Buncombe County commissioners may plug an impending budget gap by cutting fringe benefits for employees.
Interim County Manager George Wood said in a Sept. 11 memo to commissioners that, taking into account increases in automatic employee raises, a projected bump in health insurance claims and the potential for larger funding requests from local school systems, the county could see an approximately $1.7 million deficit in FY 2020.
“This is a structural budget deficit that will recur every budget year unless expenditures are brought into line with revenues,” Wood wrote.
Commissioners will consider the change during their regular meeting at 5 p.m. Tuesday, Sept. 18, in the third floor conference room at 200 College St.
Wood proposes that commissioners look for savings by shrinking the county health insurance plan and restricting a policy that allows employees to sell unused annual leave back to the county.
An indictment filed on Aug. 7 points to the county’s annual leave policy as a means by which former County Manager Wanda Greene, former County Manager Mandy Stone and former Assistant County Manager Jon Creighton allegedly enriched themselves at the expense of taxpayers.
The indictment says the former officials did not use leave time when they took lavish vacations on the dime of a county contractor. Instead, the officials claimed they had worked during these time periods, allowing them to preserve leave hours.
Wood compared Buncombe to nine other counties, including eight of the most populous counties in North Carolina. Out of those counties, only Mecklenburg and Buncombe have policies that allow employees to sell unused leave back to the county, Wood wrote.
Mecklenburg only allows employees to sell a maximum of one week of unused time, while Buncombe allows employees to sell more than 300 hours back the county.
Wood has proposed reducing Buncombe County’s cap on selling unused vacation time to one week, saving almost $350,000, while also ensuring the county can offer a still-attractive benefit to potential employees.
The changes Wood proposed to the county’s health plan would replace three existing plans with two options: one with a high deductible and a health savings account, and an 80/20 plan that uses Blue Cross Blue Shield’s preferred provider organization.
Employees choosing the first option would have $1,000 deposited in the employee’s health savings account annually and would pay premiums that cost half those of the PPO plan.
The new health plans combined with the changes to the annual leave policy would save the county $1.6 million, Wood wrote.
Wood said it is up to commissioners to find a balance between the benefits the county provides to its employees and the cost passed on to taxpayers.
“To provide below-average pay and fringe benefits would cause higher employee turnover and morale issues,” Wood said in the memo. “To provide above-average pay and fringe benefits would place an unnecessary tax burden on the taxpayers.”
While Buncombe County could face an estimated $8.1 million property tax windfall from the sale of the nonprofit Mission Health to the for-profit HCA, Wood advised commissioners to approach this figure carefully — and with a grain of salt.
Mission’s assets, Wood wrote, have not been appraised by the tax assessor’s office. “It will take a detailed appraisal of all the assets, including real and personal property, minus depreciation, to determine the actual estimated property tax proceeds,” he wrote.
Wood said the county could use the money from the sale to balance the FY 2020 budget, which could face gaps caused by the decision to use nonrecurring funds, which Wood described as “one-time money,” to balance the FY 2019 budget.
In the FY 2019 budget, the county used $675,000 in capital project savings to replace fleet vehicles, transferred $1.5 million from its health insurance fund to the county general fund and used about $1.5 million out of the A-B Tech capital projects fund to pay for college operating expenses.
Some of these practices, if continued, could be unsustainable, Wood wrote. The county’s health insurance fund faces a 10 percent annual increase in medical costs, and expenditures to the A-B Tech fund are outstripping revenues, which could shrink the fund balance to $2.8 million by FY 2021. The fund balance on June 30, 2017 was about $17.6 million.
“And we are not even budgeting adequately for [A-B Tech’s] capital maintenance needs,” Wood wrote.
Adding the $1.7 million shortfall to the $3.7 million in nonrecurring revenue from FY 2019 that won’t be available in FY 2020, Wood said the county faces a combined structural deficit of $5.4 million.
“This has to be addressed,” Wood wrote.