February 26, 2002

The Honorable Calvin Taylor, Chairman
The Honorable Robert Farmer, Vice Chairman
The Honorable Wayne Acors
The Honorable D.M. "Maxie" Rozell
The Honorable Floyd Thomas

Dear Chairman Taylor and Members of the Board of Supervisors:

I am pleased to submit to you the official Budget document attached hereto for the 2002-2003 fiscal year, which also includes the five-year Capital Improvements Plan.

The Budget is submitted to assist the Board of Supervisors in making policy decisions that are geared to meet the challenges of a growing community, as well as lend itself to public scrutiny through input from taxpayers and the media. The Budget is also designed to incorporate extensive financial controls and pursue goals of efficiency and effectiveness by balancing short term and longer-term community interests.

The 2000 Census figures reported Caroline County's population as 22,121. A 2001 update by the Weldon Cooper Center has listed the County's population at approximately 22,500. Even at a much slower rate than our neighbors to the north and south, Caroline County continues to show growth. Financial planning will be a key component to meeting the challenges of change as the County celebrates its 275th anniversary throughout the next fiscal year.

Caroline County continues to experience the lowest unemployment in its history. The national recession contributed to an increase in unemployment, which showed at two percent in December, 2000, according to the Virginia Employment Commission. The County's current unemployment rate of 3.8 percent is under the state and national averages. Per capita personal income has also risen dramatically and the 1999 estimate stands at $21,887.

The overall Budget proposed is $53,648,786, which is $3,219,300 or 6.4 percent greater than the Budget document amended for fiscal year 2002. The Operating Budget is $44,453,271, which is $749,335, or 1.7 percent greater than the amended amount for fiscal year 2002. The General Fund Budget is $21,067,498, which is $1,645,826, or 8.5 percent greater than the amended amount for fiscal year 2002.

As a percentage of the total Operating Budget, the Education function continues to be the predominant use of funds with 58 percent proposed for school operations, not including capital projects. Public Safety at 10 percent and Public Works at 10 percent also contribute significantly to the overall cost of the Budget.

As indicated in Chart 2 on the following page, the Intergovernmental revenue funding sources (State and Federal) at 49.1 percent and General Property taxes at 34.8 percent provide the bulk of the funding of the total operating budget.

Caroline County has shared economic success with the rest of the country, state and region. This trend came to a halt approximately a year ago, and was worsened by the events surrounding September 11. Adding to the dilemma has been gridlock in the General Assembly on financial matters, with funding for localities continuing to be uncertain. Legislative leaders have vowed that a balanced state budget will only be accomplished with local governments contributing more. The unpredictable state financial condition continues to put pressure on local resources to provide quality services with less revenue to work with.

The Board of Supervisors can be pleased with its efforts over the years to make responsible financial decisions. As a result, Caroline County is in better shape to weather the state and national storms than many localities. In December, the Board asked staff to reduce its current Operating Budget by $250,000. Staff's actual recommendation came in at $270,000, and that money went directly to increase the Fund Balance and prepare for even more difficult times that are projected on the State level.

In light of the uncertainty in State funding, the Budget is still submitted for your consideration without a request for additional increases on the real estate tax rate, which is .75/$100. Last year's reassessment of general property has been estimated at increasing revenues by 14 percent. Funds from this increase, mixed with reasonable growth in business and utility taxes and greater accountability for departmental spending, have provided the cash injection needed to meet expanding service needs.

The County, through this proposed budget, will also be able to closely follow its Comprehensive and Strategic plans that serve as roadmaps for future development. Matching planning with adequate revenues to support expenditures is a great challenge, but it is one that is being met successfully through this Budget proposal.

Before the financial issues for next fiscal year are addressed, I feel it is very important for the Board of Supervisors to reflect on what has been accomplished over the last 13 months, both by Board actions and administrative initiatives. A summary by department follows, which is in addition to the day-to-day responsibilities assigned:

• Completed revised process for developing the Capital Improvements Plan.
• Adopted five-year Comprehensive Plan.
• Continued implementation of Property Maintenance Program for demolition of abandoned structures.
• Developed ordinance prohibiting certain adult activities.
• Begun sub-area plans for Port Royal and Bowling Green-Milford.
  
