Budget cuts enacted early last year left Sussex County in better financial shape than originally expected, an independent audit of the county’s 2009 fiscal year showed, according to a report delivered to the county council on Tuesday, Jan. 26.
Projections made in January of 2009 left the county with an anticipated $8 million shortfall through June 30, 2009 – the end of the 2009 fiscal year. The council moved then to approve numerous spending reductions, including suspending capital projects, parking county vehicles, not filling vacant positions and freezing non-essential overtime – all of which eventually helped pare the deficit by about 75 percent, this week’s report indicated.
As a result of those cuts, instead of an $8 million shortfall, Sussex County ended the 2009 budget year with a $1.9 million deficit. That is the county’s third deficit in as many years, but it was actually better financial news than what was expected a year ago.
“You never want to operate in the red, but looking at the positive side, this is the smallest of the deficits we’ve experienced in the past three years,” County Finance Director Susan M. Webb told the council on Tuesday. “And, just as important to note, it’s much better than what we could have been left with had the county not taken immediate action last year. Hopefully, the county is turning the corner to better financial days.”
Webb noted that the report showed the continuing effects of the slumping economy, particularly in the housing sector. One of the most significant sources of revenue for the county’s general fund in recent years – the realty transfer tax – continued its downward slide, netting $13.6 million, a decrease of $7 million, or 34 percent, from the 2008 fiscal year.
County officials said they were not surprised by that decrease, though, as they had conservatively budgeted $17.9 million for realty transfer tax. Other related revenues, including fees collected through the Recorder of Deeds office, building permits and building inspections, also declined by a total of about $2 million, or 21 percent, from the previous year.
County Administrator David B. Baker said the 2009 audit report reflected many tough choices and plenty of hard work during the past year.
“Our staff deserves thanks for their incredible effort in the past year to trim spending,” Baker said. “And we’re going to continue those efforts as we go through 2010 and as we look ahead to the 2011 budget.”
Webb noted that the 2009 audit report presented an “unqualified, clean auditor’s statement,” once again, and Sussex County will submit the 2009 audit report to the Government Finance Officers Association (GFOA) of the United States and Canada for consideration of its Certificate of Achievement for Excellence in Financial Reporting award.
The county has received the award for the past seven years. Webb said she is optimistic the county will receive the same recognition for the 2009 audit report.
Webb also pointed out on Tuesday a council mandate for a balanced budget that does not use the county’s “rainy day” funds.
“We’ve seen in the last two years that you might need to use that rainy-day fund,” she emphasized. “We’ve struggled to balance the budget without it, but we have done it and we have maintained the rainy-day fund.”
That fund includes $9 million in unobligated funds, as opposed to reserves tied to certain financial commitments.
The council voted 4-0 on Tuesday, with Council President Vance Phillips absent to attend his mother’s funeral, to approve the audit report.
The report is presented annually to detail the county government’s finances in the previous fiscal year. The 2009 report showed Sussex County’s financial numbers are accurate and meet generally accepted accounting standards.
Meanwhile, county officials also reported on Tuesday that the current budget year is showing some signs of progress. After outlining the audit, Webb issued a mid-year financial report for the 2010 fiscal year that showed modest budget gains are being made. For the six months that ended Dec. 31, the county is up $500,000 in revenue over budgeted expenditures.
“We’re close on target for revenues,” Webb said, noting just a 1 percent difference between the budgeted figure and projections based on six months of the fiscal year. “The budget’s been right on target. That wouldn’t have been the case this time a year ago,” she added, pointing to the significant dips in income during the same period in the 2009 fiscal year that led to the drastic cuts in expenditures.
“We’re monitoring expenditures very closely,” she said of the current fiscal year, adding that the figures are on target, thus far – “1.34 percent to the good,” in fact, at that $500,000 figure.
“It’s important to look at things mid-year to see where stand,” Webb concluded. “Last year wasn’t so good. … At least it’s slowly staying strong.”
Baker was likewise generally positive about the county’s fiscal position in a trying economic period.
“It’s an encouraging sign to have a positive number here in terms of our revenues over expenditures,” he said, pointing to the $500,000 figure. “With a $46 million general fund budget, it’s not a completely convincing sign that this is how we’ll end up on June 30, 2010, but it is a positive that we have seen an increase in transfer tax and other revenue.”
Phillips, in a statement issued after the meeting, said the audit and the latest quarterly figures highlight the magnitude of what has been achieved in the past year. He said both reports should give taxpayers confidence in the financial health of the county government and how their money is being managed.
“Beginning with the new council that took office one year ago, the timely manner in which the administration is now providing critical financial information to the council and public has allowed everyone to understand the magnitude of our crisis and take immediate and decisive action,” he said. “Today we are seeing the fruits of this labor.”
The complete report and other information was to be made available on the County’s Web site at www.sussexcountyde.gov.