Cut, raise or punt?

Wash­ing­ton County’s tough de­ci­sions lay ahead

Northwest Arkansas Democrat-Gazette - - EDITORIAL PAGE -

The lead­ers in Wash­ing­ton County gov­ern­ment have be­fore them an unenviable task. They’re in a bud­getary hole, sort of, and some of them have par­tic­i­pated in the ex­ca­va­tion. The ap­proach­ing chal­lenge for the 2018 bud­get year is to de­ter­mine whether the county can slow or even stop the dig­ging.

For 2017, the Quo­rum Court bud­geted more than $65 mil­lion in spend­ing over­all for ser­vices like the Road Depart­ment, the Sher­iff’s Of­fice and county jail, an­i­mal con­trol and shel­ter­ing, the courts, ju­ve­nile de­ten­tion, em­ployee health in­sur­ance, the 911 sys­tem and oth­ers. The prob­lem for jus­tices of the peace, who de­velop and ap­prove each year’s bud­get, is the pro­jected rev­enue for 2017 came in around $61 mil­lion.

That’s not nec­es­sar­ily a cri­sis. Af­ter all, state law pro­hibits the county from bud­get­ing more than 90 per­cent of an­tic­i­pated rev­enue, so there’s a built-in cush­ion of sorts. In ad­di­tion, the 2017 bud­get an­tic­i­pated end­ing the year with nearly $12 mil­lion in un­ap­pro­pri­ated re­serve. We sus­pect a lot of coun­ties would love to have that kind of money in re­serve.

But what wor­ries county of­fi­cials is the trend. In 2010, the un­ap­pro­pri­ated re­serve over­all to­taled more than $25 mil­lion. It’s got­ten smaller and smaller each year as an­nual spend­ing chipped away at what, in overly sim­ple terms, might be viewed as the county’s sav­ings ac­count. Op­er­a­tion of the county jail and county em­ployee in­sur­ance cov­er­age has got­ten more ex­pen­sive, as have a lot of ex­penses.

The con­cern? Even­tu­ally, out­spend­ing an­nual rev­enue will whit­tle away re­serves un­til there’s noth­ing left.

A county with­out any re­serve has lit­tle flex­i­bil­ity, a re­duced abil­ity to re­spond to the un­ex­pected. And not ev­ery­thing can be an­tic­i­pated. For three year’s run­ning, county of­fi­cials have dis­cov­ered bud­get­ing er­rors that re­quired mid-year ad­just­ments, for ex­am­ple. Early this year, the as­ses­sor dis­cov­ered an er­ror that re­quired the Quo­rum Court to al­lo­cate an ex­tra $1 mil­lion out of re­serves.

Back in 2012, jus­tices of the peace felt com­fort­able enough with county fi­nances to re­duce prop­erty taxes by half a mill, drop­ping the county’s dis­cre­tionary prop­erty mill­age from 4.4 to 3.9 mills. Cut­ting taxes is fun and pop­u­lar, and one could rea­son­ably ar­gue that the county had enough money com­ing in. So the Quo­rum Court that year set the county on course for a tighter bud­get. That’s a fine bud­getary phi­los­o­phy — the idea that build­ing too much in re­serves re­ally means the county is over­tax­ing its res­i­dents — but as costs con­tinue to grow, it de­mands a day of reck­on­ing at some point.

Is 2017 that day of reck­on­ing? The other day, this news­pa­per re­ported County Judge Joseph Wood’s staff plans op­er­a­tional and staffing changes to save money. “It’s all money-ori­en­tated,” Chief of Staff Carl Gales said dur­ing a Pub­lic Works Com­mit­tee meet­ing. “We do need a lot of fix­ing.”

The county judge over­sees 15 de­part­ments. Wood took of­fice in Jan­uary. Other parts of the county bud­get is directed by other elected of­fi­cials, such as the sher­iff, as­ses­sor, col­lec­tor, pros­e­cut­ing at­tor­ney, county clerk and cir­cuit clerk. Each elected of­fi­cial sub­mits a bud­get to the Quo­rum Court an­nu­ally.

