Sussex County Council capped off its May 19 meeting with what County Administrator David Baker facetiously called “one other small item.” Smaller in size, yes, but small in its impact, certainly not, since that final item was the presentation of the county’s budget recommendation for the 2010 fiscal year, after months of scrutiny, discussion and planning.
Baker introduced county finance staff and Budget Committee members Susan Webb, Kathy Roth and Gina Jennings, who had helped him develop the recommended $128 million budget designed to “maintain and supplement county services in the midst” of the economic crisis.
Baker noted off the bat that the budget called for the county’s General Fund revenue to be down 16 percent versus last year, but that, despite that, no tax increase was being recommended for property owners in Sussex.
Instead, a package of cuts, accounting adjustments and small revenue enhancements will be aimed to balance the county’s newly reduced budget without tapping into the county’s so-called “rainy day funds” that might be needed if revenue falls short of projections this coming fiscal year.
The county’s General Fund budget will be down 15.7 percent – an $8.6 million reduction in revenue. Capital improvement funding for non-water and –sewer projects will be down 52 percent, at $8.2 million. Federal stimulus funding will help keep up levels of funding for housing programs, and water and sewer projects, though.
Overall, the county will be cutting its expenses by methods such as a reduction in the number of employees, which will be handled through phasing out jobs by attrition and cross-training existing employees to handle some of the jobs left vacant.
Overall, the county will do away with a net of 26 positions. That includes cutting 35 positions that fell under the general fund in last year’s budget. Nine of those positions will be made up for by moving some of those 35 workers to being paid from outside the general fund.
The county will also gain some funding for its General Fund by recovering “justifiable costs” from its water and sewer funds, shifting cost and employees primarily related to those two areas to their separate budgets for the first time.
Employees have already been cutting costs within their departments by reducing commuting in county vehicles, reducing the amount of office supplies used and deferring travel, among other means. The county will also be deferring capital purchases.
“These efforts by our staff are the real story behind the budget,” said Baker on Tuesday.
Transfer tax drop ‘huge’ as economy takes toll
While county expenses have been severely trimmed, the General Fund budget is still expected to run in a deficit in the 2010 fiscal year, with a $3.8 million loss projected, compared to $3.3 million in 2008 and $2.87 million in 2007.
“This budget attempts to reduce expenses as much as possible to enable us to survive in the future,” Baker emphasized.
“The economy has taken its toll on our budget,” Webb said in introducing the overall picture of the General Fund budget. “We had to come up with some creative ways to make up for it.”
The biggest impact on the budget is a reflection of the economic crisis.
“Transfer tax is no longer the largest component of our revenue,” Webb noted, saying that last year, transfer tax had made up 31 percent of the county’s revenue, while 22 per cent was in property taxes. Each kind of tax now constitutes 26 percent of the county’s revenue, now that the county is dealing with a $23 million decrease in transfer tax.
Noting that transfer tax is a restricted revenue, meaning that it can only be spent on certain types of expenditures, Webb urged the council to “be mindful to use or save it for uses such as the [Emergency Operations Center] EOC building. “This decrease is huge,” she said.
Fees for county services account for another 18 percent of the county’s revenue, and that’s been impacted by the economy as well. “Housing-industry-related revenue is on also on the decline,” Webb said, referring to such items as permit fees and fees paid to the Recorder of Deeds.
The county’s third highest revenue source is now grants, for its paramedic service – which itself has been dramatically cut, from a 60/40 state/county split to a 30/70 split, putting much more of the financial burden on the county – and federal grants and pension revenues.
Paramedic costs, coming under the county’s largest department, are still funded at 14 percent of the county’s general-fund budget, at $11.9 million.
Among the biggest cuts in the proposed budget are what Baker called “a broad-based reduction in grants-in-aid,” the second-largest area of General Fund expenses in the budget.
Grants-in-aid will be down 25 percent overall.
“This is where some of more dramatic cuts were,” said Webb on Tuesday. “Some were cut as few as 8 percent. Some were cut 50 percent. Some were not funded at all.”
Areas seeing the 8 percent cuts included grants to volunteer fire companies and the county’s library system. The 50 percent cuts were made to grants for local law enforcement (down to $12,500 per department, though no longer specifically divided in half for salaries and half for equipment), to the University of Delaware, to the Sussex Conservation District and to the council’s discretionary grant funding that is used to make grant awards at weekly council meetings.
The county will not be funding any open-space purchases in this budget year, though Webb noted that they do have reserve funds for obligations already entered into.
Under the proposed budget the county would also start reimbursing its general fund from the pensioner benefits fund, as was always intended, based on benefits that have been paid out.
The county will also reduce its own costs under changes to its employee group hospital plan, which entail more employee costs and less from the county. Other employees have opted to take the county up on its early retirement option, saving the county even more money.
But there will be no salary reductions, no cuts in work hours for salaried employees, no unpaid furloughs. Employees still won’t be required to make contributions to their pensions, and there is no change proposed for sick leave, vacation time and life insurance. There will also be no cost-of-living salary increases for employees.