• Adopted Voter Redistricting Plan.
• In final stages of developing Public Transportation Plan with assistance of FRED to begin March 25, 2002.
• Adopted Strategic Plan.
• Hired Telecommunications Consultant to assist with location of cellular towers.

• Implemented Business Retention & Expansion Program
• Applied for fourth round of TEA 21 funding for Visitor's Center Project.
• Updated County website.
• Implemented "Image Building" Campaign through use of billboard advertising.
  
• Completed Tourism Guide.
  
• Advanced Founders' Program by compiling endorsements and proposing legislation.
  
• Established citizen committees to work on celebrations recognizing 275th anniversary, 30th anniversary of Secretariat's Triple Crown and 200th anniversary of Lewis & Clark Expedition.
• Submitted Tourism Accreditation to state officials.
• Submitted Highway Marker commemorating Gabriel's Rebellion to state officials.

• Completed Strategic Plan for volunteer companies.
• Began development of strategic plan for E-911 operations.
• Increased salary scale for part-time personnel.
• Hosted largest class to date at Spring Regional Fire School.

• Implemented comprehensive training program that includes 24 hours for every employee.
• Completed job descriptions revisions.
• Completed new Employee Handbook.
• Conducted Ethics Training program.
• Analyzed health insurance program for 2002-03.
• Developed revised Equity Pay Plan.
• Implemented Customer Service Program.
• Recognized National Government Week in concert with renovation of Community Services Center.
• Sponsored '"Bring Your Child to Work Day."
• Implemented High School Shadow Day
• Held Adopt-a-Pet-Athon

• Developed partnership with KOA Campground to provide public swimming.
• Increased senior citizen programming in Community Services Center.
• Developed "Hotline" for program announcements.
• Expanded Citizen Relations Program.
• Developed partnership with volunteer fire and rescue companies to utilize signs for announcements and programs.
• Developed partnership with school system to implement 21st Century Grant.
• Developed Equipment Maintenance Program.
• Developed Youth Coach's Performance Program.
• Named Bowling Green mini-park after Supervisor Robert Farmer.

• Installed Milford Pilot Bore.
• Implemented new recycling program.
• Completed Earth Day Project.
• Calculated new rate schedule for utilities.
• Demolished former Ladysmith Convenience site.
• Demolished Days Inn Wastewater Treatment Plant.
• Re-located offices to former Social Services Building.
• Redesigned Consumer Confidence Water Report.
• Completed Phase I of the Ladysmith/VDOT/Carmel Church interconnect.
• Eliminated two school sewage treatment plants.
• Implemented plan for beautification at entry points into the County.
• Completed painting of exterior of courthouse.
• Began construction of Port Royal Convenience Site.
• Retained consultant to assist with Dawn Wastewater project.

• Developed five-year financial plan.
• Selected audit firm to help County move to an accrual system.
• Developed new financial policies for cash disbursements.
• Purchased new AS 400 system.
• Implemented conversion to generally accepted accounting principles.
• Completed financing for Utility System projects.
• Completed Reassessment of General Property.

• Held Summit for Youth as part of Community of Promise Program.
• Published four editions of County newsletter that included citizen surveys.
• Completed 2nd year of Benchmark Analysis of County Government.
• Established Sheriff's substations in Ladysmith & Dawn.
• Started 2nd year of Business Roundtable.
• Launched Lunch Buddies' Program.
• Established Government Information Hotline.
• Held Government Day as part of National Government Week.
• Held quarterly luncheons with representatives of the media.
• Hosted Regional Elected Officials Meeting in January, 2001.
• Worked with Citizens Health Assessment Group (CHAG) to address key issues related to delivery of health care.
• Established "Caroline Cares for Kids" project.
• Dedicated Veteran's Monument on Courthouse Lawn.
• Opened senior citizens' facility in Bowling Green at Community Services Center.
• Assisted Boy Scouts with National Jamboree.
• Finalized design for new courthouse annex.
• Retained consultant to conduct technology needs assessment.