Gales said the county judge is, for ex­am­ple, look­ing into us­ing a con­tracted vet­eri­nar­ian at the an­i­mal shel­ter rather than hav­ing one em­ployed by the county. Also, would leas­ing heavy equip­ment, such as for the Road Depart­ment, be less of a bur­den on the bud­get than buy­ing and main­tain­ing equip­ment? And can the county in­crease rev­enue by leas­ing some of its prop­erty at mar­ket rates?

Those are cer­tainly the kinds of ques­tions county of­fi­cials need to be ask­ing.

Wood’s pre­de­ces­sor, how­ever, warned the Quo­rum Court last year that cut­ting costs won’t solve the county’s fi­nan­cial chal­lenges. “A large part of the prob­lem is your con­scious de­ci­sions to con­tinue to spend while re­fus­ing to re­place the rev­enue you cut four years ago,” Ed­wards wrote at the start of last year’s bud­get work. “You can­not cut your way out of the county’s bud­get is­sues.”

Of course, you can. But the ques­tion is whether the pub­lic will ac­cept the kind of cuts to per­son­nel and ser­vices that would be re­quired to get there.

Good news comes by way of sales tax and prop­erty tax num­bers, both of which have posted a good show­ing so far in 2017. That could help close the gap be­tween spend­ing and rev­enue, but a big gap will re­main. So will the choices: cut spend­ing fur­ther, dip fur­ther into re­serve to cover the gap, or raise tax rates so more rev­enue will come in.

So, tax­pay­ers, what would you do?

Cer­tainly, there’s no magic num­ber that dic­tates how much the county should main­tain in un­ap­pro­pri­ated re­serves. Once the staterequired hold­back is set aside, the Quo­rum Court could le­git­i­mately spend all of the other money. It wouldn’t be wise, but they could. The ques­tion ev­ery year is what’s an ap­pro­pri­ate num­ber to keep in re­serves. Ev­ery dol­lar set aside in re­serve is a dol­lar not spent for county ser­vices, at least within that bud­get year.

Cut­ting bud­gets is a re­spon­si­ble ap­proach, to a point. Rais­ing taxes is a po­lit­i­cally un­pop­u­lar so­lu­tion. The for­mer usu­ally needs to hap­pen be­fore the pub­lic will ever feel good about the lat­ter.

Of pri­mary con­cern in the near fu­ture are the an­tic­i­pated ef­fects of the 2020 U.S. Cen­sus. In all like­li­hood, Wash­ing­ton County will see its rev­enue drop as a re­sult, as grow­ing cities make up a larger por­tion of the county’s pop­u­la­tion. Those num­bers de­ter­mine how rev­enue from the county sales tax is dis­trib­uted. Ac­cord­ing to Wash­ing­ton County Trea­surer Bobby Hill, it took the county un­til 2016 to get back to rev­enue lev­els it saw be­fore the 2010 Cen­sus.

Quo­rum Court mem­bers have author­ity to im­pose up to 5 mills in prop­erty taxes. That’s the tax that mem­bers re­duced back in 2012. Rais­ing it to the full 5-mill level would gen­er­ate an­other $3.7 mil­lion a year.

So Wash­ing­ton County isn’t in a fi­nan­cial cri­sis. Its lead­ers just have some hard de­ci­sion to make: Cut spend­ing, raise taxes or limp along again by al­lo­cat­ing money from re­serves in what can be con­sid­ered only a tem­po­rary fix.

Get­ting 15 mem­bers to agree on any ap­proach may prove chal­leng­ing. Hope­fully th­ese lo­cal rep­re­sen­ta­tives can find a spirit of col­lab­o­ra­tion that of­ten es­capes our na­tion’s lead­ers. We rec­om­mend the Quo­rum Court act to build re­serve rather than spend it, be­cause it looks like the next Cen­sus will mean leaner times ahead when re­serves will be needed. That’s some­thing the county should make plans for.

Will the Quo­rum Court be able to look that far into the fu­ture and pre­pare Wash­ing­ton County for it?

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.