Nearly $0.27–that’s what it would cost to fund every need in the Orange County FY27 budget.
According to budget manager Scott Johnson, the budget process began with department leaders making requests for the projects they wanted to complete in the upcoming fiscal year. Those totalled approximately $21.5 million or a 26.98 penny increase on the real estate tax rate. A penny yields $798,428 in real estate tax revenue. Three rounds of reductions were then made, eliminating a variety of 26 projects and new positions in the general fund and 20 in the fire/EMS fund, decreasing that $21.5 million down to $7.1 million, or 8.84 pennies on the real estate rate. With further refinements, that number was again decreased, leaving an increased tax rate of six cents.
The new rate, $0.62 per $100 of assessed value appears to be flat on its face value as it is the same as the current rate, but isn’t. The recent reassessment, which the county now conducts annually, resulted in a 16.88% increase in real property values. By law, the county must equalize the real estate tax rate to within 1% of the prior rate’s tax revenue. The equalized rate would be $0.56 per $100 assessed value. The $0.62 rate is a six-cent increase. It’s split with $0.46 as the general levy and $0.16 as the fire/EMS levy.
District 2 Supervisor Ed Van Hoven said the distinction between the equalized rate and the proposed rate is an important one.
“It may look like we kept your taxes the same,” he said. “No we didn’t; we raised you six cents.”
Even with the increase, the budget still utilizes a beginning appropriation of approximately $1.8 million from fund balance and a $250,000 one-time transfer from the COVID Fund.
“We’ve deferred 21-cents of investment we should be making, but can’t because instead of a $0.62 rate, we’d be $0.83 if we were to fund the obligations,” District 5 Supervisor and board chair Bryan Nicol said. “And we’re using fund balance almost to the tune of $2 million. We’re not in a great budget situation.”
The average homeowner will see an approximately 5.7% increase in their real estate tax bills under the proposed rate.
“We will ultimately have to do one of two things–stop building homes that cost us money or start increasing business which makes us money,” Nicol said. “We aren’t even talking about wants in this [budget].”
He said the budget is cut to the bone. District 3 Supervisor Keith Marshall questioned if there could be a fourth round of reductions.
“We’re saying this is the bottom of the line, basic everything included is a necessity, there’s no more room to cut,” he asked.
“I would agree with that, yes,” Johnson said.
Despite the reductions, the budget includes 19 of the 42 full-time positions that were requested, including two sheriff’s office deputies and an administrative captain. The sheriff had requested four deputies and the captain position. Volunteer fire departments will receive some funding and the 19 positions include 15 in the fire/EMS fund. As part of the budget, fire and EMS will begin 24/72 shift schedules to reduce the need for overtime. The change is estimated to save $600,000 annually and reduce turnover. County employees will receive a 3% of grade midpoint market wage adjustment to align with anticipated state increases and the public safety career step plan will continue. A 21% health insurance increase is also covered for existing county positions.
The budget allocates approximately $29.4 million to the school system–$26.2 million in the operating fund, $778,666 in capital and $2.4 million in debt service. The total amount is approximately $2 million less than the requested amount.
Capital projects in the county budget include sheriff’s office vehicle replacements, voting equipment, IT replacements, HVAC and roof replacements, the lighting of a pickleball and tennis court in Locust Grove, fire and EMS equipment replacements and $90,000 for a Lake of the Woods rescue unit. Approximately $22 million is included in debt service, with the FY27 payment totaling approximately $1.4 million. This includes the career and technical education complex project, seven school buses and three ambulances.
Utilizing $1.8 million in fund balance to structurally balance the budget puts the county approximately $81,000 outside of its fiscal policies. The policies reserve 15% of fund balance as fiscal stability funds, 3% as additional fiscal stability funds and 8% as a health insurance reserve. As of June 30, the general fund balance is estimated to be $27.7 million.
“That’s saying, ‘okay, now you’ve had to do this, that’s as far as you can go,’” District 4 Supervisor Crystal Coleman said. “You cannot go any further. You’ve dug as deep as you can into that general fund balance.”
A budget public hearing will be held April 28 at 5 p.m. with a subsequent hearing on the real estate tax increase May 5. Adoption of the budget is anticipated to occur May 12.
