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We Aren't Out of the Woods Yet
Posted 3-24-2004
The county budget may be done
for this year, and we escaped without a tax increase, but that does not mean
we are out of the woods concerning future budgets. While I am happy that we
made substantial progress in trimming expenses, we need to be more
aggressive in making future cuts or our operating deficit will just grow
larger because revenues remain flat.
When our fiscal director
received budget requests in the fall of 2003, the difference between
revenues and expenses was in the neighborhood of $18 million. We had to make
cuts in the preliminary budget passed in December 2003 just to present a
balanced budget. Since we knew that a new board of commissioners would be
seated in January 2004 and that we would re-open the budget, we let the
preliminary budget stand through the end of 2003.
Further cuts in the re-opened
budget allowed us to ultimately reduce the original requests by $9 million.
With reserves of about $14 million at the end of 2003, we settled on a final
budget this year that allows us to still maintain $5.6 million in reserves.
However, the real problem is that expenses still outpace revenues by $9.3
million. So if everything stayed exactly the same (and that definitely will
not happen), we would still have to cut $3.7 million to balance next year's
budget.
It did not help that we had
to make pension fund contributions in both 2003 and 2004. The overall
contribution in 2003 was about $3 million, with more than half coming from
the county's general fund. In 2004, our contribution is $4.7 million, with
again more than half coming from the general fund. Those contributions were
required by our actuary even though the size of our pension fund has grown
to its highest value ever -- $231 million. Hopefully in the near future, we
will escape from having to make those direct contributions from our general
fund. But, there is no guarantee.
We are certain to have higher
payroll costs next year with the various bargaining units, which represent
about 75 percent of county government's workforce, guaranteed higher wages.
Also, we froze wages for non-union employees this year, and, in fairness, we
cannot freeze them indefinitely. While we have gone self-insured for
employee health care coverage, the cost of those claims will go up each
year. The cost of virtually everything we do or purchase will also continue
to rise.
That is why re-evaluating how
we do business is essential. From an operations standpoint, we already took
steps through investments like the Guaranteed Energy Savings Act. It allowed
us to install energy-efficient lighting, water fixtures, and HVAC equipment
throughout county buildings. However, the mission of county government is
pretty much defined for us, as every service we provide is mandated except
for operating a park system. I think most people would agree that the park
system is an amenity that we can all enjoy, and one that Westmoreland County
residents can be proud.
At some point, a tax increase
will have to happen. But a tax increase alone, without a continued,
determined effort to cut expenses and improve efficiency, will not be
enough. We could quickly hit the cap on millage (25 mills, and we are at
16.99) if we do not aggressively control costs.
This year's budget process
was a mixed bag as far as cooperation from other elected officials. Some
elected officials, including the courts, made cuts regardless of the
unpleasant nature of the process. Others were simply unwilling, and I
believe are challenging the commissioners' authority to budget. Money was
not restored to those offices' budgets, so, at some point this year, they
will run out of money in their payroll. No one wanted to cut people, but
most elected officials recognized the challenges we face. Most of them did
not lose sight of the fact that the interdependence between county elected
offices outweighs the independence of their offices. Only the commissioners
can pass a budget or enter into a contract, and, ultimately, we are
responsible for the county's financial position.
It is not likely the
contentious nature of budget negotiations with other elected officials is
going to go away anytime soon, but we must all work together to best serve
you. Respect for county government's overall financial picture by every
elected official, rather than a myopic view of individual offices, will go a
long way toward helping us solidify future budgets. |
