BY MARK J. CRAWFORD
Telegraph Editor
STARKE — For their first budget workshop of the year, Bradford County commissioners received a veritable textbook of information and a crash course in budgeting courtesy of staff from the clerk’s finance office.
Commissioners and their departments are getting a head start on the process this year as spending cuts are anticipated in the face of rising costs and a lack of new revenue.
Chief Deputy Clerk Rachel Rhoden went over the budgeting basics, including terminology and process. This included a history lesson highlighting where the county has been and how it got to his point.
The county commission always approves a balanced budget. By law it must. The issue for several years has been how that budget is balanced — not with recurring revenue, but with reserve funding, one-time federal assistance and transfers of fiscally constrained county funding from the state.
“For a number of years, the clerk and auditor have warned the board that revenue has not been keeping up with expenditures and the difference is having to be made up from fund balance/reserves,” Rhoden said.
The solution is new sources of revenue, budget cuts or a combination of both. Otherwise, the county could revisit Fiscal Years 1995 and 1996, when the financial audits revealed two consecutive years of negative fund balance around half-million dollars. The county was required to report to the state, but instead of a bailout, the state told the county it must implement its full taxing authority to dig itself out of a bad situation.
So, the property tax rate was raised to 10 mills from 1999 to 2003, and a countywide electrical franchise fee was imposed at 5.5% around 1997. Overtime that was reduced to 3% and then 0% around 2000. Likewise, the commission gradually rolled back the millage rate, to 9.5 mills in 2004, 9.176 mills in 2008 and 9.1104 mills in 2014.
“While the board reduced its recurring revenue between the years 1999 and 2020, the county did not reduce its spending. Overtime the county became dependent on its unassigned fund balance/reserves/savings to help balance the county’s budget,” Rhoden said.
With renewed talk of franchise fees and even special assessments on fire and rescue services, the one action taken by the board to reduce a nearly $2.7 million use of reserves to balance the Fiscal Year 2021-22 budget was to crank the tax rate back up to 10 mills. That generated an additional $1.5 million in property tax revenue, but it left a hole to fill.
The clerk’s office demonstrated the seven-year trend looks quite different in the absence of federal pandemic and disaster funding used to fill that hole. Without it the, the fund balance in the general fund would be down more than $5.1 million, an average of nearly $736,000 a year. With that funding, the seven-year loss was under $2.9 million, an annual average of $410,000.
Noted several times is the $1.3 million in fire department funding in added 2020-21, which has yet to be audited. If the board continues to fund fire operations at that level, then an additional $1.8 million decrease in the future fund balance is anticipated ($1.3 million plus the $500,000 budgeted in previous years for fire).
Rhoden said while the board had requested cuts from departments, and those cuts were put in place, the additional fire department funding beginning in 2021 and employee raises in 2022 offset the cuts. (According to attorney Will Sexton, the raises were paid for with operational funding cuts, but that did not include the recurring cost of raises given by constitutional officers.) Currently, a nearly $2.5 million use of fund balance is predicted for next year’s budget unless the 10-mill property tax rate remains in place, reducing the use of reserves to around $966,000.
Commissioner Diane Andrews said it’s important information to have as they begin planning next year’s budget.
“That’s a very important number for us because we’re cutting services, we’re cutting public safety. We’re looking at a lot of different things that could hurt our county,” she said.
Going over some of the other funds outside of the general fund, commissioners looked at fines and forfeitures and discovered there were recurring costs for life and health insurance, worker’s compensation, utilities, and more for the sheriff’s office that are reflected in the board’s budget, not the sheriff’s budget. If those costs were added back to his budget, it would more accurately reflect the cost of law enforcement.
Commissioner Danny Riddick said adding those additional costs would increase the sheriff’s budget to nearly $9 million.
The decision to move insurance costs to the board was credited to the prior clerk to discourage the sheriff from shopping around for a more affordable plan for his employees. It was said pulling the younger employees in the sheriff’s office from the county’s overall insurance plan would have caused increased rates for other employees.
The need to address insurance costs is an issue that has been raised by Clerk Denny Thompson, but people are resistant to change.
Commission Chairman Chris Dougherty talked about the need for additional revenue streams like franchise fees and a 1 cent sales tax to reduce the burden on taxpayers for funding county services. Like the gas tax, he said, franchise fees and sales tax would be paid by more people, including those traveling through the area.
“I’m not advocating for raising taxes everywhere. I’m just trying to fill the holes in a boat that’s sinking,” he said.
Riddick said the county was also missing out on money that could benefit an area like transportation by not charging impact fees to new development.
Finance Director Dana LaFollette followed up on Rhoden’s presentation with an overview of several departments four months into the current fiscal year. She took the commission through the road department, for example, which at first glance looks to be overspending based on the amount of revenue coming in. However, she said, they had planned to use nearly $1.7 million of the road department fund balance the budget. At the current rate of spending, the department will only spend a fraction of that, less than $600,000 by the end of the fiscal year.
The road department is not self-sufficient, Sexton pointed out. The revenue generated must always be supplemented by fund balance expenditures or transfers from the general fund. This has always been the case, but now the board is being given a better look at how that works.
At the same time, Rhoden said this has been the source of auditors’ repeated warnings that the county is relying on reserves to balance budgets instead of generating revenue to cover those costs.
“The auditor has also advised us that it’s healthy for a county to have no less than about five months of fund balance available to you to use. We’re using it to help our operations, not just keeping it in the bank for a rainy day. We’re actually using it to help fund our operations,” she said.
While more than $3.8 million in fund balance (mostly CARES money) was budgeted to help cover Bradford County Fire Rescue’s expenses, the department is also on track to have money left over by the end of September. Once the CARES money is exhausted, however, the department will once again be relying on a transfer from the general fund to balance the budget.
The general fund is also on track to add to its fund balance by the end of the year. Through January, revenue outpaced expenditures by more than $1.14 million. At this rate, the county could add more than $3.4 million by the end of the fiscal year. However, the general fund budget was balanced this year with a transfer of more than $2 million in fiscally constrained county savings and more than $234,000 in out-of-county inmate housing revenue. Without those transfers, the addition to the general fund balance would be around $1.19 million. Also, the inmate housing revenue was used to cover the cost of pay raises, which will be an ongoing cost.
Armed with this information and additional reports, the commission is planning on its second budget workshop on Wednesday, April 6, at 6 p.m.
