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County Council, May 21

Questions but little anguish over proposed FY2014 budget
Millage increase offset by LOST credit for owner occupied dwellings
Warwick Jones

What a difference an improving economy makes. The Finance Committee had the staff’s proposed budget for FY 2014 before it last night. Some Council members had questions and concerns but there was none of the anguish and divisions that accompanied discussion over the proposed budgets of preceding years. Lower Local Option Sales Tax (LOST) credits, Intergovernmental revenues, and charges and fees, cut heavily into revenue and precipitated some painful belt tightening in those years. Council let its belt out a few notches this year and seems set to let it out a few more in the coming year.

Of course, the tightness in recent years could not be blamed entirely on the economy. The County was committed to the completion of its Consolidated Dispatch program, a cost that will linger for another year as it takes over the full burden from the municipalities. The County did have the benefit of the considerable savings achieved in Solid Waste, but notwithstanding, the County was forced to reduce operating costs – largely by staff attrition and lower maintenance. And to its credit, it has been able to maintain its very high bond rating through some very severe years.

Staff is projecting revenues of $194 million for the General Fund in FY 2014 (12m to June 30, 2014). This compares with the $187.1 million projected for the year about to close. Much of the $6.9 million increase will come from an anticipated $6.2 million increase in the Local Option Sales Tax (LOST) but small increase are expected in other categories. Press Download file to see Summary of General Fund Revenues and Expenditures.

Staff proposed that the millage rate for the General Fund be raised from 39.9 to 40.7 to achieve their projections. Staff also argued that although this represented a tax increase, the burden would be more than offset by the LOST credit. The millage increase would add $3.20 per $100,000 of assessed value of an owner occupied property. The anticipated benefit of the LOST, estimated at $8 per $100,000 of assessed value would allow a net gain of $4.80 per $100,000 for homeowners.

Council members Schweers, Sass and Qualey were not happy about the millage rate increase. Council member Schweers disagreed that there was a tax “decrease” as suggested by staff. The LOST credit was giving back to tax payers something they had already paid. He might have added that there would be a tax increase for all property not owner-occupied – essentially commercial property.

The proposed budget will come up for first reading tomorrow (May 23). We suspect that some Council members will oppose the millage rate increase and attempt to balance the budget with some cost cutting. How successful they will be is debatable. But we are inclined to say the votes are there to pass the budget as proposed by staff.

As is usual at this time, Staff presented a 5 year projection of revenues for the General Fund. The projections show modest improvement in all categories except one – Intergovernmental. The contribution from this category is expected to decline from $25.8 million in FY 2014 to $20.0 million in FY 2016. The County has committed to picking up the full cost of Consolidated Dispatch. The municipalities have been contributing in recent years but the contribution will drop to 50% in FY2015 and zero in FY 2016. To see the 5 year projection for the General Fund, press Download file.

Staff also noted that the Library Board had proposed a major capital improvement plan. Spread over 3 years beginning FY 2016, the cost would be $89.4 million. Staff noted that if it were approved by Council, a referendum would be necessary. To implement the program, funds would need to be borrowed, operating costs would rise and a tax increase would be necessary in 2016. We don’t see Council rushing to embrace this program even if spending on libraries has slipped over the years.

Discussions are planned on the budgets of other Funds and agencies beginning tomorrow. Press Download file
to see a summary of staff's proposal for the other major funds.

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