In fiscal year 2003, the following projects are expected to get underway or be completed that are consistent with the Comprehensive and Strategic plans for Caroline County:

• Phase II of the Ladysmith/VDOT/Carmel Church Water Systems Interconnect and Well Development Project.
• Post-closure operations at County landfill.
• Construction of Port Royal Solid Waste Convenience Site.
• Dedication of mini-park in Bowling Green.
• Upgrade of wastewater treatment plant.
• Construction of new courthouse annex.
• Construction of golf course as first phase of Madison Village project.
• Near completion of Mattaponi Springs Golf Course along Penola Road.
• Groundbreaking of 550-home subdivision along Route 1 north.
• New routes added to Public Transportation Program coordinated by FRED.
• Completion of Dispatch center relocation to Community Services Center.
• Construction of first homes of Bauserman subdivision in Ladysmith.
• Site work for VDOT road improvements in Carmel Church.
• Application for grant funds for wastewater project in Dawn.
• Completion of sub-area plan in Port Royal.
• Completion of multi-cultural monument.

The County's financial position remains solid. The Budget for FY 2003 is proposed to stay in line with the Budgeting and Financial Management Policies approved by the Board of Supervisors two years ago. The policies outline desirable levels of fund balance and outstanding long-term debt. The levels are maintained in the proposed Budget, with a General Fund balance of at least 10 percent of expenditures, and capital spending limited to insure that our guideline ratios of outstanding debt and debt service to operating expenditures are not exceeded.

The County remains under pressure because of judicial and regulatory directives to tackle multiple projects at the same time. The closure of the County's landfill, construction of the new courthouse annex and upgrade of the wastewater treatment facility are all projects that the County has been directed to complete in an urgent manner. These projects combined total over $12 million.

At the end of the fiscal year on June 30, 2002, the Fund Balance is projected to be 2,981,525, which is $108,488 greater than the amount ending June 30, 2001. The increase was anticipated when the Board amended the Budget last December as a result of the anticipated shortfalls in State revenues. As of June 30, 2001, the Fund Balance was at 14.9 percent of the General Fund, and the projections for June 30, 2002 is 14.2 percent. The Budget on June 30, 2003 projects the Fund Balance to be at $2,593,766, or 12.3 percent of the General Fund.

Preserving a strong Fund Balance insures the County will have a steady cash flow, and also helps to absorb an unanticipated emergency that would require immediate expenditures. Cash from the Fund Balance can also provide matching funds for state and federal grants and keeps the County competitive in the offering of incentives in the recruitment of business and industry. To help preserve our Fund Balance, steps are being taken to move the County toward borrowing in advance of, or at least concurrently with, capital project spending. This will expand the pool of available cash resources and enable the County to withstand the "dry" periods that inevitably occur in the County's annual cash flow cycle.

Controlling the County's outstanding debt is as important for perception as well as reality. The County's obligations as of June 30, 2001 were less than $1,500 per capita, continuing to keep them in line with most counties in the region. A General Fund contribution of $1,059,358 is proposed for debt retirement, which is $313,592 more than the contribution in FY 2002. Revenue stemming from personal property portion, consumer utility and meals tax receipts are dedicated directly to retiring County debt.

The proposed Budget is focused on managing anticipated growth in a responsible manner that is both consistent with the County's rural character and necessary to improve the quality of life for those citizens now residing in Caroline. Improvements in education, social services, infrastructure, recreation, economic development and public safety are all proposed to expand the services offered to our citizens.

The Budget is designed to meet five fundamental financial goals:

• Stay within financial management policies adopted by the Board of Supervisors.
• Present a realistic five-year Capital Improvements Plan.
  
• Develop a spending plan, both next year and over five years, which is geared to promote customer service.
  
• Present to the Board of Supervisors realistic estimates for both expenditures and revenues.
  
• Establish adequate reserves in Fund Balance and Contingency.

