The county will delay some capital projects, temporarily freeze new hiring and reduce funding of several agencies to cover a $340,000 shortfall in state reimbursements.

County Manager David McNeill Jr. said Tuesday that he has instructed county finance personnel to carry out these measures to balance the budget for the remainder of the 2000-01 fiscal year. It is his response to the state’s fiscal emergency.

“I tried to spread it out as much as we could without inflicting all the pain in one particular area,” McNeill told The Pilot.

McNeill said the cuts should have no adverse effect on the efficiency of county government operations. The measures include reductions in funding for the public schools, Sandhills Community College and Sandhills Mental Health.

“Some items cut may be as simple as not ordering new letterheads,” McNeill said. “Sometimes departments try to spend all their budget money before the end of the fiscal year.”

The county expects to save $111,000 by delaying hiring for open positions, except in areas of public safety and public utilities. It also includes eliminating nonessential out-of-county travel and training costs and delaying or eliminating some purchasing initiatives.

McNeill’s decision shifts, but does not eliminate, $75,000 of the county’s match for the Monroetown Community Development Block Grant from this year to the 2001-02 budget year. McNeill said this change should have no effect on progress in carrying out the Monroetown water extension project, for which the county has received a $446,500 federal grant. The county’s match totals $125,000.

McNeill said he is asking the Moore County Public Schools to reduce its budget by $50,000. He has asked Sandhills Community College to cut $10,000 and Sandhills Mental Health Center to cut $2,000.

The remaining cuts call for delaying or reducing specific outlay items, including $50,000 from funds designated for land acquisition to provide a buffer for the county landfill off N.C. 5 between Pinehurst and Aberdeen. This item was budgeted for $150,000, and McNeill has cut the amount to $100,000.

Other reductions are include, $20,000 for the elections absentee voting system, $17,000 for the Lobelia container site acquisition (from $37,000 to $20,000) and $5,000 for a library telephone system.

More Cuts?

McNeill is far more concerned about the effect the state’s financial crisis will have on next year’s county budget than he is about these current reductions.

So far, Moore County is losing $340,000 in funds that the state was scheduled to pay as the remaining reimbursement for the inventory tax. The county has already received 40 percent of the state’s reimbursement for the 2000-01 year. The $340,000 represents the remainder of the total $625,000 reimbursement.

McNeill’s concern centers on the likelihood that the state will not be able to fulfill its obligations to local governments in the next fiscal year. In developing the new budget, the state will be looking at numerous ways to handle an expected shortfall of almost $800 million. Some financial analysts are predicting the shortfall may be closer to $1 billion.

If the trend of cutting state reimbursements to counties continues, Moore County stands to lose the full $625,000 for the inventory tax and worse, about $2 million for the intangibles tax.

“It will put us in a much tighter position next year, whether we budget it or not,” McNeill said.

The state legislature voted to provide reimbursements to local government after repealing the inventory and the intangibles taxes a few years ago. Although local governments have accepted these reimbursements, many, including Moore County, have complained that the state’s payment does not represent the full amount the county would have received had the taxes remained in effect.

Reimbursements Frozen

McNeill said that the state has effectively frozen the amount of these reimbursements and not taken into account normal growth that would have occurred.

“Reimbursements have been a sore subject for counties,” McNeill said. “I think it’s an opportunity to give counties a permanent revenue source, certainly a revenue source they can control.”

He points out that if Moore County were reimbursed at the rate of growth enjoyed in recent years, the county would have been receiving between $3 million and $4 million for the intangibles tax alone. Because the state has frozen the reimbursement at the level in place when the tax was repealed, the county receives a $2 million annual payment.

McNeill said examples of new revenue sources are an additional sales tax, impact fees, land transfer fees and similar taxes.

He noted that in some places the room occupancy tax is higher than the one charged in Moore County to support promotion of tourism. Another example is the tax on meals.

“I’m not promoting any particular one of these taxes, but it needs to be examined,” McNeill continued.

The county’s financial situation may worsen with if the recession continues. Its effects are being felt elsewhere across the nation.

McNeill and county financial officers, including Deputy County Manager Michael Griffin and Financial Services Director John Frye, are keeping an eye on such things as sales tax collections and Register of Deeds fees. The county saw a loss in new building starts most of last year.

“I don’t think the state should fix its budget problems on the backs of the counties,” McNeill said. “While we’re not impacted as much as some counties, that $2 to $3 million loss is something we don’t want to take. I think it’s an opportunity for the state to re-examine this situation and see what revenue sources can be given to cities and counties so we can avoid this in the future.”

State Budget Crisis

Gov. Mike Easley declared a state budget emergency last week. He announced plans to cut funds in several areas in order to make up the shortfall estimated at $791 million by the end of this fiscal year, June 30.

His plan calls for cutting $95 million in payments to municipalities and counties.

Easley also targeted state retirement funds at $151 million, $157 million in the “rainy day” fund, $95 million in federal funds, $50 million in Employment Security Commission job training funds, and $40 million in unspent Hurricane Floyd relief funds. The governor also cut a number of capital and renovations projects, including some at the state zoo, museums and hospitals.