Schools, Medicaid continue to drive county budgets

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By Todd McGee
Director of Communications

New studies from the U.S. Census Bureau continue to show what North Carolina’s county government leaders have known for years – that North Carolina remains one of the fastest-growing states in the nation, both in terms of retirees and school-age children.

Those numbers are being reflected in county budgets, as managers and commissioners across the state continue to deal with an increasing population that requires more schools and more services.

From April 1, 2000, to July 1, 2003, the Tar Heel state added 47,198 persons aged 65 and older – the fourth-highest total in the nation, trailing only California, Texas and Florida. In that same time span, North Carolina experienced a net gain of more than 73,000 school-age children, which ranked fifth in the nation, trailing California, Arizona, Texas and Florida.

Five N.C. counties were ranked among the nation’s 100 fastest-growing counties from Jan. 1, 2000, through June 30, 2003, according to a survey by the Census Bureau. Union County ranked first in the state and 24th in the nation, adding 22,214 residents for an increase of 17.9 percent.

Other N.C. counties ranking in the top 100 include: Currituck (54th, 14.5 percent), Camden (61st, 14.2 percent), Johnston (95th, 12.2 percent) and Chatham (100th, 12 percent).

It is probably no surprise that nearly one-third of North Carolina counties, representing almost 40 percent of the state’s population, were forced to raise property taxes for 2004-05 (see chart).

“As more citizens pour into our counties, the demands for services necessarily go up,” said NCACC Executive Director C. Ronald Aycock. “We need to build more schools for the children, and we need to provide more health-care for the poor and elderly and our public safety costs go up. Our commissioners have a difficult job of providing for this growth while maintaining a fair tax rate.”

Schools and Medicaid, the federally mandated health program for the poor and elderly, continue to be the primary budget drivers for North Carolina counties. Almost every county in the state is either building new schools, renovating and expanding existing schools, or paying debt on schools that have been built in the past few years. That makes it critical that the state continue contributing to counties’ capital needs by fully funding the School Capital Expense Fund (ADM funds).

In each of the past two years, Gov. Mike Easley has proposed in his budget diverting all or part of these funds, which are provided to counties to help pay for school construction needs, to the state’s general fund. In both cases, the NCACC successfully fought to have these funds restored by the General Assembly.

“We appreciate the efforts of the House and Senate to protect these critical funds for counties,” Aycock said. “As the state continues to reduce class size in the lower grades, it is requiring counties to build even more classrooms, making the need for those funds even greater.”

State law requires that counties pay 15 percent of the non-federal share of Medicaid. North Carolina and New York are the only states requiring their counties to fully participate in Medicaid funding.

The county share has increased from approximately $33.3 million in 1985-86 to more than $400 million in 2004-05, and county budgets are struggling to keep up. Many smaller counties are more adversely affected by Medicaid, because they have a lower property tax base and a higher percentage of citizens eligible for services.

“Medicaid is the No. 1 drain on our available funds,” said Bertie County Manager Zee Lamb. “It diverts money that could go towards education, law enforcement, recreation and other things to improve the quality of life of people in Bertie County. Our commissioners would love to be able to take the money we are forced to spend on Medicaid and spend it on education for the children in Bertie County.”

According to Lamb, Medicaid represents about 14 percent of the Bertie’s expenditures for 2004-05, and it uses up almost one-third of the revenue generated by the county’s property tax.