The following revenues have been highlighted to reflect the County's reliance upon these sources:

• Real Property Taxes

Estimated at $8,329,750 million. The total 2001 assessed value of taxable real estate in Caroline is $1,048,381,347. The 2002 and 2003 tax bases are projected to increase from reassessments and new construction. The completion of the Virginia Turbine Power Project is a strong boost for the County's tax base, estimated for FY 2003 at $700,000 per year. Revenues from the last year's reassessment of property are estimated at a growth level of 14 percent. Property reassessment is conducted every four years as mandated by state law.

• Personal Property Taxes

Estimated at $4,477,000. This revenue source has been the center of considerable dispute at the State level because of the phased elimination of the personal property tax on vehicles beginning two years ago. We continue to receive reimbursement from the State for the reduced property tax collections, however.

• Sales Taxes

Estimated at $1,075,000. A 0.5 percent increase over FY 2002 is forecasted. While the County continues to receive strong revenues from the Carmel Church and Ladysmith businesses, we feel the general economic slowdown dictates a cautious estimate.

• State and Federal Revenue

Estimated at $2,145,484, which is $74,479 less than FY 2002, adjusting for PPTRA. This revenue source includes state aid for education and social services, as well as funding for the second year of the COPS Program that provides three deputies to the Sheriff’s Department for the next two years. The County also receives a grant allocation to employ two School Resource Officers. The County has also been the recipient of three TEA 21 grants for a proposed Visitor's Center and has applied for a fourth round to complete the construction.

• Meals Taxes

Estimated at $672,000, which is $64,000 greater than FY 2002. New restaurants in Ladysmith have contributed directly to the increase.

• Transient Occupancy Taxes

Estimated at $211,000, which is $4,000 less than FY 2002. The Transient Occupancy Tax is divided among revenues for the General Fund and Tourism Fund. Two percent, or approximately $85,000 is estimated for the General Fund in FY 2003 and three percent, or approximately $126,000 is estimated for the Tourism Fund in FY 2003.

General Fund Expenditures Education

The proposed local share contribution for the Caroline County Public School System is $8,315,370, which is three percent greater than that approved for FY 2002. The proposed appropriation exceeds the state-funded minimum. The increase would help offset funding shortfalls expected on the state level. On behalf of the School Board, Dr. Stanley Jones and his staff are expected to present the School Budget to the Board of Supervisors on March 12.

An increase of $12,025 in the local contribution to the Public Library System is proposed. The Board of Supervisors and Friends of the Library have enjoyed a special partnership over the years that has produced dramatic improvements to the library system. Most recently that partnership brought about an expansion to the main library area in Bowling Green.

Public Safety

The pressure to protect life and property continues to increase with the economic and community development projects that have been approved. Citizen satisfaction is at a high level for all aspects of public safety, and it is vital that services continue that give residents and businesses a comfort level for a high quality of life.

Acquiring and retaining personnel has been a challenge for both the Sheriff’s Office and the Department of Fire and Rescue. Keeping a full staff of dispatchers has been very difficult for both departments, as well as maintaining other full-time staff.

A $25,000 contribution is proposed to serve as the County’s match for the COPS Grant in FY 2003, which continues to provide funding for three additional officers for the next two years.

Full funding and benefits are recommended for 31 deputies, which continues to be the largest force in County history. The County qualifies in FY 2004 to receive an additional deputy based on its population from the State Compensation Board.

An attempt to improve retention of Sheriff’s deputies came in the adoption last year by the Board of Supervisors of the Law Enforcement Officers (LEO) Program. This program enhances retirement benefits. Proposed is $33,000 for a full-year’s funding of the program.

A few years ago, the County beefed up its commitment to its Volunteer Fire and Rescue companies by absorbing more of the costs of operation. That commitment is continued through the proposed Budget with an increase of three percent over the amount amended in FY 2002. Board policy also remains intact that any unspent funds in the fiscal year will be returned to the companies to assist with operational costs.

An increase of $55,929 is proposed for Emergency Services, which includes the proposed hiring of another full-time Medic/Firefighter. This would raise the number of full-time medics with the Department of Fire and Rescue to four, along with a full complement of part-time personnel.

