Q&A with Canova Peterson on cash proffers, education funding and size and scope of government

Posted on Friday, February 8, 2013 at 12:31 pm

The Herald-Progress sat down with W. Canova Peterson IV, chairman of the Hanover County Board of Supervisors, to discuss the cash proffer repeal, his vision for funding capital improvements in the county and his philosophy toward education funding and government as a whole.

Herald-Progress: In hindsight, is there any part of the process leading up to the cash proffer repeal that you would have done differently because of the outcry?

W. Canova Peterson IV, chairman of the Hanover County Board of Supervisors

Canova Peterson: No, I wouldn’t, and I’ll tell you the reason for that is because there’s been a lot of inaccurate information out there that’s come out, frankly, from folks who started making responses after coming to the last meeting only. And I don’t know why they didn’t pursue any of it, it’d been going on since back in June all the way through the end of the year and then someone comes to the last meeting and gets all up in the air about it. I don’t think they really fully realize what was shown at the meeting. [Peterson is referring to his plan to use monies that will become available as the schools’ debt service payments begin to dwindle to pay for capital improvements as they are needed.]
A lot of people, and we’re still hearing it, they’re talking about ‘well, this is taking money away from the schools’…Not one dime of proffers ever went to the operation of schools. It all has to be capital and it all has to be for growth. If we have equipment go down or if an existing building is failing, we can’t use [proffers]. It has to be growth-related and we haven’t grown in four years. We’ve actually been decreasing so we have money sitting there that we cannot use for anything.

HP: It has to be used to add classrooms or that type of thing?

CP: It has to be to accommodate growth. It could be a bus if we need an additional bus to accommodate new students. It has to be because you’re growing. Using schools an example, because they were a big part of the proffers before and a big part of all of our capital expenditures, if the number of students is not growing, you cannot spend the money that was collected; it just has to be set aside and wait until you grow. So, what we’re really looking at doing in the meantime though: we’ve got schools that need attention now. We’ve got other buildings in the county that need attention. We’ve got buildings that are going to be coming up down the road we have to start planning for. I know we’re going to have to look at some new courts. The judges are not real happy with what’s there and they’ve been working with us very well, but at some point they’re going to come down and say, ‘You’re going to do something.’ And judges can do that. So, we’ve got to be looking at that.
Everybody’s been running around with this $10 million figure that is not an accurate figure; it was a figure that was projected if we kept proffers where they were, this is what we would average over the next 20 years, and that’s keeping the proffers there at just under $20,000. Well, the reality is over the last 20 years we’ve just collected a little over an average of $1.3 million a year. Yet we built, during that 20-year period, just looking at the schools, we built seven different schools over that time and used a little bit of proffer money on – I think it was Pole Green school was the one that really had the proffer money. Most of the rest of it was built with bond issues.

HP: And the proffer money can’t be used to pay debt service on those schools?

CP: I don’t think there’s a lot left in the proffer money at this point because I think it was utilized and we really hadn’t been collecting any proffers to speak of ever since the economy went south. People weren’t breaking ground. When the economy went down, the housing industry stopped and there’s no collections.
That was also part of the problem when we looked at this. There’s a lot of talk about the majority opinion and the minority opinion on the proffer committee. The one thing everybody on the proffer committee agreed on was the proffers weren’t a good thing but they also – people said they may not be a good thing, but our hands our tied; this is what the state allows us to do, we have to do it this way – They recognized there was an unfairness. Some people had to pay it, some people didn’t.  You could go to a site in my subdivision in one of the vacant lots, you go in there and build a house, you could have 10 kids and you won’t pay a proffer if we still had proffers. No zoning is required…It was not a situation that hit everybody fairly. I always felt that it was wrong in the sense that the least well-to-do of us have had to pay the same rates as the most well-to-do. For instance, you’re buying a $100,000 home, you’re talking about a 20 percent tax. If you’ve got a $1 million home it’s the same dollar amount and it becomes somewhat irrelevant at that level. So, it was kind of lousy for the people that were in the tightest situations.
Anyway, when it left the proffer committee you came out to a situation where the majority said, ‘OK, let’s get rid of them. Let’s do the car registration [fee].’ At the time, the only thing that I wish I had thought of ahead of time, was: How can we bridge the gap between the minority and the majority opinion? It would’ve been better had I figured that out before the committee finished meeting. Unfortunately, it was done. I personally did not fully agree with the majority opinion in the sense that I thought there needed to be more consideration to the minority opinion on the committee. On the other hand, I did think the minority opinion was looking at an extreme case on the high side. It needed to be bridged. So, I started looking at it and started thinking about it and looking at other aspects.
Several years back, the citizens of Hanover County voted for bonds to build capital improvements…with the full knowledge that it was going to raise the property tax rate to pay them off. That’s what we did. That’s the reason we built Pole Green, Laurel Meadow, Oak Knoll, Hanover High School, Georgetown, the vocational school and Cool Spring. [As the debt on these projects begins to decline, Peterson would hold the tax rate steady, a plan he says will generate $180 million over the next 20 years. He presented this plan at the same meeting where supervisors voted 4-2 to repeal the cash proffer plan.]
So I started looking at it and I said, ‘Well, what happens if we just keep paying what we’re paying now on capital improvements?’ That’s what people voted it for; they didn’t vote for this to be used for operating, general fund expenditures, taking care of the landfill and stuff like that. This was voted on for capital improvements. OK, if we do that, it comes up to $180 million over the same period. Divide that out, that’s $9 million a year average over the next 20 years that you’re putting in capital improvements. The beauty of this, is the county can determine where it goes; we’re not tied by state law to only use it for capacity. We can use it to upgrade facilities and bring them up to date and we’ve got a number of facilities in the county that need to be brought up to date, that we need to look at and work on and we could not use a dime of proffer money to work on them.