The changes for employees were compared to the proposed state budget, under which state employees would receive 8 percent pay cuts and group hospitalization insurance premiums increases from $48 to $79 per month.
According to Baker, New Castle County is proposing cuts for its employees’ wages; Kent County is requiring employees to contribute to their pension funds; and Accomack County, Va., employees had their medical insurance premiums jump from no employee cost to $78 per month.
County engineers who spend 90 percent of their time on sewer and water projects will now be paid from sewer and water budgets, while work they do on general-fund projects will be repaid from that funding source to the sewer and water departments and administrative costs for sewer and water projects will be billed to the sewer and water departments.
Further, Webb said, with $36 million contributed to sewer and water projects over the years and several coming in under-budget, “We don’t need all of that transfer tax money, so we propose to bring some of it back to the general fund.”
The county will also recover interest on loans to sewer projects, which it has forgone in the past. Clerk of the Peace fee increases will help bring that department to being in the black for the first time in memory. (A Register of Wills fees increase that would have brought in $300,000 or more was rejected by the council last week.)
“There are reductions in expenses across the board,” Webb emphasized. “We didn’t just look in one area to cut.”
Public safety sees cuts, sewer and water funding up
Along with the county’s paramedics, other areas of the county’s public safety budget will also see substantial cuts this coming year. Overall, the budget comes in at $19.7 million, or 42 percent of the county’s total budget.
That $11.9 million going to paramedics is down from $13.6 million in 2009, noted Roth.
Fire and ambulance funding for volunteer fire companies will be down $570,000 this year, at $2.9 million to be divided amongst 27 organizations.
Another $1.6 million – down $240,000 from the prior year – will go to fund state police above the state’s funding level for Sussex County. That will mean no change from the existing number of state police operating in the county, which the county is funding 65 percent of this year.
Emergency Preparedness funding will also be down this year, by $150,000, cutting into 911 services and emergency planning, despite ongoing increases in costs and need, primarily due to continuing the population increase.
Library funding cuts will mean just $1.9 million going to local libraries. Bookmobile services will be cut to two days per week, despite ongoing increases in demand. Roth said the economy is influencing usage of the libraries upward, in a trend being seen nationwide, especially in the use of computers for things such as job searches.
On a rare positive note, Jennings noted that funding for community development programs is up this year, mostly due to increases in federal funding. Community block grants will be up by $100,000, despite a decrease in county council’s emergency grant from $75,000 to $30,000. The county will be able to assist with rehabilitation of 65 homes this coming year, versus 62 last year.
While non-water and –sewer capital projects will be down a whopping 52 percent from last year, at $7.8 million in funding, plans still call for runway and drainage improvements at the county’s airport and industrial park, work on the administrative building’s roof and parking lot expansion there, along with technology improvements and $1.8 million for property acquisition.
The county will offset administrative costs for the sewer systems previously paid by the general fund through an increase in service charges of $8 per year and a 5 percent increase in connection charges for new sewer connections, helping to build the department’s $29.9 million budget. Decreases in the budget will come in utility billing and capital items.
“We’re still seeing substantial growth,” said Jennings, noting an average annual growth of the sewer systems by 16 percent over 22 years.
Capital funding for water and sewer will be up $3 million from 2009, to $41.7 million, with some of the planned projects eligible for federal stimulus finding. Those particular projects, including work on the Johnson’s Corner sewer district will have to be under contract by January of 2010.
Budget reductions mean little change in services
Baker, in concluding the budget presentation, offered a five-year budget projection. The projection, he noted, is merely an estimate for the future, “given the current economic climate, and assumes a continuation of conservative budgeting with a reduction of grant revenue.”
In a key figure for the projection, Baker said the county expects to take in $12.7 million in transfer tax each year, until 2010, at which time they anticipate a 3 percent increase per year. Grants, except grants-in-aid, are forecast to increase at 3 percent per year.
Baker also emphasized on Tuesday that the budget does not call for any property tax increase, remaining at 44.5 cents per $100 of assessed value for 20th year, despite falling revenues. The average tax paid to the county for a single-family home is still just $104.04 per year, just $39.65 per year for a manufactured home.
“This has been a difficult budget, given the drastic revenue reductions we’ve seen this year and the state of the economy,” Baker concluded. “It has been a challenge to provide a budget with a 16 percent reduction with little change in services.”
The proposed budget and the associated budget presentation is now available on the county Web site, at www.sussexcountyde.gov.
The council on Tuesday formally introduced two ordinances that would enact the budget. County council will hold a public hearing on the proposal during its 3 p.m. meeting Tuesday, June 16, in council chambers at the County Administrative Offices building on The Circle in Georgetown. The council must adopt a budget by June 30.
Council President Vance Phillips on Tuesday praised Baker’s work on the budget. “You’ve done an excellent job, along with your staff. … It will be interesting to see how it ultimately turns out, but you’ve done an excellent job,” he said.
Also on May 19, the council approved $2,000 in grant funding for the new Delaware Burn Camp, slated to be held at Camp Barnes for a week this summer, as well as $2,700 in grants to the West Rehoboth Community Land Trust.