Funding continues for the multi-jurisdictional operated institutions – Pamunkey Regional Jail, Pneumansend Creek Regional Jail and Middle Peninsula Regional Juvenile Detention Center. A proposed increase of $57,553 is recommended to cover additional costs of these operations. The most dramatic increase is at Middle Peninsula, were $132,048 is proposed to meet rising expenses in juvenile detention.

Public Works

The County department involved in the most activity and facing the most Budget challenges outside of Education is that of Public Works. From adhering to state and federal mandates, to the renovation and construction of County properties, the department has been fully pressed to meet required service levels with current staffing. Even greater demands in FY 2003 will continue to challenge the department. A proposed increase of $123,730 is recommended to cover the costs of continuing and adding additional services.

The decision was made a few years ago to close the County landfill, due in large part to costly state and federal regulations imposed on active landfills. That closure went into full effect on April 1, and solid waste has been hauled to Henrico County as part of a contract with BFI Industries, Inc. Funding to meet contractual obligations relative to hauling is included in the recommended proposal at $350,000. Additional funding of $200,000 is included to cover the costs of contractual and professional services needed for post-closure operations to comply with state and federal regulations. Proposed funding for Refuse Disposal is $691,099.

Increases in utilities and maintenance create a need to propose an increase in General Properties of $156,620. Some of the increases are related to the Community Services Center being in full operation. Another full-time position has been proposed to assist current personnel with the ever-increasing responsibilities of maintaining upkeep on buildings and grounds.

A new solid waste convenience site in Port Royal is expected to be in operation as part of a property agreement with Fort AP Hill. This new site will also dictate the need for increased maintenance and upkeep.

Social Services

Funding for the Department of Social Services is unclear at the present time pending final actions by the General Assembly. A tentative budget is proposed that calls for a decrease in overall spending to $2,076,899. Also recommended is a $25,000 increase in rent to help offset expenditures related to moving into the renovated Community Services Center.

Community Development

The Board of Supervisors has continued to place emphasis on long-range planning and economic development. A proposed increase of $15,358 is recommended to continue advancing the County internally and also strategically placing it in a vital role for regional activity.

An additional $6,976 is proposed in Economic Development, in part because of the demand to step up its marketing and advertising efforts. The printing of new materials and appearances at trade shows will increase the County’s reputation for being a friendly place to do business.

The Planning Department will continue its focus on asking our citizens to comply with property maintenance codes. Recommended is $35,000 to continue with the Property Maintenance Program. Also proposed is a $17,000 contribution for public transportation in the County that is expected to begin March 25 through a partnership with FRED Transit in Fredericksburg.

As part of the County's regional participation with the Fredericksburg Regional Alliance, full funding of a $1.50 per capita is proposed, which amounts to $33,182. The Alliance continues to be a strong link between the County and the State in the identification of prospects, and also for hosting training opportunities in the economic development arena.

Recreation

The Recreation Department continues to expand its outreach to County residents. For FY 2003, the Department will assume additional responsibilities by providing oversight to the mini-park system. An increase of $19,313 overall is requested to fund necessary expenditures for programming and services.

General Government Administration

Rising legal costs have been an issue with the County for the last couple years. The County continues to contract for legal services with Sands, Anderson, Marks and Miller, located in Richmond. Legal fees have been recommended at $110,000 for FY 2003.

Funding is once again recommended to cover the costs of the Summer Youth Program, estimated at $26,349. Funding to cover the printing of the quarterly County newsletter is also recommended at $16,000 in Public Communications.

Judicial Administration

Expenditures related to Judicial Administration, the County’s financial support of the Court System, is projected to stay close to FY 2002 levels.

Additional funding, a total of $35,000 is proposed for the Clerk of the Circuit Court for microfilming of court documents.

Health and Welfare

An additional $9,129 is recommended to meet the growing needs of the Area Health Department. A new lease agreement with the Department to occupy space at the Community Services Center will contribute additional funds for maintenance, as well as debt service for its new quarters.

Virginia Cooperative Extension (VPI)

Funding for the Virginia Cooperative Extension is $75,879, which includes $3,000 for the Caroline Cares for Kids Program.

Tourism

With the presence of a full-time Tourism Coordinator and the oversight of the Economic Development Director, the Tourism Program continues to pursue an aggressive agenda.

