County budget delayed until fall
Polk County Commissioners want more time to figure out how to balance the books and handle all their priorities for the coming year, and will also be looking to move how they complete their annual budget process for the future.
All agreed without a vote to push back a vote on the 2019 Fiscal Year budget after a prolonged 2-hour discussion over requests for additional funds, priorities like the 80-20 retirement rule, reducing group insurance costs, giving employees raises and a conversation about revenue sources that ended with the promise of more discussion in June.
Commission Chair Jennifer Hulsey tasked the board to figure out dates this week during their work session and regular session for June, adding two more meeting dates to this month now that they’ve delayed the discussions for now.
The heart of the issue is whether the Board of Com- missioners and the county administration can agree on where revenues and expenditures need to land for the second half of the calendar year, and heading into 2019.
Hulsey said that additional work sessions, finance committee meetings and data will be needed to figure out how to make all their priorities work at once for the coming year, and wants to meet again after this week’s regular session.
The administration submitted the $22.1 million budget for consideration during their May regular session, and a first work session was held on May 15 to allow for the board to ask some initial questions and hear from department heads seeking additional funds.
However, following that meeting on May 22, County Manager Matt Denton told the board of an additional need for the coming fiscal year: a half-mill increase in property taxes.
That move comes as revenue sources outside of taxes are beginning to decrease after recovering some from the recession. Fines and fees imposed by judicial proceedings – specifically fines in criminal cases – have reduced drastically over the past years.
Annual tag taxes and fees replaced by a new system in past years continues to go down as more people buy or trade cars, and only smaller fees are assessed. Increases in the amount the state shares in new vehicle taxes and annual renewal fees are on the way after new legislation was passed in the past session. Those fees alone it isn’t enough to offset increases in expenses and decreases in revenue.
Where the money will come from to cover costs of more than $22 million balanced budget is one reason why the board wants more time, and a chance to change the process for coming years.
Starting fresh on
Commissioners want to start with a fresh process when it comes to the FY 2019 budget, so when it comes time to tally the amount of money expected in and going out each year, they do so without having to make educated guesses at what is available.
Over the past years the county along with the City of Rockmart and City of Aragon have undertaken passing their budget on a July to June year for their budgets. That means when officials are determining the priorities of spending for the year for the municipal governments, they are doing so without having a complete picture of what they’ll get in from taxes and be able to spend through the rest of the year.
The reason has to do with the local property tax digest, which is compiled annually during the summer and has to be submitted to the state at the end of August.
Hence why in past years, local boards have determined a millage rate to be set late in the summer before tax bills go out to local residents.
Without having a completed tax digest on hand, finance officials within the municipalities have to determine their budget based on estimations of how much tax revenue is anticipated for the year.
This forces adjustments to the budgets, usually at the midway or end of the budget cycle to account for revenue that didn’t come in, or expenses that had to be cut.
Budget amendments also are used to add unanticipated revenue to the budget, as the county had to do in past months in order to take in money from several sources that can then be used for specific projects or purchases, like insurance money received for wrecked vehicles in the county or grant money that wasn’t included in the past year.
Approving a budget before the tax digest becomes available can cause problems, like shortfalls in expected revenue, and the need for Tax Anticipation Notes to cover expenses until those revenues come in.
The county hasn’t needed a TAN in a number of years to balance the budget temporarily and ensure there is plenty of money left in the bank, but to fix further problems with budget numbers will require a real change in the way the process is completed. Commissioners want a comprehensive look at how much revenue is available during the year.
It won’t however fix one problem in the budget process: estimating expenditures.
When Finance Director Muriel Dulaney puts together what she thinks the county will spend each year, she uses a snapshot of a single day’s costs to run the county as a basis for the rest of the year. That snapshot was taken in the spring months and gives the county a rough idea of how much it will cost to pay employees and their insurance, utilities, funds paid out to agencies and much more.
The snapshot doesn’t account for changes that can be made from day to day within the county government. Employees come and go, and so does changes in starting pay, along with their insurance needs. Emergency funds might be needed for an unexpected repair of equipment or replacement of a roof as other examples.
All of that adds up, and if the county doesn’t account for the extra costs or freed up money, they require amendments for the budget later in the year.
The hope is that by making a change to the way the budget is designed by waiting for the tax digest to be generated and distributed until the fall, the county can design a better and more realistic accounting of revenue and expenditures for the year.
Especially with the issues the county commission wants to fix in the months and years to come.
Rising costs of doing business
There’s a lot the county commission wants to fix in the years to come to ensure that both the taxpayers and the employees doing the work of the local government are both getting good deals.
Priorities differ from one commissioner to the next as discussions over spending needs went on for two hours during the county’s second work session on the budget.
Commissioner Hal Floyd continued to push for something to be done about the rising cost of group health insurance coverage.
Insurance needs an additional $ 273,501 to cover added costs, or a 23 percent increase from 2018 to 2019’s budget. Combined, it only amounts to a total 6.6 increase in revenue.
The rate is up to over 80 percent of all those insured submitting a claim, and also education issues within the county workforce about health.
