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County looks at borrowing for budget

County looks at borrowing for budget County looks at borrowing for budget

Would use short-term borrowing to exceed levy cap, close budget hole

Taylor County is looking at a combination of cutting costs, increasing revenues, applying fund balance and utilizing short term borrowing for capital projects to bring its 2023 budget into balance.

At Monday’s budget review session, county finance director Larry Brandl laid out a plan that he said would still result in an overall tax rate decrease while ensuring the county had the ability to maintain services. State law caps the amount county boards can increase the levy to the percentage of increase in new growth in the county. However, the law exempts debt service payments from that cap and many other counties have utilized short-term debt as a way to meet budget needs.

While common in other counties, this is new territory for Taylor County which has traditionally favored cuts or only allowed narrow levy increases.

“It is a tool in the toolbox and we have to take advantage of it sooner or later,” said committee chairman Chuck Zenner. While acknowledging that cutting costs has its place, he said it can only go so far.

“Even if you cut a lot of services this year, where will you be next year? You can’t keep cutting,” Zenner said.

Brandl said there is a lot he has to research checking with the county’s financial advisors, auditors and bond counsel about what kind of impact it will have. He noted that while this would be new for Taylor County, Clark County has done this for years where they borrow the money for about 30 days and then pay off the loan with the tax revenues to keep the amount of interest paid to a minimum.

“It is a way to get around the levy limit,” Brandl explained. “I’ve talked to a lot of counties and municipalities and they do it because they have to,” he said.

After two budget review sessions Brandl said the county’s proposed budget deficit was at about $760,000. However he said that can be reduced in part through applying additional revenues. He proposed applying $260,000 in forest stumpage revenue to the budget. This includes both the direct logging income as well as logging revenue that would have been earmarked to go into a land acquisition account. By county code that fund is capped at $500,000 in carryover and is currently at that cap. Brandl said he felt comfortable moving these amounts assuming logging revenues in the county will remain flat in the coming year compared to this year.

Brandl also proposed raising the amount of county sales tax income applied to the budget from $1,450,000 to $1.5 million.

Members of the county’s finance and personnel committee voted to approve those recommended changes.

The big unknowns in the budget come down to wages and benefits, specifically with health insurance costs. The preliminary budget includes a 7% increase and the county is waiting for word from their insurance broker on how much that rate will go up. Brandl expressed concern that it may be hard to keep insurance premiums from going up 10%.

As far as any wage adjustments, the preliminary budget did not include any increases in base wages. Zenner said he felt it was important to give employees something. It was noted that an informal survey of other counties projected raises there at between 2 and 4%.

The end result of all of this is that the county’s tax levy will be higher this year. Just how high it will need to be remains to be determined. Committee member Scott Mildbrand said it made sense to him to look at a tax increase similar to the consumer price index (CPI). The CPI is routinely used as a gauge of inflation and is currently at 8.25% for the year.

“I think that a CPI increase is a reasonable tax increase,” Mildbrand said, criticizing the state for stubbornly not allowing counties to tax what is needed.

Brandl noted that despite increasing the levy, county taxpayers will likely see a drop in the tax rates as a result of an increase in equalized value. He noted the county’s overall equalized value went up 11.4%. A part of this was due to revaluations which occurred in many municipalities in the past year as well as new growth and the closure of Tax Incremental District No. 12 in the city of Medford and added value coming onto the county tax base.

Brandl compared the borrowing the county is anticipating doing to be similar to the short term borrowing used by many school districts. “It is not because of cash flow, but to get the levy limit to work,” Brandl said.

Brandl also said they would look at applying existing fund balance to help reduce the budget levy.

“I would be OK if we don’t exceed the CPI limit,” Mildbrand said.

During Monday’s department reviews, committee members opened the door to bringing the treasurer’s office and real property lister’s offices up to 40 hours per week.

Treasurer Sarah Holtz proposed two versions of her department budget, one at 35 hours per week and the other at 40 hours. Under the 35 hour budget she would come in $14,318 below last year’s budget and at 40 hours would come in $9,083 below budget.

Holtz noted the savings is due to the county eliminating a part-time position that had been a floater between the treasurer and real property lister offices.

“I really don’t have much in my budget to change,” Holtz said. She has repeatedly asked for the hours increase for her department because of the added workload without the part-time help and the need to retain staff.

Committee member Rollie Thums made the motion in support of the budget with 40 hours. He noted that he supported it because there had been an overall staff reduction in the treasurer’s office. Committee members agreed and voted to adopt the department budget with the 40 hours per week.

The committee will have to take separate action at a future meeting to formally authorize the position at deputy treasurer position at 40 hours per week. The budget just makes sure the hours are funded.

A request to increase the hours to 40 hours per week for the real property lister’s office was also approved. However Mildbrand raised concern about setting a precedent that would get other departments asking to be increased.

It was noted that even with the increase in hours, the department budget was projected to decrease by $5,825 compared to last year. Mildbrand said he didn’t mind voting for those two because it still included a budget decrease.

He suggested that any department looking to increase hours from 35 to 40 would need to also show an overall budget savings. Currently 31 county employees are at the 35 hours per week level. Thums voted against the real property lister increase because there was no cut in staff.

The county’s final budget review session will take place on Tuesday morning. It will go to the full county board for action at the end of October.

“It is a way to get around the levy limit. . . . I’ve talked to a lot of counties and municipalities and they do it because they have to.” — Larry Brandl, County Finance Director