HomeMy WebLinkAboutC.054.93011_0243 (2)increasing at five percent. They are currently increasing at 2.25 percent. Property tax
revenue projections in the plan are also too optimistic. When the manufacturing jobs left,
because of trade agreements and other policies imposed by the federal government, the
manufacturing equipment left also. This has resulted in property tax revenues being
nearly flat as opposed to increasing at 5 percent annually as predicted in the plan. The
result is the revenue needed to fund the plan will not be there.
"The second problem is the plan uses maintenance money to make payments. This
is unwise. The response to this concern has been, `We will take that risk.' However,
existing facilities will deteriorate while the bondholders get paid. This is not a risk worth
taking.
"Thirdly, the Local Government Commission, that has to approve the debt of local
governments, recommends that debt service should not exceed 15 percent of a county's
budget. This plan takes Iredell County's debt to 18.03 percent. The schools' response to
this concern is `15 percent is only a recommendation.' This is true, but the county has
other capital needs and a high debt ratio will hurt the county when we return to the bond
market. Therefore, a decision to exceed this ratio may be allowable, but it is imprudent.
"The Local Government Commission is adamant that construction bids, major
permits, and Phase I environmental studies are to be obtained before the bonds are sold.
The rebuttal has been, `The LGC has deviated from this policy on other projects in North
Carolina.' Even in the unlikely event that they would, this too is unwise. Should we
borrow money for a plan without knowing exactly what it will cost?
"Lastly, but most devastating to the plan is that the Local Government
Commission requires level principal payment rather than level payment. The part of the
plan dealing with debt service uses an amortization schedule based on level payment.
This schedule shows a surplus of $2 million after the first payment is made in the first
year. Under the level principal payment required by the LGC, there is no surplus.
Instead, there is a $5.6 million deficit.
"This will result in a substantial tax increase. This increase would come on top of
last year's reevaluation which more than doubled the property taxes of many working or
retired folks in Iredell County.
"As you can see, the reluctance of the commissioners to endorse the plan is well
justified. We have appropriated nearly $203 million to improve school buildings in the
Iredell-Statesville School System. $45,162,035 has been appropriated to the Mooresville
Graded School District. This brings the total spent on school buildings in Iredell County
during the last 12 years to $248,111,753. We all realize we must continue to build new
schools and improve older buildings. Any future plan must include realistic revenue
projections and procedures in compliance with the Local Government Commission's
guidelines. The present plan may be well intentioned, but it is unworkable. $24 million
worth of projects are underway today. This was accomplished with cooperation between
the commissioners and school board using realistic financial projections from our highly
competent county staff.
"My desire, and the desire of every county commissioner with whom I have
served, is to see continued improvements in our school buildings. In the last 12 years we
have built new schools, air-conditioned all the existing schools, built science labs and
media centers. More needs to be done and more will be done. Let's put a proven strategy
back to work. A strategy based on sound financial planning and realistic projections."
Commissioner Madison said he appreciated Mr. Johnson making the comments
PUBLIC HEARINGS