Wake County is cutting back on the amount of money it puts into capital projects.
During the County Commission’s work session Monday, County Manager David Cooke explained that the county puts in 15.76 cents per dollar of property tax into the debt/capital fund. For the third year in a row, the county borrowed from that pool to put more money into the operating fund.
Each time they robbed Peter to pay Paul, it was labeled as a “temporary” or “one-time” move. Cooke said he wants to institutionalize what has been taking place for three years.
“We’re permanently making that reduction in the tax rate to capital,” he said.
If approved by commissioners as part of the Fiscal Year 2012 budget, the new debt/capital rate will now be 15.5 cents. The fiscal year begins July 1.
Wake County’s property tax rate is 53.4 cents per $100 of assessed value.
That change will not affect the county’s ability to pay its debt, said Nicole Kreiser, the county’s debt and capital director.
However, the reduction will affect the county’s projected balance for future capital projects, cutting it by $19 million by Fiscal Year 2018.
That information was part of a presentation on the county’s seven-year Capital Improvement Project plan. The 2012-18 plan was originally presented to Commissioners during their February retreat. An updated version was issued Monday, ahead of the new fiscal year.
In addition to the amount of money coming into the fund, the other big changes are:
- The county’s updated predictions for the property tax base come in at $120 billion for Fiscal Year 2012, expanding from the estimated 0.75 percent growth to 1.03 percent growth.
- The March sale of $116.8 million in bonds for open spaces and schools was not as expensive as expected, with the true interest cost coming in at 3.36 percent instead of the expected 4.17 percent.
- The appropriate for the county’s new Justice Center is reduced by $3.2 million due to savings.
In other business, the county will change the way it names its fund balances. The change creates five “buckets” of money instead of three and is required by the Governmental Accounting Standards Board.
Commissioners speculated the move might make it tougher for Gov. Bev Perdue to require them to use fund balances to pay for services now funded through state dollars.
In efforts to balance the state budget, Perdue has said counties may need to take on more state responsibilities, even if it means using undesignated fund balances to pay for it. Counties are only required to keep a balance of 8 percent of their operating budgets. However, one fiscal official said at least 15 percent is needed to maintain Wake County’s AAA bond rating.
Cooke has previously opposed the idea, indicating that the county’s undesignated fund balance is $0, despite what might appear to be more than $95 million sitting in the bank.
Under the new system, the funds more specifically designate money for specific types of projects or from a certain type of funding source, such as the federal government. The change creates an “unassigned” fund similar to the old “undesignated” fund.
Based on the new criteria, the county’s “unassigned” fund would still be empty, Cooke said.
The commission will formally consider the change at its meeting May 16.