The County is moving forward with plans to construct a Visitor’s Center. Architecture and engineering work is underway, and Tourism Funds have been reserved to match the first phase of a TEA 21 grant that will fund the project.

Recommended is almost $63,000 to fund Community Projects. Specific projects planned for funding, which total $61,450, include:

• $13,000 County Fair
• $15,000 July 4th Celebration
• $ 6,000 275th Anniversary Celebration
• $ 6,000 Central Point School Renovation
• $ 5,000 Clark-York Celebration
• $ 7,500 Secretariat Celebration
• $ 4,000 Harvest Festival
• $ 1,500 Port Royal House Tour
• $ 2,000 Port Royal Pub Night
• $ 1,200 Candlelight Tour
• $ 750 Christmas Parade

$27,000 is proposed for advertising and marketing of various Tourism events.

Human Resources

The County takes pride in providing services to residents and businesses with one of the best employee groups in the Commonwealth. In recent years, large investments have been made to improve the standards for employees. Those investments include: Annual Cost of Living Adjustments; Merit Pay; Salary Equity Program; and Professional Education and Training. This year's Budget proposal makes recommendations that will advance all these areas and continue to make Caroline County competitive with other counties in the region.

Proposed is a new Merit Pay Plan for all full-time employees, effective July 1, 2002. This plan would substitute for the annual cost-of-living allowances (COLA) that employees have received in recent years. The merit plan would allow employees to receive up to a two percent salary adjustment upon receipt of their annual performance evaluation. A salary adjustment of 2% for the County's part time emplyees is also proposed.

Also included is funding for a continued review of the County's salary scale in order to keep employee salaries competitive with market average. The Salary Equity Program will become effective January 1, 2003, and will be funded over a two-year period. Funding in the amount of $55,000 has been proposed for the first year of the program.

Over the years, the Board of Supervisors has recognized the need to provide employees with the best health insurance benefit possible. Funding in the amount of $567,620 is proposed to cover the employers' contribution for the health insurance plan.

In 2000, the Board approved a three-year training program for employees that would eventually raise the number of Professional Development to 24 hours by FY 2003. Funding of $94,374 is proposed to cover the cost of employee professional development, which is a $15,964 increase over the amount budgeted in FY 2002. This includes training for all departments, as well Constitutional offices.

Staffing levels remain somewhat constant in the proposed Budget. Only two new full time positions are proposed; a Maintenance Mechanic in the General Properties Division of the Public Works Department and a new Medic Firefighter position in the Department of Fire and Rescue.

Contributions to Outside Agencies

Funding assistance for Outside Agencies is again proposed, with the most radical increase proposed for the funding of a new shelter for the Thurman Brisben Homeless Shelter. The shelter has been asked to vacate its current quarters in Fredericksburg and must find a new facility by December 31, 2002. Each locality is being asked to contribute to the debt service to construct a new facility. A funding formula devised by the Rappahannock Area Development Corporation determined the amount of Caroline’s request to fund the shelter, which is $22,300 for the next 15-20 years.

A new contribution proposed is for the Community of Promise Program. In September, 2001, a Summit for Youth was held that unveiled a strategic plan for the future of Caroline County’s youth. Since that time, the Community of Promise committee has been working aggressively to meet the goals of the plan for the first year. A contribution of $7,000 is proposed to assist with the program.

General Fund Transfers

Subsidies to non-departmental accounts are once again included in the proposed spending plan. These transfers from the General Fund help to offset funding shortfalls, meet Board of Supervisors directives or keep statutory obligations in areas where revenues don’t keep up with the expenditures that are warranted. These transfers include:

• $8,315,370 to School Operating Fund, which is $363,293, or three percent greater than FY 2002.
  
• $360,112 to Social Services Department, which is $24,118, or 7.2 percent greater than FY 2002.
  
• $150,000 to assist in funding the Comprehensive Services Act, which is the same as FY 2002.
  
