County might see $2.5M shortfall
By Steve Herring
Published in News on February 4, 2009 1:46 PM
Underestimating sales tax and Medicaid relief revenues should help Wayne County compensate for a projected worst-case $2.5 million county budget shortfall, while helping the county better prepare for next year's budget, County Manager Lee Smith said Tuesday.
Adding to the budget "wiggle room" are the savings the county is realizing from a number of cost-cutting moves that date back to last summer.
Smith tempered his comments by pointing out that the legislature now sitting for its long session will be looking for ways to close its own $2 billion budget gap -- ways that could adversely affect the county's bottom line.
As for next year, Smith said he is looking at the county "holding the line... no increases."
"If revenues are going to drop to where we are, I have got to live within my means I have now with no tax increase. We will have to hold the line at zero and that will be tough. We are committed to that through cuts and other revenue sources. But now it appears that it will be through cuts."
Smith explained the shortfall at a six-month review of the budget during the first of several planned retreat sessions held at the Goldsboro Country Club. Additional sessions are planned for Feb. 19 and 20 at 8 a.m. The locations have yet to be decided.
Prior to the budget review, auditors briefed commissioners on the county's 2007-08 budget audit.
Auditors praised the county for its efforts over the past several years to build a fund balance that now stands at $31 million of which $8 million is mandated by state law.
Overall, the budget's current status is comparable to the previous budget year, with most expenditures hovering around 50 percent or less.
"We underestimated sales tax by about a million dollars," Smith said of the current budget. "We did not count on the full Medicaid phaseout by the state. I only counted on about a million of that this year. If things come in from the state as they have been as far as reimbursements, that should be a million and a half (more than estimated).
"Those two things plus the cost-cutting measures we have taken ... I think we should be able to take care of that shortfall. I feel comfortable with that. I think I have $3 million to $3.5 million in room to move."
Those cuts include a hiring freeze for most county jobs. The county has eliminated some 130 jobs over the past several years as people retired.
However, Smith said he thinks he is "maxing out" and "hitting a glass ceiling" where certain jobs are concerned.
"But I am nervous. Folks are in Raleigh. What I am afraid of is that the (Medicaid) phaseout could slow down. The real issue is what's it going to be like next year," he said. "The next three to four months are going to be important on our sales tax and to how they trend. If they trend like they did in October, and it looks like November will, we are going to have a shortfall. But is that going to be sustained or is it going to start picking up."
Commissioners will have to discuss local revenue options before the legislature now in regards to sales tax, impact fees and other revenue sources.
"We don't manage dollars any more, we manage pennies," Smith said. "But you have to because that is where it gets lost."
As of Dec. 31, the county's revenues exceeded expenditures by $7,646,488, County Finance Officer Pam Holt said.
However, sales tax proceeds were down by about $600,000, and by the end of the fiscal year in June, the shortfall could top $1 million.
The county has received about 53 percent of $74,612,934 of total general fund revenues of $141,274, 492. Ms. Holt noted that the county receives the bulk of its tax revenues in December and January.
Expenditures thus far total $66,966,445 or about 47.4 percent of the general fund.
The percents are almost identical to the same period for the 2006-07 budget.
The county has spent $1.8 million (42 percent) of its Medicaid budget. However, during January, the county's Medicaid expenditures increased by $115,000, she said.
"County services are being impacted by the deteriorating economic situation," she said. "We are seeing high levels of service demands in the Department of Social Services as the unemployment rate increases and more jobs are shed. More residents become eligible for Medicaid, food stamps resulting in higher cases loads."
Public health accounts for slightly more than $8 million of the budget, while public assistance (DSS) accounts for more than $26 million.
As of Dec. 31, revenues were $11.6 million (44.3 percent) in public assistance while expenditures were at $10.9 million (41.8 percent).
Revenues in public health are at $3.3 million (41 percent) compared to expenditures of $3.5 million (44 percent).
"Government is expected to prop everybody up when the economy is down," Smith said. "The problem is when people aren't spending, we have got problems."