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Mecklenburg supervisors eye rainy day fund / August 04, 2021
The Mecklenburg County Board of Supervisors is moving toward creating a “rainy day fund” with tens of millions of dollars socked away to pay for future needs or to smooth over revenue disruptions.

In response to concerns raised by Supervisor David Brankley, County Administrator Wayne Carter this week asked members of the board’s budget and finance committee to explore the idea and the appropriate sums that the county should place in reserve.

Carter said he can recall a time when Mecklenburg County had only $72,000 available to spend, which was not enough to cover costs for more than a couple of days.

Currently, the county has $39,325,767.23 in unobligated funds. But it also has $110,130,485.01 in debt service.

Financial advisors recommend the creation of a rainy-day fund equal to 15-20 percent of unassigned money, or an amount equal to two months of the total budget, at a minimum. Based on the current FY2022 budget of $97,572,265, a 20 percent reserve would require Mecklenburg County to maintain at least $19,514,453 in its coffers.

Carter said the ideal is for the county to establish a reserve of at least 40 percent of its budget to cover debt service. That would require Mecklenburg to set aside $39,028,060 in unobligated funds.

While the $39 million in unobligated funds that the county currently has in reserve appears to exceed that recommendation, Carter reminded supervisors that the treasurer’s office will not receive its next influx of state funding until November at the earliest. There have been times, in the past, where the state has not paid its obligations when due.

Carter explained that he calculated the county’s available funds by starting with the current budget of $142,419,195. After subtracting economic stimulus grant funds of nearly $45 million, plus other sums — $8.5 million in bond payments, $11.3 million in funds held in other accounts, such as the textbook and school food monies, $27.68 million for the current school construction and $7.1 million for approved capital projects such as the new convenience centers and the cost of demolishing unused schools — Mecklenburg County is left with $39.3 million to cover operating costs.

Carter recounted more than one instance where the state did not reimburse Mecklenburg for monies owed for at least two years. If the current unobligated $39 million was held in reserve, Mecklenburg County would be left with less than $300,000 in operating capital if state funding were interrupted.

Carter said supervisors need to plan for a future where there is no Microsoft — a major source of revenue to Mecklenburg County. “Very few companies still operate here that existed 20 years ago. Sooner or later data centers might go away,” he said.

He predicted that within the next two to three years, the county will have to take on financial support of EMS services at an estimated cost of $5 million annually. This amount would be added to an ever-burgeoning budget.

Carter said he was not asking the board to increase taxes; Mecklenburg County has not raised its property taxes in the past three years. He said a one-cent real estate tax increase only generates about $450,000 in revenue.

His recommendation is for supervisors to take money out of the year-end reserves starting in FY 2022. Carter said he would work with Treasurer Sandra Langford to come up with a workable number.

Jim Jennings called for the board to take “as aggressive approach as possible, one that everyone is comfortable with,” suggesting the end goal should be an amount higher than 40 percent of the debt service. Hearing this, Carter replied, “It would take years to get there.”

Brankley weighed in by saying, “We’re fortunate to have been able to keep taxes down, but it’s important to start today so the public is not hit by a large tax increase at one time.”

No one raised the issue of what this plan might mean for future construction needs of Mecklenburg County elementary schools. Carter reminded members of the budget committee that “the schools are just one [entity] with their hands out.”

In other business, members of the budget and finance committee recommended lending Transtech Alliance, formerly known as Virginia Growth Alliance, $52,611.87. Transtech Alliance is a regional economic development organization serving five localities in southern Virginia — Brunswick, Charlotte, Greensville, Lunenburg and Mecklenburg counties.

Carter said Transtech is “out of money so Mecklenburg County needs to loan them money.”

Jeff Reed previously served as executive director of Transtech. He left the post in May and the Alliance is currently seeking a new executive director.

Carter said the organization is expecting to receive grant money from both the Virginia Tobacco Commission and the Virginia Department of Housing and Community Development but he would not speculate as to when those funds might be forthcoming.

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