Floyd wants to dig into the issue and see what can be done about lowering the cost in years to come, and also address how much future employees should have to cover in their part of paying for monthly health insurance premiums. Current employees would keep their same percentages.
“One, if you’re an employee you’re really in luck,” he said. “We owe it to them, they’re entitled to it. But in the future, do we know what our competition in other counties are paying, what percent their contributions and premium they’re paying?... industry is around 50-50 to 60-40. If you average out the cost, it comes out to $12,000 a year per employee.”
Along with that, Commissioner Scotty Tillery wants to look in-depth at the numbers surrounding the 80-20 rule, an issue he’s been working on for several months. In bringing up the discussion during the county’s work session last week, Denton said he believed the county would do better by offering to buy out employees and cut them a check at the current time instead of looking at the potential new retirement scheme.
His argument is that like a corporation that decides to buy out employees who are older but don’t yet want to retire, they can determine the offers they want to make.
The idea is that older members of the county workforce could be offered a chance at money now to retire early, and replace the position with an employee at starting pay.
Pay scale is another area where commissioners still want time to figure out as well. They’re waiting for the Carl Vinson pay study to be returned, and without that they don’t have a solid understanding of the costs associated with more than just the annual 1.25 percent increase to salaries, and the 75 cent an hour raise that employees got earlier in the year.
All of these items combine to give commissioners a good reason to delay passing a budget, plus one more: they weren’t fully aware of the need to increase the millage rate until after officials submitted the budget for consideration.
No millage rate increase for now
Where did this millage rate increase come from? It was the basis of questions posed by Hulsey to Denton since it had not been mentioned during their first work session held on May 15, and wasn’t until an email went out on May 22 to the board that they learned of the need.
A half a millage point is around $340,000 in additional tax revenue based on this year’s estimated real property tax revenue and the previous year’s millage rate. That individual cost to home and landowners would be based on the value of a percentage of their property.
Hulsey expressed her concerns and unease about being informed of the need for a millage rate increase only after the first work session, when she felt that should have been explained.
“What my real concern is why didn’t we hear about it at the first budget meeting, and did anyone else know about it, or was it just you and Muriel that knew about it,” she said.
She went on to add that in future budget conversations, it will be an open process where all the commissioners will be involved. That includes Marshelle Thaxton who has not been to a board meeting in May following surgeries and recovery.
Denton did apologize for not informing the board, but it was done within the past couple of weeks. He said the mill rate increase came about because of the increase in salaries.
Hulsey added that she was additionally concerned because commissioners had asked during their previous meeting whether everything in the budget would be covered by the proposed revenues and expenditures.
“We were told that we’re waiting on the digest come back, and nothing about the millage rate increase,” Hulsey said. “I’ll be honest with you, when I get it in an e-mail in the middle of the day – I didn’t get it until 10:30 after the election… Am I the only one who is upset by this?”
Denton said that “I wish I had been in the meeting” so he could have explained it.
“You guys can fund it anyway you want to,” Denton said before the decision to postpone budget approval. “But no matter what there is a $ 455,000 above the insurance and regular cost of business increases… the only thing Muriel and I can think of is a millage rate increase.”
“I don’t like the way this was handled,” she said. “You think you’d let the board chair and the members of the board know that we’re doing that. I just didn’t like that at all. I want us to be open and honest, and that’s why I brought it up here. I feel like there are some side door conversations, and I think that is what has gotten us in a real pickle in the past.”
Commissioners don’t want to increase the millage rate if possible, and instead are looking at other options.
Tillery especially wants to wait until he can present his work on introducing new service-based fees for residents seeking the county’s help in a variety of areas.
Additionally, they also want to look at how they can generate savings within the departments by going line by line through the budget and see what is really needed, and what might just be a dream.
Part of that has to do with saving money on capital improvement projects by forcing department heads to make realistic requests for their needs.
Commissioners also want to avoid taking anymore of the landfill funds still available for use, since their hopes is to one day setup a trust to help future generations not have to deal with issues the commission is currently facing.
During the first work session, commissioners heard requests for increases from three departments, and a fourth was added during he May 29 session.
Tallapoosa Circuit District Attorney Jack Browning came before the board with a request for just over $13,000 in funding to help boost his budget for FY 2019.
Previously, he used fine and forfeiture money to cover some additional expenses within his budget to match some grant money for a position, but now that is unsustainable with fine money going down.
“It doesn’t take a financial guru that when your money is going out faster than it was coming in, it was going to be a problem,” he said.
His hopes are the commission can come up with some help, which is one final reason why they’ve decided to delay the FY 2019 budget.
Floyd said with all the requests being made this year for spending above $840,000 from a variety of areas, the commission needs more time to figure it out.
“There was nine requests for additional money as opposed to where we were, and this is one of the nine that we’re adding as opposed that was in the budget originally,” Floyd said. “
County Commissioners decided that they needed to take a pause and work on budget numbers through the summer and come back to approve a full FY 2019 budget in October.
District Attorney Jack Browning sought additional money in his budget for the 2019 fiscal year.