by LISA MACNEIL Hernando Sun Reporter
Update Regarding changes to Budget Policy
Leading into the budget discussion of the February 26, 2019 regular meeting, Interim Budget Director George Zoettlein updated the Board of County Commissioners on changes to the county’s budget policies.
Zoettlein described the changes as a simplified way of constructing future budgets in order to “make things balance easier.” The changes are not expected to be put in place until after the next fiscal year.
The proposed process, described by Zoettlein is, “Take the revenues coming in, and balance them against expenses going out. You don’t use money from a prior year, you don’t use reserve money. All you’re doing is, ‘money in / money out.’” The second step was explained, “Any money coming forward from a prior year would be used to fund reserves in the new year.”
Zoettlein added, “Basically, you have the same amount coming forward every year, and you don’t touch it, unless emergencies arise.” Part of revisions to the policy include reserve funding. If there is a sufficient balance forward to cover the reserves, and additional money remaining, Finance would bring it back to the board for a decision on if the money should be spent, what project should be funded, or if the funds should remain in the Reserve Fund.
In the opposite case of not having enough in reserves to cover the 18.5% requirement, other areas of the budget will be reviewed for reduction or elimination of expenses.
“It’s a very simple process. It’s just very hard to accomplish right now with the way our budget looks,” Zoettlein concluded.
Commissioner John Allocco agreed with Zoettlein and said, “How do we approve this very appropriate budget while we’re in an $11-million hole? Zoettlein responded that the updated process would be in place after the shortfall is resolved, with the hope that will be in the next one to two years.
Commissioner Steve Champion also agreed with Zoettlein, remarking that in any budget, more should not be spent than what is incurred in revenue or income. “It’s just common sense,” Champion said. He also went on to mention a problematic doubling of the budget that was indicated by Commissioner John Mitten in recent meetings. “Our population hasn’t doubled. Yes, there’s growth, but not that much growth.
The revised policy was approved 4-0. (Chairman Holcomb not voting)
General Fund Budget Update
The Board of County Commissioners discussed several options to cut expenses in order to recover from the recently-discovered $11.4-million deficit. Additionally, the Reserve Budget is at 14.3%, leaving $0 in reserve for contingencies, as an 18.5% is mandated. While still a discussion, the board leans toward cutting expenses, rather than raising taxes.
The theme repeated during the discussion was, “Stop the bleeding.” The board seeks to cut expenses rather than raise taxes, cut jobs or reduce services.
Next in Zoettlein’s presentation was discussion of how a loan for cash flow will affect the FY 2020 budget. Presently, the county will enter FY 2020 with $93-million in expected revenue. A $20-million loan will balance revenue against the budgeted $93-million expenditures, although with a $100,000 interest payment. “The thing that hurts is, because you’re going to pay interest for the first two months on the $20-million … you just put yourself another 100,000 in the hole.”
The loan is not viewed as an option at this time.
Expanding a table shown in previous budget discussions, Zoettlein added projected revenue vs. expense figures for years 2019 – 2021. Calculating the figures using average previous increases, Zoettlein stated that the deficit by 2021 would be approximately $10-million. Acting County Administrator Jeff Rogers added that the county has seen growth rates of 4-5% over the last few years.
Zoettlein said, “We should be at the $22-23-million mark (in the General Fund) … we’ve been taking a tumble since FY18, and if we keep up the way we’re going … by 2021, we won’t have any money at all. We have to stop what’s happening.”
Zoettlein also highlighted State-Mandated County Expenses, totalling $4,797,245. These mandatory expenses fund items such as indigent care, mental health, the Medical Examiner, and several other court departments and human services-related areas. The expenses cannot be changed by the Board of County Commissioners.
Other Fixed County Expenses were shown to the board, the largest being Debt Service / Transfers ($5,934,958), which includes bond payments. Also included in this category are utilities, insurance, software contracts and fleet expenses. These expenses are mandated by the state, and are not able to be modified.
Commissioner John Allocco said, “We’re mandated to have a county jail … we can’t close our jail.
In explaining the following figures, Zoettlein said these expenses will persist every year. “This is about $11-million that will occur year-in and year-out. We (the county) control a little bit, but these expenses are going to be there.”