• $566,848 to assist with funding for the five-year Capital Improvements Plan, which is $215,848, or 61.5 percent greater than the amended budget amount for FY 2002.
• $228,095 to E-911 Fund, which is $20,503, or 9.9 percent greater than FY 2002.
  
• $1,059,338 to Debt Retirement, which is $313,592, or 42 percent greater than FY 2002.
  
• $14,912 to Milford Sanitary District Enterprise Fund, which is $450 or 3 percent greater than FY 2002.

Public Utilities

The Division of Public Utilities oversees two enterprise funds, whereby the operations and capital expenditures are funded in large part with revenues generated from customer user fees and one-time availability fees. Revenues transferred from the General Fund are currently supporting both the Milford Sanitary District and the Caroline County Public Utilities.

Through the assistance of the County's private consultant, a plan has been proposed that would allow the County Public Utilities operation to finance its capital improvement needs and make the Fund self-supporting. The Utility Fund is not expected to require a General Fund support transfer in the coming year.

Revenues for the Caroline County Public Utilities for FY 2003 are forecasted to be $1,385,628, which is $591,687, or almost 400 percent greater than in FY 2002; the majority of the increase is expected in availability and connection fees for new development. Expenditures related to the operations are proposed at $832,152, or 8.5 percent greater than FY 2002.

Revenues for the Milford Sanitary District for FY 2003 are forecasted to be $55,000, which is exactly the same as last year. Expenditures related to the operations are proposed at $69,912, or .6 percent greater than FY 2002.

Capital Improvements Plan

In 2000, the Board approved the hiring of a financial consultant to assist the Finance Department staff with developing a financing plan for the five-year Capital Improvements Plan. The purpose was to develop a planning document that would only require minor adjustments every year and give the Board an accurate picture of future capital needs. It is also a document that would accurately reflect the County’s ability to assume debt and help forecast future funding needs necessary to implement the plan.

The CIP proposal submitted by staff and approved by the Planning Commission on February 21 is a five-year CIP for $33,009,429. Funding needed to complete FY 2003 projects is $9,195,515.

Projects for General Government over the next five years are $14,459,785, which includes $6,842,848 worth of projects in FY 2003. Those projects include:

• $50,000 for implementation of Technology Plan.
• $100,000 for renovation to Emergency Operations Center for relocation of Dispatch Unit.
• $60,000 for Frog Level Rescue Ambulance (Rechassis).
• $350,000 for Upper Caroline Tanker, subject to inspection by third-party source.
• $246,000 for replacement of nine Sheriff’s Department vehicles.
• $3.75 million for construction and renovation of County courtroom facilities.
• $20,000 to replace floor at Animal Shelter to meet state inspection standards.
• $25,000 for site identification for Port Royal District mini-park.
• $25,000 to complete Bowling Green District mini-park.
• $85,000 for Boom Container Roll-Off Unit for County Convenience Sites.
• $2.054 million for closure of County landfill.

Projects for Utilities over the next five years are $18,536,706, which includes $2,237,667 worth of projects in FY 2003. These projects include:

• $1.277 million for Phase II of the Ladysmith/Carmel Church/VDOT Interconnect.
• $850,000 for upgrade of Wastewater Treatment Facility.
• $60,000 for UV Light Upgrade at the Wastewater Treatment Facility.
• $50,000 for Utility Study in Port Royal District.

Projects for Schools over the next five years are $12,938,000, which includes $115,000 worth of projects in FY 2003. A complete list of projects were still pending at the time of this budget submittal, so additional requests are probable when the School Board presents its Budget. The tentative list of projects for 2003 includes:

• $45,000 for Maintenance Vehicle.
• $30,000 for general School Administrator Vehicle.
• $40,000 for Outdoor Dressing Facilities at Caroline High School.

Budget Reserves

Recent renovation of older buildings, and the anticipated renovation and new construction of courtroom facilities, has drawn the attention of the Administration to propose to the Board the establishment of a Building Maintenance Fund. The Fund, which is proposed at $50,000 for FY 2003, would be drawn upon when the need for major building maintenance is required. The Administration hopes to propose in next year’s budget a dedicated revenue source in which to annually contribute to the Building Maintenance Fund.

