but it’s gaining on the field. Again, all this could change on April 22.

The shift to the Democratic point of view by the voters resulted in a serious recoil by the other side, particularly from the gun lobby and its followers. Who could have imagined in April 2019 that we’d be a Second Amendment Sanctuary County in April 2020? Or that we’d hear the words County militiauttered in a Board of Supervisors meeting,” Hall rhetorically asked.

Even still, Equal Taxing Authority has gone from concept to reality,” Hall said, and explained legislators have given counties the option to impose increases on many of the revenue streams that we previously had to beg for from Richmond. Now it’s our play. Meals tax increase? Lodging tax increase? Admissions tax? Cigarette tax? All or none of the above?

As the community changes its blinders-on focus regarding job creation toward the triumvirate of job retention, new housing opportunities and new child-care options,” Hall said that should not be interpreted as our closing the book on job creation – that is, and will forever remain, our first priority. However, those new job opportunities have placed a spotlight on some things that now require a share of our attention.

For instance, the housing and child care initiatives, undertaken by the Harvest Foundation and the Martinsville-Henry County Economic Development Corporation, need a similar all-encompassing effort. Henry County is a full-time participant here, through many of our departments, and we are confident that success will follow, Hall said.

But, “we venture no guess on where we will be in a year. The only certainty is that we will be making budget adjustments at a record pace, as the true impact of coronavirus and the tanking of the economy reveal their actual damage. But we should be ever mindful of adjusting our sails.

The Henry County Board of Supervisors opted to postpone their April 9 work session and April 20 public hearing on the budget until a date after the General Assembly reconvenes.

Hall said that there are plans to set up an email and hotline so individuals can voice their concerns about the budget before it comes to a vote.

Hall estimated it will take 6 to 8 months to see the economic fallout from COVID-19.

Mark Heath, president and CEO of the Martinsville-Henry County Economic Development Corp. (EDC), also has said it is too early to estimate the pandemics impact on the local economy.

“Events at Martinsville Speedway, Rooster Walk and the Smith River Sports Complex are helpful, as we use them to entertain and showcase the community to prospects and at the same time, they are significant generators for the community’s tourism and hospitality sectors,” he said. “Any postponement of events will have a negative impact, but hopefully one that is short lived.”

Heath said traditional economic development should be impacted less because it is a long-term process.

However, to date, we have dealt with postponement of three prospect visits and EDC staff has postponed two marketing trips, one domestic and one international, Heath said, adding that the plan is to reschedule all when travel returns to normal.

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