Mood:
happyTopic: Budgets
I have noticed over the last dozen years or so that the County checkbook never dips below about $15 million dollars. I have long thought that there was some 'hidden" fund with millions in it. There is not. The extra millions are there, they are just in "reserves" and they are simply held from year to year to cover emergencies or budget requests like you saw yesterday. Apparently law only allows that when any reserves are used, they are "fund specific" so for example if there is $150,000 reserve in the Tort Fund, it can be brought into the budget to be used but only in the Tort Fund - paying for lawsuits etc. There is for example about $1,600,000 reserve in Solid Waste but since it is a fee based fund, those extra dollars can only be used in that fund. For example we could use the funds to build new transfer stations or upgrade the Colburn transfer site etc.
Past commissions have allowed for large reserves to be built up in all of the funds. Law allows as large a reserve as the Clerk and Commissioners have the stomach for. I see that there are 25% contingencies in most funds and 30% in a couple. To be fair some are 10% and many that need no reserves are rightly 0%. In order to get this money into the budget and not keep it in reserve the commissioners have to decide to reduce the yearly reserve percentages. We are told that it will be a "tax hit" next year and it would if we were to bring the reserves back up to the current 25-30% levels. I am working on changing the reserve levels so that they are much lower say 5-15%. This will put Bonner County in the position of not having to raise the levy at all (too late this year but certainly next year and a few years after) or if there are many requests for additional funds, not very much. We (all three commissioners) went into the budget process hoping to hold the line on the budget. We are allowed by law to take any "new construction" which is buildings that are not on the tax rolls yet but will most likely be in the coming budget year. That was about $400,00.00. we are also allowed to take a yearly 3% hike. That is about $500,000.00 this year. As the requests began coming in it was apparent that we either needed to roll money from the reserves into the budget or, hike it with new construction and the 3%. I have been suggesting a modest infusion of reserves with the idea that we will simply let them adjust to the lower percentage step-by-step permanently. I don't know if that will be acceptable but we shall see. What I would like to do is actually reduce the reserves to their lawful minimums. This would reduce the need to hike the budget probably for 2-4 years. The downside would be that if there were a true emergency, there would likely be no funds to plunder for that need as there have been for so long.
This is not a sinister plot but rather past elected officials have just legally padded the funds for a rainy day. We just need to decide that we don't want that comfort level and we can use the funds down to their bare minimums. I am certainly glad to do that but everyone needs to know that at some point we will need to decide (rightly in my view) to reduce the level of what the county does because when the excess reserves are gone, there will be no funds to satisfy requests like the Sheriff made yesterday. I believe that we need to do this slowly and methodically because the reserves are in fact taxpayer dollars that should be used and not saved. They should be in the pockets of the citizens until they are actually needed.
This will be wildly popular with some and not so popular with others. The reason Bonner County has not had to lay off personnel is largely due to the healthy reserves that gave us the ability to simply keep working when other counties had to slice their budgets. It is one of the claims I made when I ran and I would like to honor the commitment to reduce the county budget but we need to get the word out with all of the ramifications.
If we use the reserves over the next few years, we will hold the budget to either no increase or a modest increase. If we couple using the reserves with removing some of the things the county does from the budget permanently, we will reduce property taxes but people will have to begin to do more for themselves as they rightly should.
During further inquiry I was given an Excel spreadsheet in hard copy that shows the reserves, their percentage and the resulting cash available "after reserve". In other words, the amount of the budget for a certain fund - say Justice - is multiplied by a suggested percentage which for Justice is 30%. So the projected budget for Justice for 2010 is $11,781,310. 00 (yes that's eleven million it actually includes 6 departments including the Sheriff's). Multiplying that by 30% results in a suggested reserve of $3,561,393.00. Now we look at cash on hand for Justice - $7,480,868.00 as of July 9th. Subtract the remaining budget which is $3,765,396.00 and we have a$3,715,472. 00 available cash for Justice. Remember the projected reserve is $3,561,393.00 so there is, according to this philosophy, $154,079.00 above the reserve in cash to give to the Sheriff (or any other of the 6 departments in that fund) if the commissioners so choose. Now, what if Justice had a reserve of only say 15%? Now the projected reserve is $1,780,696.50 and the cash balance after reserve, that is, the cash ready and available to infuse into the budget, is $1,934,775.50. Doing the same for all of the other funds would yield immediately from about five million to nine million dollars that could be "one-time" infusions into the budget. One-time because when those funds were gone, they could only be replenished by raising the levy and taxing Bonner County residents at a higher rate than is currently being used to bring the funds back to their 25-30% reserve status.
If, however, we slowly and methodically bring those reserves into the budget with the caveat that the new reserve levels would be lowered permanently to between 5 and 15% depending on the fund, at the very least, property taxes would not increase using my intended plan for 3-4 years. In fact, if the will of the County was in line with reducing some of the unnecessary expenses like Parks and Recreation, Historical Society, Indigent & Charity, and parts of many other funds as I find them, we could reduce the county budget permanently by several million dollars.
This will take a sea-change in both county budgeting philosophy and in the expectations the citizens of the county have for county government. I took that spreadsheet that I mentioned above and, after simply entering all of the figures under their correct headings, reverse engineered the math calculations so that the figures on the right side - the results side- are reproduced correctly with calculations in the spreadsheet. It was a simple multiply and/or add spreadsheet so I am very certain that the figures are correct. This is not rocket science or hiding funds. They are right there in the open and simply building up year-by-year. I believe that the will exists to use them. It will remain to be seen if future county elected officials will have the will to keep the reserves low after using them. By the way, the reserves that I will propose will provide plenty of cash to get the county through the October-January doldrums when the budget is being spent with no new tax dollars coming in to replenish it.
One kicker, the massive reserves in Solid Waste $1,617,578.00 by current calculations and $2,538,071.60 using my suggested lower reserve percentage, must stay in Solid Waste. I would have current fees stay static or reduce some and use the funds to build transfer stations if the citizens approve. We wouldn't have to levy anything if the county wanted a couple more waste transfer stations, the cash is there to build them now.
Again, the law allows these large reserve funds. Our County Clerk has done nothing unlawful. Neither did past commissions. I had our County Prosecutor look into the statutes related to this and there exists no law preventing even 50% reserves if the commissioners chose. I just believe that those excess reserves should be in your pocket, not Bonner County's.
Anyone who wants the Excel Spreadsheet can simply ask me and I will send it. It does need some explanation as it is not intuitive but I would be happy to go over it in person or on the phone. After all, this information is Public Information.
For those of you in other counties, this is most certainly what is going on in your county. County Commissioner Sharon Ullman found about $6 million in Ada's budget probably in much the same way I found this. Only a few counties use a CAFR (listen up Scotty!) but if you can get the Excel Spreadsheet that shows county "reserves" and "Cash balance after reserves", you are on the way to finding a small pot at the end of the budgetary rainbow.
Regarding that caveat I keep mentioning that any reserves must be spent in their specific fund - if anyone can find state statute that would allow moving dollars around like from Solid Waste to 911 or some such thing, please let me know. Because of this, the Juvenile Detention Center could not have been built with reserves since there are not enough in that specific fund.
Posted by cornelrasor
at 11:58 AM EDT
Updated: Wednesday, 5 August 2009 12:05 PM EDT
