$2 million in cuts coming to Butler County’s 2019 budget

Butler County needs to cut $2 million to create a structurally balanced 2019 budget.

Butler County office holders and department heads have asked to spend $101.5 million from the general fund next year, which means the county must slice $2 million to get to a structurally-balanced budget.

Monday’s tax budget discussion started with a warning from Butler County Administrator Charlie Young that budgeting will be tough for 2019.

“We’ve got some tremendous financial headwinds we’re facing,” Young said. “It’s a challenge. We’ve met them in the past and I expect we’ll be able to meet that challenge this year as well.”

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Some of the biggest challenges for 2019, according to county officials, are:

  • An estimated 10 percent health insurance hike
  • The $3 million loss of Medicaid Managed Sales Tax
  • $3 million to $6 million for new voting machines that may or may not be state-funded
  • Increased jail costs to house felony five offenders who can no longer be sent to prison
  • A new adult probation department proposed in the county's three Area Courts

Finance Director Tawana Keels is projecting a slight — less than one percent — increase in sales tax, a revenue stream that had been steadily climbing the past several years. The county continues to feel the sting of losing the Medicaid tax since the one-time-only $2.1 million the state chipped in to ease the loss ended this year. The federal government deemed the tax collection wrong a couple years ago.

“Instead of the climb — the six, seven, eight, nine percent increases — we actually have been operating with a decrease in sales tax,” Keels said.

Counties and states across the country received a potential revenues boost last week when the U.S. Supreme Court ruled online sales taxes from all vendors can now be collected. Keels did not pencil the new sales tax boost into the tax budget. And Commissioner T.C. Rogers said under the state’s funding formula — the neediest counties get a bigger share of state money than counties like Butler that are in fine fiscal shape — they might not see much of a boost anyway.

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“One would first think that would be a bunch of money coming into the counties,” Rogers said. “Based upon what Columbus has done over the last four years I’d be surprised if the formula would allow us to receive the same share of the new taxes.”

Gary Gudmundson with the State Department of Taxation said it is premature to talk about the impact of the court’s ruling and the general assembly would likely have to pass legislation to deal with the windfall.

The county has been on a healthy budget trajectory for several years now after years of bloated budgets, unrestrained spending and borrowing. In 2015 the commissioners introduced their debt-free by 2020 plan, a measure projected to save taxpayers $2.1 million.

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The county owed almost $92 million in general fund debt obligations in 2009 so the commissioners have increased the debt payment amounts and refinanced debt to lower interest rates since they instituted the debt plan. Keels assured the commissioners that balance will be zero by the end of 2020.

Rogers and Commissioner Don Dixon both say they have had people ask why they accelerated the debt reduction plan. Dixon said once the debt is gone, the county can consider loosening the purse strings a bit. He said holding onto — and paying interest — “doesn’t make any sense.”

“We’re never going back to old days where you would just borrow, and borrow and then borrow again and then hope next year that somehow they (the state) would come up with a new funding stream that’s going to save us…,” Dixon said “When we get to 2020 and we have this eliminated then that gives us the ability to move forward and consider more expenditures, but they’ll be paid for as we go.”

The commissioners credit their pay-for-performance plan as being a major contributor to the county’s financial health. Keels said any office holder or department head that submitted raises larger than two percent were cut back in tax budget. The pay plan gives worthy employees up to two percent added on their base pay with an additional two percent as incentive pay in lump sums.

Keels told the Journal-News they won’t know until they finish out the books on this year if the lump sums will be forthcoming or not.

The tax budget is the first step on the way to crafting a concrete spending plan for next year. Keels set the general fund revenue projections at $99 million — a 1.5 percent increase. To get to structurally balanced budget they need to cut $2 million.

The general fund has been structurally balanced for seven years now, meaning they don’t dip into reserves to balance. When you factor in all of the other revenues and expenses, from departments that operate on their own levies and or state and federal funding or revenue generators like water and sewer, the total proposed tax budget revenues are $590 million versus $401 million in expenditures.

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