In calendar year 2001, the Board voted to contribute Revenue Sharing Funds to the Virginia Department of Transportation for assistance with Secondary Road Improvements. The amount of the funds would not exceed $150,000. Proposed is $50,000 in FY 2003 to begin the cycle of appropriations to VDOT.

A Contingency Fund of $104,000 is proposed, which primarily would be used through Board appropriation for unexpected or emergency spending needs throughout the budget year.

Conclusion & Budget Highlights

Amidst national tragedy and state political haggling, Caroline County has stepped up to overcome the financial uncertainty that exists throughout our state and nation. Although these impacts are still not known, it is certain that Caroline County will receive fewer resources than in previous years. That is why it continues to be important that management of the County’s finances be handled with fiscal integrity and responsibility; the trademarks of good government. The Board of Supervisors has taken large steps in recent years to provide its residents with confidence in its financial position, and ensure that long-range planning will be met with caution and respect for tradition.

Three years ago, the Board agreed to create the position of Finance Director, which now enables a full-time professional to oversee the day-to-day financial operations. The position has enhanced communication with all departments, agencies and Constitutional offices, and troubleshoots issues and corrects them before they become a major problem. In addition, the Director of Finance and his staff have begun to address the need for technology to improve efficiency in operations, and also have started the process of reviewing annual contracts to search for savings and assurance for accountability.

The Board has adopted a revised set of financial management policies that will serve as guidelines for budget planning. These policies, if adhered to, will always serve as checks and balances for Board decisions and keep the County from slipping into a financial zone of uncertainty.

Also two years ago, the Board hired a financial consultant who has assisted the Director of Finance and Director of Public Works in developing a long-range strategy for capital planning. The County is now poised to bring its utility funds to a level of self-supporting and to also incur long-term debt as responsibly and cost effectively as possible.

The Capital Improvements Plan is now a realistic spending document. Certainly most of the focus is on the first year of the plan, but departments and agencies can now conduct their own interior planning with the understanding of where certain future capital projects will begin.

These major initiatives, and other subtle directives by the Board, have made it possible for this Budget proposal, and future Budget proposals, be made with confidence and responsibility.

The proposed spending plan addresses the service demands of a growing county. It continues to make a strong investment in its employee base, and expands services externally to all areas of the County. It also continues to give a strong boost to Public Schools and sends a message that no dollar spent is more important than that of educating our children.

Projected revenues from the reassessment of real property, coupled with increased forecasts in business taxes, should reverse the downward trend and boost the Fund Balance in the next couple years. Also, anticipated growth in the housing industry should also benefit the County near the middle of the decade.

Highlights of the proposed 2002-2003 Budget:

• Maintains Fund Balance within established policy level of over 10 percent.
  
• Stays within debt capacity guidelines.
  
• Recommends three percent spending increase for public education.
  
• Staff levels remain almost constant with only two new positions requested.
  
• Shift to Merit Pay Plan for employees.
  
• Funds new cycle for Salary Equity Program.
  
• Increases funds for professional development for all employees.
  
• Funds LEO Retirement benefit for Sheriff’s Deputies.
  
• Increases County contribution to health insurance benefits for employees.
  
• Provides matching money for COPS Grant for hiring of three additional Sheriff’s deputies.
  
• Funds costs associated with closing of County landfill.
  
• Funds second phase of Public Transportation Program.
  
• Funds Community of Promise Program.
  
• Funds Community Projects for Tourism Program.
  
• Establishes Building Maintenance Fund.
  
• Funds Revenue Sharing Program for Secondary Road Improvements.
  
• Recommends $33,009,429 five-year Capital Improvements Plan, $9,195,515 for FY 2003, including major projects of closing the County's landfill and renovation and construction of new courtroom facilities.

Thanks go out to the various department heads, agency heads and Constitutional Officers that have worked so hard to assist with the preparation of this proposal. Special thanks to Mr. John Sieg, Director of Finance and Mr. Alan Partin, Assistant County Administrator.

The staff looks forward to the dialogue on the proposed Budget that will follow in the coming weeks.

Sincerely,
Percy C. Ashcraft
County Administrator


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