HP: So this would just give you a lot more flexibility?

CP: This gives us a lot more flexibility and basically is capturing pretty much the same money that we might get – and that’s the whole key with proffers because that’s up and down with the economy. This is real, cash dollar based on commitments already made that could be captured.
So we started trying to analyze this thing, specifically with the schools with the 2 percent growth rate that was projected – we don’t have a 2 percent growth rate obviously at this point, but we’re still thinking that over a 20-year period it will probably average that.  If we were doing a 2 percent growth rate right now and going forward, the first time we would need capacity would be with a new elementary school in 2021… That last one including land [we built] was Laurel Meadow around $20 million, somewhere in that range. In 2021, when that school would be needed, we don’t need to do a bond. If we’re responsibly looking at this, we’re in a position to build the school we need and at the same time we’ve been able to address other things. Washington-Henry’s a good example; we’ve got Elmont. There’s a number of schools that really need some attention now that we can address with a capital improvements fund that we couldn’t address with proffers.
That doesn’t mean that we’re just going to save everything for a new school. The reason we’re doing this is so we don’t have to just save it all for growth; that we can use if for our real needs elsewhere. And a lot of people I don’t think have really quite figured that out…some folks don’t want to hear the facts. This is reality.

HP: Transitioning from capital spending, the new outcry is over the schools and their operating revenues. Do you feel like schools can make do with what they’re getting or do you think they need more local funds?

CP: I feel like we need to let the school board and school administration finish their job. I think a lot of people have taken the first brush and taken it as gospel. I heard it at my town hall and at the school board and board of supervisors’ meetings. We had well over 20-some people speak during citizens time last week. We’re all really concerned about the quality of education in Hanover County.  The concern I have right now is that we’re sitting there thinking the school board and superintendent have everything set in granite and they don’t. Things are being worked on and I have confidence in Dr. Wilson and our school board that they’re going to come back and tell us exactly what they need for the long-term health of our school system. People are saying we need more funds and what have you. I’m going to wait and let the professionals tell me what they need. Everybody’s praising the school system, well this is the same school board, with only one person changed, that built this school system. People have been on that board a long time and they’ve done a great job. To ignore them and what they’re doing I think is premature.

HP: Ideally, what percentage of county spending do you think should go towards education?

CP: Right now, just a little bit less than half of our county budget goes to education. And, frankly, I don’t even know how to answer that question as a percentage. In my mind, we need to spend whatever we need to do the job right. I know right now the percentage has been maintained fairly close across the board. But we cannot sit here and ignore Fire & EMS or the Sheriff’s Department or public works. All of our departments are trying to do a good job and many of them are dealing with things that have been thrown at us from on high, up at state and federal level, just making things more difficult for them. Public works has really got their hands full with all these Chesapeake Bay regulations coming down. We’ve got to take care of all of these things. I don’t think it’s a matter of: What percentage of the budget goes to education or goes to the Sheriff’s Department? It’s what are the needs of the different departments, and those can change over time, as far as a percentage.

HP: This is kind of an unrelated question: How does the reality of serving as a supervisor, and now, chairman, compare to your expectations when you were seeking office?

CP: It’s a lot more work than I thought it was going to be. Definitely, a lot more work than I thought it was going to be. But I’m still enjoying having the opportunity to serve and I still feel quite honored that people wanted me to.

