11/14/2007: "County Revenue Estimate: The “Squeeze” is On"

Following on County Administrator Pete Rose warning to the County Council that the capital budget for maintenance and construction has “ “Hit the wall”, County Auditor Milene Henley reported to the County Council Tuesday that she also expects the tax revenue that funds most of the county’s day-to-day operations to increase just 2 percent next year over the estimated revenue for 2007. The next time for public comment is on December 4.

The Auditor is projecting a modest 2.4 percent increase in increase in property tax revenue. While the increase in revenue from existing property is -or has been- statutorily limited to 1 percent annually; (the balance of the increase comes from new construction): but the recent Supreme Court decision that struck down I-747 opens the door for property tax increases up to as much as 6%..

Henley believes that the other major generator of operating revenue, retail sales and use taxes, will actually be lower in 2008 than the amount originally budgeted for 2007.

Henley says she is basing next year’s estimate on the fact that the collection of sales taxes are running well behind expectations this year and may end up being only marginally higher than collections in 2006. Historically, the county’s sales tax revenue has increased an average of 5 to 6 percent each year.

Overall, tax revenues are projected to increase about $180,000 over this year’s budgeted income. Increases in income from smaller revenue sources, including Licenses and Permits, grants, Fines and Forfeitures and interest income, along with a dip of $785,803 into the projected beginning cash balance of $2.3 million, will balance the 2008 “County Current” operating budget of nearly $14 million.

The actual dip into the cash balance, Auditor Henley explained, is likely to be less than the projected use. Over the years, the County’s departments have predictably spent only about 94% of their budgets, due to savings on such things as unfilled employee positions and funds built into department budgets for emergency contingencies. However, she said, because mandatory increases in expenses for 2008 exceed the increase in revenue, “This year we squeezed it.”

She predicts that because contingency funds were stripped from the budget, actual spending will be closer to 97 percent of the budgeted amount or higher.

Tuesday’s report was presented at a public hearing that is a legally required step in the budget process. The County’s capital funds budget and Road Levy are considered separately.

The Council has scheduled public hearings on the budget proposal for its December 4th meeting. A vote to adopt the budget is expected on December 11th.