GUEST EDITORAL: Balance Northampton Budget
CITIZENS FOR A BETTER EASTERN SHORE
April 6, 2015
Budgets work best when the dollars coming in are equal to — or even better, are a little bit more — than the dollars going out. Spend only what you’ve planned to spend, except for real emergencies. Corporate finance people know this. Small business owners know this. Men and women running their household budgets know this. Even kids with weekly allowances know this. So, that should mean that our local governments ought to know this too – adopt the budget, know where every cent is going, and stick to it except for real emergencies. There absolutely cannot be off-budget, additional, “discretionary” spending by county administration without scrutiny and approval of the governing body.
State and local governments are usually faced with more requests for funds than there is revenue coming in – and Northampton County is no exception. The preliminary budget showed Fiscal Year (FY) 2016 revenues at $24.8 million and requests for funding for county operations and debt at $27.6 million – a shortfall of $2.8 million. The county budget is separate from the school budget, which was proposed at $20.3 million.
This equals the grand total of close to $48 million to run a county of 12,125 people, a county with a shrinking population and a declining school enrollment. If all the new funding requests had been adopted, an alarmingly large tax increase would have followed.
It wasn’t only more funding increases that caused the shortfall. Decreased revenues are likely for both county and school budgets as state-level budget-balancing transfers more required expenditures from state to local governments. Locally, lower real estate property tax revenues may occur if property values decline. And sales and personal property tax revenues may also decline below projections as families juggle their own household budgets.
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The logical way to balance a budget is to reduce expenses – and that’s what Northampton County Supervisors found themselves doing within a very short time frame. In the absence of a Board-appointed Budget Committee to analyze and scrutinize all non-fixed expenses (including county and school operations and salaries), the Board has taken the budget proposed by the County Administrator and appears to have applied reductions only to requests for new funding – not to existing expense items.
Among the cuts in new spending requests are:
- Vehicles for the Sheriff, EMS, Solid Waste and Commissioner of Revenue;
- Equipment for Electoral Board, EMS and Public Utilities; and
- New or expanded employment positions for Facilities Management, Treasurer, Commissioner of Revenue and EMS – including three new EMS positions.
It appeared almost effortless to reduce the shortfall by over half a million dollars by eliminating just two expensive items – a $200,000 equipment replacement for the almost empty former Middle School, and a $350,000 water treatment system for the county government complex. In short order, a revised budget draft retained requests for teacher salary increases; raised tipping fees at the landfill; and the Board considered imposing a full BPOL (Business and Professional Operating License) fee, raising the personal property tax rate and raising the real estate tax rate.
When the smoke cleared, the Board voted 3 to 2 to send the budget to public hearing [held March 31]. The proposal includes increases to other taxes and fees as well as an increase to the real estate tax of 5.35% or 3.6 cents per $100 assessed valuation. Each penny of new real estate tax will generate about $200,000 in new revenue.
The Board may decrease the tax rate after the hearing but cannot increase it. The Board will make a final decision on the tax rate and how the increased revenue will be spent and then adopt the FY 2016 county operating budget.
In December 2014, the Board’s ad hoc Tax Structure Committee recommended “that a similar ad hoc Committee also assist the Board of Supervisors in examining expenses and spending at the County level . . . .” But that recommendation has not yet been implemented.
At some point, local governments, like small business owners and household budgeters, will need to acknowledge that the economy has changed – that discretionary income is no longer readily available. Lower incoming revenue and tough decisions about what to spend it on have to be realistically aligned. Just adding expenses on top of last year’s budget, then raising taxes without analyzing last year’s expenses, isn’t working for the taxpayers anymore. The Board needs to appoint that ad hoc budget advisory committee and decide if it wants to continue to tax and spend or whether it needs to start living within the means of its taxpayers.
Reprinted by permission from the April 2015 issue of ShoreLine, the CBES newsletter.