County preps for budget ax

[cleeng_content id="357301312" description="Read it now!" price="0.49" t="article"]CHARLES TOWN – Faced with revenue shortfalls and a cash-flow crunch, the Jefferson County Commission is preparing to examine wether to make cuts in its budget.

The Commission last week authorized County Administrator Debbie Keyser to head up a team that will seek to find ways for the county to save money.

Keyser said flat revenues and steadily increasing expenditures were at the root of the overall budget situation – as opposed to seasonal cash-flow difficulties that many counties face because the bulk of property tax revenue does not come in until October.

“We have a relatively small decrease in revenue but an increase in expenditures from 2012 to 2013,” Keyser told the commissioners.

Walt Pellish

Walt Pellish

Keyser said county revenue has been mostly flat over the last three years – $20 million in 2011, $21.5 million in 2012, $21.2 million in 2013 – but expenditures have steadily crept upwards – $19.4 million in 2011, $20.7 in 2012, $22.2 in 2013.

There is no central driving force in the increased spending, Keyser said, rather it is attributable to many separate factors.

“Basically, it is not one thing that jumps out. It is a lot of little things that have been added together,” she said, though she said employee costs were a significant factor. “Since 2007, we have seen full-time head count increase from 164 employees to 183.”

One major driver of increasing costs, she said, are employee benefits.

“We’ve seen increases in health care. We’ve seen increases in retirement,” she said. “Since 2007, we have seen health care increase from $1.04 to $2.2 million. Our total benefits as a percent of payroll has gone from 34.46 to 42.36.”

Keyser said this means an employee with a nominal salary of $30,000 costs the county $42,714. “While that seems high, it is probably normal in today’s market … We really do need to be careful when we hire employees,” she said.

Commissioner Walt Pellish warned that healthcare benefit costs might rise significantly once a provision of the Affordable Care Act that imposes an excise tax on so-called “Cadillac Plans” – those with individual yearly premiums of over $10,200 for individuals or $27,500 for a family – goes into effect in 2018.

“Obviously, when you look at that there is an extremely dramatic increase from $1 to $2 million for healthcare costs, and my prediction is that is going to get worse,” Pellish said. “And one of the major reasons it can get worse is that as we move into Obamacare, we probably will get labeled as a Cadillac Plan, and that means that the numbers are going to skyrocket. We need to keep that in front of us.”

Keyser said she was already working to plan for the tax.

“Actually, we have discussed that with Blue Cross, and what we are looking to do, potentially, is put in a second plan which would not be a Cadillac Plan,” she said. “It would be the plan that is deemed to be the regular, standard plan that had been designated by the government… The Cadillac Plan may well become unaffordable to anyone because there may be a 40 percent tax on it.”

Keyser said she is also examining implementing a wellness plan – a plan that typically focuses on physical fitness, smoking cessation, diet improvement and other prophylactic measures – for county employees to help drive down insurance costs.

On the revenue side, Keyser said that the county had significantly overestimated the revenue it would receive in both of the last two fiscal years.

“Revenues were projected for fiscal year [2012] at $25,254,000 and for fiscal year [2013] at $25,952,000,” she said. “Actual revenue … was at $21,199,000, which is a significant shortfall.”

Keyser said a significant driver of that shortfall has been declining revenue from Hollywood Casino.

“There was a 22- and 12-percent reduction in revenue from video lottery and table games respectively, but only a total of a 5 percent revenue decrease in the overall budget,” she said. “So taxes remain the same, but we have seen decreases in some of the other video lottery and table games.”

Keyser said the county would be unable to use across-the-board cuts without necessitating layoffs, pay or benefit cuts, or furloughs.

“There has been talk about potential cuts,” she said. “I don’t think we can do a straight budget cut across the board, or we are going to impact personnel. We are going to have to go line-item by line-item.”

For example, she said, the Planning and Zoning office and the prosecuting attorney spend more than 90 percent of their budgets directly on personnel.

Commissioner Dale Manuel said that the county would have to begin finding places to cut soon, adding that the longer cuts are put off the more difficult it becomes to cut enough, since spending will continue until the cuts are in place.

“We have to cut,” he said. “We are going to have to come up with a procedure, and some of it is going to be long, laborious and painful.”

Commissioner Lyn Widmyer said the commission would have to be mindful of what areas it is cutting, keeping in mind that cuts would impact services offered to the community.

“You have to know what services are going to be cut,” she said. “I hope we are able to move into that area of the budget, to talk about what taxpayers are getting for their money … It’s not just numbers. There are real services that are involved.”

Pellish accused the commission of “howling at the moon,” saying they ought to be more focused on growing the county’s tax revenues through economic development, rather than on cutting spending.

“We are sitting here focusing on what dollars can we take out of the budget and keep people from spending, when our focus has to be on what does this commission need to do to generate more revenues,” he said. “The answer to our problem is not cutting. The answer is generating more revenues. We need, for example, more business. That is what is going to get us more revenues. That is what is going to broaden the tax base.”

Manuel said the commission has been focused on economic development, but that large companies have chosen to locate elsewhere so far.

“We do need to improve revenues,” he said, indicating that investments to the Development Authority and the Conventions and Visitors Bureau were geared toward attracting businesses. “I think we have a record of doing that. I think we are doing what we can do with our budget. “We’ve got to land some of these fish.”[/cleeng_content]

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