County explores ways to balance budget

Published 12:00 am Wednesday, March 3, 2004

JACKSON – Following a mid-year analysis of its financial status presented by auditor Brian Starnes of Martin Starnes & Associates, Northampton County Commissioners are faced with the challenge of determining the source of funds to balance the budget for 2004-05.

According to Starnes, although the county is &uot;fiscally strong,&uot; change will be necessary to balance the budget effectively in the long term.

&uot;The train’s not off the track with an ambulance coming from Raleigh and everyone calling out ‘murder,’&uot; said Starnes. &uot;You are on the right track.&uot;

Starnes noted that as of December 31, 2003 the county’s appropriated fund balance was $2,067,056 and emphasized that the goal for the following fiscal year should be a zero appropriated fund balance.

&uot;The fund balance was appropriated to balance the 2004 budget, but with the county’s projected $1,098,000 reduction in fund balance going to fund recurring expenses, it’s like you’re paying your family’s budget by cutting into your savings account,&uot; said Starnes. &uot;Your income is not enough to meet your debt.&uot;

Northampton County Manager Wayne Jenkins commented that the county has had to make decisions of the same nature from approximately three years ago stating, &uot;This is the same thing we did three years ago and the last time we did this we pulled the county’s fund balance up from 7.59 percent to 14.53 percent.&uot;

As Starnes neared the completion of his presentation, he expressed points of concern regarding various departments within the county.

He cited an increase in expenditures for inmate housing from $353,437 to $433,154 with an increase in revenue of $8,820 as of December 31, 2002 leaving a difference of $372,095.

He also noted that although revenues had increased since 2002, expenses for the Department of Social Services exceeded its income, leaving the department with $1,709,229 in deficit spending.

Additionally, the Health Department saw a significant increase in their deficit spending, which registered at $321,229, up from $37,217 in 2002.

Starnes also mentioned that water and sewer revenues were projected to be significantly less than budget and in the neighborhood of $350,000 with debt service payments financing approximately one-third of total expenditures for that fund.

&uot;At this time, the fund is not generating sufficient revenues to cover operations and debt service,&uot; said Starnes.

Jenkins offered a clarification that the water and sewer along with the solid waste fund were enterprise funds and explained that with such a fund, user fees were responsible for supporting its operation.

&uot;An enterprise fund is supported by user fees,&uot; he said. &uot;You make a dollar, you spend a dollar, no tax money goes into it.&uot;

He continued, &uot;That doesn’t mean that the county can’t appropriate funds to support those services; Northampton has just chosen not to.&uot;

Department heads met yesterday (Wednesday) collectively with other county officials to strategize ways of bridging the gap in the 2004-2005 FY budget.

&uot;It’s going to be tough,&uot; Starnes told the county, &uot;but, it’s not time to be politically correct; you need to let the department heads and the community know that you have to do what’s fiscally correct, even though they may disagree.&uot;

Starnes admonished the county to be &uot;prepared&uot; for questions to come from the residents stating, &uot;There will be some that claim they have a constitutional right for the things they have requested, yet on the other hand there may be others who refute the idea of paying taxes for services they don’t use.&uot;

He also cautioned the county to beware, what he referred to as &uot;annuity contracts&uot; and stressed the importance of weighing the long-term pros and cons of adding new positions. He explained the scenario like this, &uot;Every time you add a new position, you’re adding, $35,000 a year, plus retirement, plus the cost of health insurance and everything else, not for one year, but for forever.&uot;

In a proactive response to prior discussions with Starnes, Jenkins submitted a Budget Formulation Guidance, which was later approved by Commissioners, thereby agreeing to a zero increase in expenditures, no new positions or salary increases for cost of living, maintenance of the current compensation for mileage, freezing non essential travel, and operation based on critical capital outlay only, which would include utilizing existing equipment or buildings to maintain the level of service required for daily operation.

The current focus of the Board, according to Starnes, should be developing a plan to fund the county’s recurring expenses with its recurring revenues to &uot;stop the bleeding&uot; and reevaluate the remaining capital outlay or budget of approximately $300,000.

&uot;Something that people need to take note of,&uot; said Jenkins, &uot;is that the county was $850,000+ under budget for planned expenditures. Although that does not mean the money is excess, what it does mean is that our departments have done an excellent job with the budget.

&uot;It indicates that our finance officer and department heads are utilizing excellent budget management skills and that they put together a good spending plan.&uot;

Starnes suggested that the county consider conducting a comprehensive study on its detention center to determine a strategy for generating additional revenue.

&uot;Right now, you are providing a very expensive service for empty beds,&uot; said Starnes who added that the departments’ deficit spending was projected to continually increase unless some action was taken.

&uot;It’s kind of like garbage. Everybody has it, there’s a lot of it and there’s a lot of money in it,&uot; he said.

He continued to stress for the county to continue to evaluate grant projects for post grant costs and to be careful about the effects of &uot;loosening the purse strings&uot; in the budget.

Jenkins clarified that the county is not in a deficit and corrected the misinformation stating, &uot;There is a figure out that the county is $750,000 in deficit. That is not correct. There is a big difference between the county being in deficit and individual departments having an increase in their deficit spending. They are not the same thing.&uot;

Starnes commended the Board on their leadership of the county and stated, &uot;We audit nine counties and just recently added one more so, inevitably, we see a lot of issues and struggles common to counties in your area and you’re doing a great job in your strategy.&uot;

He further expressed confidence in the county’s leadership abilities and decision making skills, encouraged county officials to be prepared to make some &uot;tough, but necessary decisions&uot; and candidly commented, &uot;discussion creates solutions, unless you’re running for president, then it just creates discussion!&uot;

Information regarding the strategy session held with the county’s department heads was not available as of press time.