The Clark County Council met again Monday to hear budget woes told to them by a consultant and former state finance employee. The problems came with possible solutions, although most of those would add taxes or increase debt for the county.

“Budgets for 2010 and 2011 cannot be sustained at the current appropriation levels without increased revenue,” said Dan Eggermann, a consultant with Governmental Consulting Services and former Department of Local Government Finance employee. “Without consideration being given to increasing the property tax levy, the county’s options to increase revenues are limited and would not likely be sufficient to allow budget increases in the next two years.

“Even worse, the current revenue streams with no cash reserves will cause all of your budgets in the next few years to be less than they are now. And right now, you can’t fund this year’s budget at $14.7 million.”

Eggermann was hired by County Commissioners to come in as a consultant in hopes to resolve 2009 and 2010 budget issues.

“The whole point today was how are we going to make it through this next year or two, because it’s not going to be easy,” said Greg Fifer, attorney for the county commissioners.

For the 2010 budget, there is little the council will be able to do to recover the expected shortfall. As a result, the council has asked county department heads to cut budgets by 22 percent in an effort to make up about $4 million. Early work by department heads netted only about $1 million in proposed savings.



ROOTS OF THE PROBLEM

Along with fewer revenues coming into the county, Eggermann cited two major reasons for seeing the budget shortfall.

One of the major flaws was not asking for the maximum tax levy in 2007 for the 2008 budget; the county asked for $2.7 million below the maximum amount.

In addition to asking for an underfunded levy in 2007, the most the council could ask for in 2008 for the 2009 budget — which included the amount of annual growth allowed by the state — was half of the requested amount in 2007.

“So, it’s about $1.4 million that you don’t get as far as the calculation, even before you put on the growth,” Eggermann said.

The second problem was the elimination of the cumulative bridge rate — a tax that generates money to rebuild and repair county bridges.

“I would venture to guess that there is not another county in the state that does not have a cumulative bridge fund,” Eggermann said.

The loss in revenues may be tied to the council’s belief it was helping out taxpayers.

“We thought we’d be OK with $4 million in rainy-day [funds],” said David Abbott, council president in regards to not seeking the maximum levy.

At the time of the levy reduction, the county had $4 million in reserves in its rainy-day fund. There is about $2.5 million remaining in that fund that has not been tabled or committed.

“But really what’s happening is you are using cash reserves faster than your budget will allow you to do it,” Eggermann said.



PLAYING CATCH-UP?

The growth allowed by the tax levy year-to-year will not make up the revenue the county needs to operate.

“If you go into 2010, the [allowed] levy growth is 3.8 percent,” Eggermann said. “It is not determined yet for 2011, but it is generally accepted that it is going to be less.”

Even less revenues means the budget will not recover in 2011.

Adding the expected revenues together with the 3.8 percent growth for the 2010 budget, the council should expect no more than $13 million for the year’s budget.

“In 2011, again you won’t have any cash balance because you’re going to have to spend everything you have [in reserves] in 2010 probably just to get by,” Eggermann said.



OTHER OPTIONS

All is not lost for the county, as it can seek a remedy to increase revenues, but not for 2010.

Eggermann had a list of recommendations he presented to the council and asked that it consider all of the options. One is to try and recoup some of the revenue lost by filing an excessive levy appeal.

An appeal can be filed for several reasons, but in Clark County’s case, it could apply because of a taxing unit being unable to carry out governmental functions or it could claim a math error.

“This is an unanticipated emergency and it’s based on my opinion, at least, a math error,” Eggermann said. “Because I don’t think in 2008 when the council elected not to take all of the maximum levy that anybody did the math to determine what effect that would have on future levies.

“I could be wrong, but I can’t imagine that they did.”

Unfortunately for the council, the deadline to file an appeal was Monday, the day of its special meeting.

Other recommendations include re-establishing the cumulative bridge fund after Jan. 1, which will need to be passed by the County Commissioners; preparing a short and long-term capital projects list and fund the projects through a public works loan — up to $2 million; moving money within funds to increase the general fund; reconsidering the wheel tax; and working with other taxing units to evaluate, consolidate and implement shared services or enter into interlocal agreements.

While all of the proposals do not contribute directly to the county’s general fund, they could create revenue for the county, Eggermann said.

The council recessed its meeting and it is scheduled to reconvene at 6 p.m. Thursday.

A Monday deadline for an approved budget has been set by the council, the day of its regularly scheduled meeting.





BUDGET BY THE YEARS

Budget requested for 2008

• Total — $15,555,615

• Property tax revenue — $5,016,954

• Miscellaneous revenue — $8,169,208

• County adjusted gross income tax/property tax replacement credit — $684,805

• Money needed from cash reserves — $1,684,648.



Budget requested for 2009

• Total — $15,444,478

• Property tax revenue — $3,118,747

• Miscellaneous revenue — $8,562,665

• County adjusted gross income tax/property tax replacement credit — $858,263

• Money needed from cash reserves — $2,904,803



Budget requested for 2010

• Total — $14,715,025