HP: Let’s talk a little bit about your philosophy towards government. You talked a lot about how county staffing levels were outpacing population growth in the county when you were seeking office. Do you still think that’s the case?

CP: Actually, this past year we shrunk government. I still believe that county government should run lean, as should any operation. You should not be wasteful; you should have the people that you need to do the job right. When I was campaigning, I mentioned the fact that while the county had grown about 17 percent over the census period, government had grown by 50 percent. That was and still is something that has to be considered and watched.  I think it’s always important to run our government as efficiently as possible and it’s also important to maintain high-quality services.

HP: Are there certain areas of government that you think would need to be trimmed if it came down to it?

CP: Obviously, we’ve been trimming.

HP: Mainly by attrition, or…?

CP: Well, attrition or early retirement. One thing this board this past year has been very conscious of is how we do the trimming. It takes a long time to build up and it was real easy to build up when times were good and money was flowing. Yeah, we can add another person here, another person there. It made life easy in a lot of cases. When times get tight across the board, it’s harder for everybody. One thing we made sure of, is I don’t believe we had any direct layoffs in the process. [Peterson explained that there was a net drop of approximately 70 full-time equivalent, benefitted positions from the county and school system last year.]
One of the things I know we’re talking about in the schools budget this year, I believe they talked about dropping some teachers’ positions. Again, it’s how you do this. With vacant positions, you’re not really changing something in the classroom if you’re taking away a slot, not a person. We had the same thing last year when the first school budget came out. They came to the board at that time and were looking at losing 64 teaching positions. And, by the time the final budget was approved they lost none except by early retirement or attrition. There were three assistant principals that were going to be lost and they were going to have a travelling assistant principal at some of the more rural elementary schools. But within the budget, they figured out how they didn’t have to do that. We didn’t lose them.
I’m not going to every school board meeting, because I really don’t think it’s my position to sit there and try and micromanage the school people. But I’m hearing reports from my appointee. Glenn Millican’s been very active in looking at things. He’s even pushing at working in the budget now to add some STEM teachers at the high schools. And he is an excellent accountant; he knows what he’s doing and he’s thinking he can do it within budget. At the same time, I think he made a very good recommendation about buses versus technology. We’ve got 25 buses sitting in reserve perfectly ready to go. Do we really need a new bus right now or do we need the technology? It’s about priorities. And it sounds to me like the school board is trying to be very creative, along with the administration, to do these type of things.
I know in our work with the joint education committee, one of the things we’ve been trying to look at to help the schools and the county overall is to look where  the county and the schools were duplicating services and working towards moving them where they can be working back and forth with each other rather than carrying on [for example] a separate maintenance operation for the schools, separate maintenance operation for the county… It’s little things, but these are things that create efficiencies and help. If we can create the efficiencies there, we can put money back in the classrooms and on the streets for the deputies and into the firehouses where the services come directly to the people.

HP: Are there any non-core areas of Hanover government that concern you?

CP: What do you call a non-core area?

HP: Things that you don’t think government should be in the business of?

CP: Actually, if any of our areas are non-core, they’re the ones that were mandated on us. I think, in any county the size of Hanover, for us to not be in the public library business would be foolish. We do have a good quality of life here in Hanover compared to most communities, and these things are parts of it. There are people out there that might say we don’t need parks and recreation, but I think we do. When you’ve got 100,000 people in the community, this is part and parcel of it and I think most people have been very supportive of it. If you go to Poor Farm Park or Pole Green or any of them and see the use of it by the citizens, you realize that this is not a non-core. A lot of our problems are really mandated problems from the state where they say you will do this and you will do that and we have no choice about it. It’s the same with the federal government.
One of the things I know we’ve been doing this past year, obviously the economy’s been down. A good example is the planning department. Obviously, their workload is down. If people aren’t building and doing projects, they’re not coming in for zoning cases. On the other hand, with the economy the way it’s been, we’ve had an increase in the number of people that need services in the social services area. We’ve also been looking very heavily at economic development as the best way to achieve new revenue streams. So, one of the planners is now working with economic development to help push growth. So, rather than laying off people we didn’t need in planning, we’re shifting people to the places where needs have increased. The same time you have a decrease in certain areas you have increases in others because of it. So, we’ve been doing a lot of shifting and moving people around within the county to accommodate that to take care of the employees the best we possibly can.

HP: Do you still think that Hanover’s regulatory environment prevents businesses from coming here?

CP: It’s improving. The more I have heard from people who deal with the development departments in the county over the past year, have reported back to me that they have been finding much better attitudes.

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