County facing tough financial choices

CFO Rose Kisaalita said at budget committee meeting last Wednesday that the finance department needs direction from the BOC in order to complete the preliminary budget.

Currently, her staff is projecting about $6 million more in spending than in revenue for the upcoming fiscal year.

TAX HIKE A POSSIBILITY

The finance department expects the county to collect about $30.9 million in revenue for FY2011. That is about $700,000 less than the $31.7 million expected by the end of the current fiscal year Sept. 30.

Still unknown is the impact of a recently completed, countywide reassessment of property values. It is the second such undertaking in two years due to the continuing decline of property values.

Through some creative financing – including the recent sale of an old county fire station to the Barrow County Water & Sewerage Authority for $300,000 – the commissioners last fall managed to balance FY2010 budget without raising the property tax rate.

However, no such windfalls are on the horizon for FY2011. And Commission Chairman Danny Yearwood has said the county may not be able to avoid a millage rate increase a second year in a row during the ongoing recession.

At last Wednesday’s committee meeting, commissioners Steve Worley and Billy Parks also acknowledged that an ad valorem tax rate increase may be required, along with spending cuts.

Yearwood said the goal would be to raise the millage rate only enough to keep property tax revenues "neutral" in the face of declining property values. However, he noted that taxes would go up on any property that has not lost value in the two annual reassessments.

A one-point rise in the millage rate would raise a tax bill by $40 for each $100,000 of a property’s value.

SERVICE CUTS ALSO ON THE TABLE

Already off the table are millions of dollars in new positions, promotions or raises requested by department managers and elected officials for FY2011, along with nearly all capital requests.

Up for discussion at Wednesday's called meeting are significant cuts in existing services – ranging from the possible closing of one of the county’s six fire stations, the elimination of up to five additional county employees, and the cutting off all local funding for state-funded agencies that serve the mentally ill and the developmentally disabled.

Facing partial funding cuts are the Barrow County Health Department, the Department of Family and Children’s Services, and the Piedmont Regional Library System.

Worley also is considering recommending an across-the-board funding cut of 2-4 percent for all departments, along with the possible privatization of recreation services.

NO RELIANCE ON RESERVES

One option not on the table is any planned use of the county’s reserves in order to balance the budget.

Because spending in the current fiscal year is expected to be about $1.5 million more than revenues, the reserves will be hit again in September and will drop to well below $4 million.

Since her arrival as the new CFO a few months ago, Rose Kisaalita has been strongly cautioning the commissioners about the reserve’s weakening status, pointing out that what Barrow County calls a “reserve” is not cash but also includes money owed to the county.

She has repeatedly voiced the need to immediately begin rebuilding the reserves to at least $8 million in order to provide a backup of three months of operating expenses.

She originally called for the infusion of $1 million into the reserves during FY2011. That has now dropped to about $500,000. But even that may not be possible without a tax hike or severe service cuts.

BUDGET SCHEDULE

After the finance staff receives the BOC’s direction on planned tax hikes and service cuts, they will produce a preliminary budget for presentation to the full board.

According to the original timeline for the process, the document is to be presented to the full board on July 27 and placed for public review in the Winder library and finance department.

Public hearings are planned for 6 p.m. Aug. 10, noon Aug. 17, and 6 p.m. Aug. 24.

The board’s vote on the final budget is planned for Sept. 14.

Both of this week’s called meetings are open to the public and will be held in the board of commissioners meeting room.