When it comes to government finance, eyes tend to glaze over. Most people want to know just the basics and whether or not their local governments are financially sound or fiscally struggling.
For the Barrow County government, the short answer is this: County finances appear to be strong, although the slowing economy is having an impact on local government revenues.
But a true look at government financial numbers is more complex than such a broad-brush summary. That’s why this newspaper is presenting a page of analysis numbers this week based on the Barrow County audit for FY07. These details are published to show both the details and complexity of local government financial issues.
In FY07, Barrow County was in the black, spending less money than it took in. Its general fund reserves appear to be strong at $9 million and its overall debt appears to be reasonable based on the size of the population and county budget.
Part of the reason Barrow had strong finances in FY07 was due to a large leap in property tax income. That income jumped from $10.5 million in FY06 to $15 million in FY07. No doubt, much of that was due to the additional tax base that has been built in the county over the last couple of years.
So far in FY08, revenues have been holding up. For the first five months of FY08, tax revenues were up by 11 percent and court fines were up 17 percent. Because of that, overall revenues for the first five months were up 5.7 percent over last year. Whether that trend holds true for the coming months remains to be seen.
But there are some warning signs in the revenue stream. The 2007 audit showed that the county’s sales tax income was already stagnating, being slightly down from 2006. The worsening economy will likely keep sales tax revenues down in 2008 and some projections indicate it might be off by $400,000 by the end of the current fiscal year.
In addition, the housing bust will keep zoning fees, building permits and other growth-related revenues flat during the year. Those items were already slowing in 2007 and have slowed even more this year. Through the first five months of FY08, licenses and permits revenue was down 35 percent compared to the same period the year before.
Hopefully, good management will make sure the county weathers the current economic downturn without having to dip into county reserves. So far in FY08, the county has managed to hold its expenses down. Through the first five months, expenses were running 3.5 percent under last year. In addition most areas of county government have been under budget for the first five months. It’s apparent that somewhere along the way, someone is looking at keeping county costs in line.
So despite the overall gloomy economic conditions, the Barrow County government has not yet gotten caught in a huge financial squeeze. Unlike some counties, Barrow is in a good position to meet its financial challenges, if it can continue to control its costs during this period of revenue stagnation.
That means, in part, that the county can’t afford to throw money at new projects that don’t have a solid return on investment. The proposed Northeast Georgia Convention and Arts Center, for example, could become a financial black hole requiring large county subsidies in the future. More study is needed on that idea so that it doesn’t become financial boondoggle either in the short-term or the long-term.
Another danger is that the last few years of growth allowed Barrow to rapidly expand the size of its government from a $24 million general fund in FY05 to a $33 million enterprise at the end of FY07. That kind of rapid growth in government can’t be sustained during an economic recession and slowing revenues.
This economic downturn is a true test of Barrow’s leadership and government structure. It’s relatively easy to run a government when money is pouring from double-digit growth.
It’s making tough decisions today, when times are lean, that is the real mark of strong leadership and good government.