COUNTY BUDGET REPORT

2010 revenues down $200,000; tough 2011 budget year looms

By the end of the 2010 fiscal year on Sept. 30, the county will face a shortfall of about $200,000 in overall general-fund tax revenue compared to the same time last year, according to county administrator Ralph Mitchell. The decrease is from $8,859,807 in general-fund revenues last year compared to $8,638,588 expected for this year, a decrease of about 2.25 percent.

According to Mitchell’s records, about $110,000 of the shortfall comes from decreased general sales tax as people buy less because of the sputtering economy. An additional $58,000 is attributable to reduced motor vehicle taxes, resulting from the downturn in purchase of new cars over the last year; $38,000 comes from reductions in recording fees and sales transaction fees; another $35,000 comes from decreased interest on county accounts.

While that totals $241,000, it is offset to some extent by small increases in certain tax categories, primarily property taxes and excise taxes.

Unlike last year, when gasoline taxes showed a significant decline of 3.7 percent for the last half of the year over the first half, this year, gas tax revenues have been essentially flat, showing only a slight decrease.

This year tough; next year tougher

A more discouraging indicator is that prospects for next year appear worse than this year, according to Mitchell’s 2011 revenue forecasts. Forecasts for 2011 are based on the last three months of 2009 and the first nine months of 2010, he said. They are considered conservative and should provide a sound basis for 2011 fiscal year budget planning, he added.

Overall, the forecast suggests general fund tax revenues for the 2011 fiscal year could be as much as 10 percent below 2010 fiscal year levels. If gas-tax revenues continue to hold steady, the decrease could moderate to a single-digit overall reduction.

Mitchell provided several examples of the decreases anticipated. General sales taxes are expected to decrease from the 2010 budgeted amount of $1,353,036 to a projected $1,243,118, a decrease of 8 percent. Property and motor vehicle tax receipts, budgeted at $710,600 for 2010, are projected to drop to $653,000, also a decrease of 8 percent.

Recording fees of $275,000 for 2010 are projected to total $237,000 for 2011, a decrease of 14 percent. And interest on county accounts, budgeted at $127,000 for 2010, is expected to total under $93,000 for 2011, a decrease of over 25 percent.

“2011 will be the third year in a row where we’ve downsized the budget,” Mitchell said. “The continuing revenue decreases are a real concern. Fortunately, the commissioners were wise in that they started taking pre-emptive measures to cut expenditures when the economy first started to turn. But this year, they’ll have to look seriously at cost control options. Employee health care costs are still going up, projected at 5 percent this year. The matching amount the county pays on retirement went up this year. The costs for inmate health insurance went up 3 percent, although that’s really good news in that it wasn’t any more than that. And county employees haven’t gotten raises for the last two years. There’s going to be a lot of pressure to consder raises this time. All in all, the 2011 budget is going to be one of the toughest to plan in recent years.”