Rockingham County approves HHS expansion, sets FY27 tax rate at 56.9¢ in budget work session

The Rockingham County Board of Commissioners on Wednesday reviewed the manager’s recommended $192,989,361 fiscal‑year 2027 budget and approved a package of measures that includes a 48,000‑square‑foot Health & Human Services building expansion and a lower recommended property tax rate.

County Manager Lance Kesseling presented the proposed budget as “the budget in a nutshell,” saying the recommended total is $192,989,361 and the general fund is roughly $140.5 million. He told commissioners the book reflects a number of pressures — an $8 million request from schools, $7.3 million in capital outlay requests, rising fringe‑benefit costs and decreased state and federal reimbursements for some social‑service programs.

Kesseling said the recommended ad valorem rate before board action was 57.9¢ and that the proposal projects a taxable base near $13.09 billion. “The recommended total budget is a $192,989,361,” Kesseling said as he reviewed the major revenue and expenditure drivers.

Why it matters: commissioners said they wanted to balance taxpayer impact with infrastructure needs. After discussion about the county’s fund balance and insurance exposures, the board approved moving forward with the HHS building expansion and set the FY27 tax rate at 56.9¢.

Building expansion and financing

Kesseling described a multi‑part plan to address space and HIPAA compliance problems in public health and other county services, recommending a 48,000‑square‑foot addition and renovations for existing county facilities. Staff estimated the total financing need at $26,500,000, with a 20‑year financing plan under consideration and $12,000,000 proposed from the county’s fund balance for furniture, fixtures and equipment.

“We're running out of space and we’re not in HIPAA compliance in some places,” Kesseling said, urging the board to allow staff to seek debt and bring back detailed budget amendments. Commissioners discussed timing, the effect on the county’s CIP and the planned use of fund balance to reduce near‑term debt service pressure.

The motion to authorize staff to seek the necessary debt and to prepare budget amendments committing $12,000,000 from fund balance carried on a board vote.

Budget tradeoffs, fund balance and insurance

Finance staff reported the county’s insurance fund balance and walked commissioners through a change in how deductibles are handled. That discussion informed a larger conversation about how much of the county’s reserves should be used to smooth tax rate impacts versus held to protect the county’s financial position.

Sherry, a finance staffer, told the board the insurance fund balance is a little more than $41.45 million year‑to‑date and that revenue flows and claim experience have driven the decision to hold a portion of potential deductible exposure in an internal insurance fund rather than charging individual departments when claims occur.

Tax rate decision

After discussion of revenue projections, fund‑balance strategy and upcoming cost pressures on retirement and health insurance, a motion was made to set the FY27 ad valorem rate at 56.9¢. Commissioners moved and seconded the motion and approved the rate by voice vote; the chair noted that lowering the rate requires using a larger fund‑balance appropriation to balance the budget.

Votes at a glance

- Motion to authorize the HHS building expansion financing and to direct staff to prepare budget amendments committing $12,000,000 of fund balance: approved (motion carried). - Motion to set the FY27 ad valorem tax rate at 56.9¢: approved (motion carried).

What’s next

Staff will return with specific debt documents, draft budget amendments and detailed project schedules. The manager and finance staff said some budget items and capital requests will require additional quotes and will be brought to the board as they are finalized.

Speakers quoted in this article are identified by the board record and include County Manager Lance Kesseling and finance staff Sherry.