EXPENSES FY 19 BUDGET
- MLK Compound $60,000
- Debt Service / Transfers $5,934,958
- Annual Audit $229,000
- Utility $1,139,925
- Office / Land Leases $290,675
- Insurance $1,877,750
- Software Contracts $990,565
- Other $157,481
- Fleet Expenses $219,053
- TRIM $65,600
As for reduction in services, Zoettlein’s department proposed the following:
- Government Broadcasting $170,219
- Little Rock Cannery $50,016
- Chinsegut Hill $181,496
- Cooperative Extension (IFAS) $325985
- Aquatic Services $216,517
- Sensitive Lands $186,878
- Libraries (Close 2) $910,896
Rogers said, “These are all great things, and we need them. We just can’t afford them.”
Commissioner Steve Champion spoke first about libraries, “You mention closing libraries, especially eastside, (the phones) are going to be blowing up if you even propose to close the east-side library. I don’t think any of it’s necessary. It’s not necessary to do this. If you keep it flat, do you have to cut something? Yes. But what? 3-5%? Because we can get out of this in 3-5 years by simply matching expense and growing out of it. Would that require some cuts in service because of things we can’t control like insurance … but you put this stuff up here and you say, ‘We’re going to cut all these services and we are going to put it all in the General Fund. Guess what. When the recession happened, all the constitutionals (funds) had to come down too.”
Champion went on to say, “Even with the Sheriff’s department, no one wants to talk about. If we said ‘No one’s going to cut anything from the Sheriff’s office, but (HCSO) has to come in flat for a year or two. That’s not the end of the world.
Champion suggested that the Cannery could be sold.
Champion mentioned several times to keep services ‘flat.’ “That’s the only way we’re going to help this community.”
Commissioner John Allocco said, “My concern is even when you look at something like this, and I think we cut off our nose in spite of our face, if we go in the direction of these (cuts) because our community will be much less attractive to those people that we want to move here, and bring their families here. In spite of that, even if we’re to do these things, there are still costs. It doesn’t eliminate them. Government Broadcast, for example. We’re still going to have to pay for services that we’re statutorily required to do.”
Allocco referenced a library in danger of closing in his neighborhood, “If we close a library … we’d have to sell that… you’d have to find somebody to buy it, someone with their own funding source, otherwise, you’re still maintaining a building that’s empty.”
Commissioner John Mitten commended staff on a job well done in presenting options to the board. Mitten asked if the costs of insurance and upkeep would be reasonable for closed buildings and services. Zoettlein replied that it could run as high as “half a million, and you’re going to have to offset that cost somewhere.”
Mitten asked, and received a quiet confirmation that, “This is less of a detox and more of an amputation.”
Focused on keeping revenues balanced with expenses, Commissioner Steve Champion asked, “(if) we stop the ‘bleeding’, and come in at revenue. There’s 3-million coming in in revenue if the economy is the way it is — that’s 6-million. The fire department owes us approximately 4.5-million. That’s $10.5 million, if the fire department is paid off in two years.”
Zoettlein expressed concern over constitutional budgets remaining constant. Champion asked, “You don’t have any control over the sheriff’s budget? Zoettlein stated, “You guys know, you went to the Governor two years ago.”
Champion stated, “We’ll go to the Governor again.”
Rogers expressed cooperation with Hernando County Sheriff Al Nienhuis and staff.
Finally, Zoettlein presented “Revenue Increasers” which have been brought before boards in the past, but have never actually been instituted. MSTUs for parks and libraries, which Allocco termed “A shell game.” PILOF and PILOT (Payment in Lieu of Franchise Fees/ Payment in Lieu of Taxes) Utilities and solid waste, restoring a .10000 millage rate, and increasing millage in general, along with early repayment of the Fire Department loan. The repayment however affects only cash flow, but not the budget.
Zoettlein also presented reductions in salaries for the Board of County Commissioners and Constitutional Officers. The Board and Sheriff’s department comprise more than 80% of the budget, and the reductions proposed are; $3,681,653 for the Commissioners and $5,467,598 for Hernando County Sheriff’s Office.
Tax Collector Sally Daniels approached to remind the board that her salary budget is determined by Statute, and that she cannot modify it, nor can the board. Daniels said that she will work on contributing a surplus, as her department has done in the past.
The Property Appraiser’s office is also unable to modify their budget due to statutory constraints.
Other measures discussed, but not decided were salary suspension, centralizing Information Technology, eliminating positions and reduction in services.
