Bleak Numbers Cast Shadows Over County Finances
County Legislators received an update on the County’s fiscal picture in late April from budget and finance personnel. It was bleak, as was to be expected. Afterall the 2012 budget when passed did not balance spending with revenues but instead borrowed extensively ($23million) from our reserve funds. This left the County at the end of 2011 with $7.8million in its fund balance, which is only 1.9 percent of the County’s $411million operating budget. Fund balance is the difference between County assets and liabilities and is not the same as cash. The ideal fund balance is between five and ten percent. Like the fund balance, the County’s cash flow is also much lower than in previous years. We finished 2011 with $29.5million. While cash flow fluctuates daily based on cash outlays and revenues received, cash balances has consistently been lower for the past three years.
The 2012 budget was balanced not only with an enormous reliance on fund balance, but by anticipating Medicaid Mandate Relief from the State. Such aid did not come. This creates a $1million shortfall for the County in 2012.
Instead the State chose to cap their reimbursement to the counties for Medicaid administrative costs, costing Dutchess County an estimated further $145,000. County financial leadership is estimating that the County faces a $40million budget gap for 2013.
Spending continues to rise. County spending in 2011 totaled $435.4million, which was an increase of $7.6million compared to 2010. This includes State-mandated expenses including $41.5million for Medicaid, $38.9million for employee health insurance and pension payments, $1million for preschool special education and early intervention programs (state mandated services all). It also includes $38.9million for the Sheriff and jail costs, and $12.7million in debt service to Dutchess Community College.
Revenues are down. While sales tax increased in 2011 by $1.8 million to $134.3million (largely due to the expiration of the sales tax exemption on clothing and footwear), the first quarter of 2012 showed a decrease of 1.4% compared to the first quarter of 2011.
Unfortunately the County’s fiscal trouble reflects financial distress of too many of its residents. Unemployment was at 7.7% in March. Department of Social Services caseloads are up 61% from five years ago. The County’s real property tax receivables have increased nearly $4.5million in one year. This final number indicates that more property owners are struggling to pay their taxes. We legislators must take note of this startling statistic. In 2010, 1,435 homeowners had their properties foreclosed due to inability to pay mortgages and/or taxes. While this number decreased in 2011 to 969, the underlying message of struggling taxpayers/property owners mustn’t be ignored.
In only a few months, county departments will start planning their budgets for the 2013 budget. This month we legislators continue scrutinizing bonding resolutions. Somehow we all must realize that business as usual can no longer be our mantra.