November 25, 2013
Mr. Ken Easterley, Chairman
& Finance Committee Members
#10 Public Square
Belleville, Illinois 62220
(LINK TO PDF VERSION Analysis of Budget St. Clair County)
Dear Members:
I have completed the analysis of the budget for fiscal year 2014 and would make the following recommendations:
Based upon projected revenues of $38,839,113.00 (before tax abatements) I have determined St. Clair County can budget $34,952,229.00 for the General Fund, or an overall decrease of approximately $66,083.00. The budgeted amount represents a decrease from the 2013 annual budget of two tenths of a percent. Because of a labor contingency carryover from 2013 of approximately $162,883.00 the actual decrease is closer to 1.0%. Additionally, $400,000 of the increased general fund is due to increase budgeting for two elections in 2014. The other increase in General Fund spending represents a 1.5 percent increase in wages amounting to $375,000.00. In order to keep net spending below the 2013 level of $35,018,312.00, administration reduced other levels of spending in the general fund by approximately $650,000.00. Reduced spending for medical services in 2014 helped significantly in reducing expenditures. This was the direct result of renegotiating medical, vision, and dental contracts last year.
There are a number of assumptions built into projected revenues that kept the budget from requiring additional cuts in 2014. St. Clair County will have to increase a number of fees that have not been increased in a number of years, but for which cost studies have already been completed in 2013, and are available in the administrative office. Failure to increase the various user fees for 2014 may require mid-year budget cuts and may result in some employee reductions.
The inability to collect traffic fines/fees and child support administrative fees has been an ongoing problem for many years. The statutes were structured in such a manner, that the collecting of unpaid fees was a money losing proposition. This year, after just falling short of votes in 2012, and with the help of local legislators, Brendan Kelly, Metro Counties, and some tough lobbying, we managed to pass legislation that placed the full burden of collections on the non-payers. The data processing department had to rewrite much of the code of the integrated court management system to accommodate the new statutes and I expect the collection program to go into operation early in 2014.
The County has been able to accommodate the state’s continual refusal to pays its bills in a timely manner, but this cannot continue much longer. In 2013, the accounts receivable from the state has grown to over 3.6 million dollars and shows no signs of abating in 2014. A majority of the uncompensated payments are due to the state’s refusal to reimburse the county for Probation Department expenditures as guaranteed by state statute. The Chief Judge has already reduced and redeployed existing staff to help reduce the burden, but more may have to be done if Illinois doesn’t do something to meet its fiscal obligations.
In many ways, 2014 will be a pivotal year in terms of County finances. Recessions, historically recover in two years, and then have a major growth period. Unfortunately, our economy hasn’t shown any substantial growth in five years, and the employee participation rate is at a thirty year low. Additionally, sales tax, corporate taxes, and incomes taxes are stagnant. Interest rates, which have been a significant source of revenue in the past, have also dried up. If the Federal Reserve continues to keep rates low, our interest payments will be fortunate to return little more than one-half percent. It is also uncertain if County assessments will grow for the first time in three years. Even so, the proposed 2014 budget allows for continued tax abatements and a general fund reserve of six months as recommended by the outside auditors. However, as mentioned earlier, without the economy showing potential for growth, future abatements will be difficult to achieve.
The IMRF Board recently signaled that investment returns may help to offset previous year’s losses. If the projected return on investments hold true in 2014, the tax levy which supports the required payments, may remain static and help with the abatements. It is projected that the special public safety IMRF contributions will reach 22.89% in 2014, and when combined with social security may be close to 30%. Regular IMRF employees require an 11.45% contribution. Additionally, worker’s compensation claims continue to approach 1,000,000.00 with public safety employees collecting approximately 75% to 80% of the total payments.
The total St. Clair County budget for 2014 is projected at $177,285,144.00 or an $8,761,147.00 decrease. This represents a cut of five percent over last year’s expenditures.
A detailed expenditure list is provided in the budget book by department. Because a new financial and payroll system was been put in place two years ago, the structure has changed. Departmental total expenditures are in the front of the book while salaries are displayed in the back by line item. The new system also allows for a more sophisticated allocation system, which is disbursed throughout the entire budget. Essentially, manpower and indirect costs can be allocated across various departments and funds so that sophisticated cost allocation plans can be tied back to various grants and new fee structures.
Please review the new funding and expenditure charts as well as the various tables that have been provided for a graphic presentation of the budget. The information provides a time analysis and historical perspective of the budgeting outcomes by department. I have also included detailed dollar increases by office over a number of years so that comparisons can be made as to service and departmental priorities. Additionally, I have again provided the various elected officials and department head program updates as part of the 2014 budget. This should help the board members relate the budgeted numbers to actual services to the public.
The only major capital expenditure the County is exploring for 2014 is the 150-170 bed jail expansion. The design work on the jail expansion will be completed by early December, 2013. The County Board will have to explore various ways to fund the expansion, but the use of a ballot initiative to seek additional sales tax revenue seems to offer the most equitable option.
All capital expenditures at MidAmerica Airport will be completed before the end of 2013 and the construction of the new exit 21 will begin in 2014. While the impact upon MidAmerica Airport isn’t known at this time, there is no question that it will open new opportunities for development along the I64 corridor and therefore influence the growth potential of MidAmerica Airport. The opening of the new Mississippi Bridge, as well as the North Bay Produce expansion, will also open up cargo and distribution opportunities for the greater St. Louis Metropolitan area. It has long been feared that if any of the interstate bridges connecting the states were disabled, transportation dependent services would be badly compromised. That fear has now been eliminated and I look forward to promoting our advantages as a cargo hub. St. Clair County also benefits from our expanding rail hub activities and the expansion of the Metro-East port facilities.
St. Clair County continues to make substantial progress in meeting the goals of the Americans With Disabilities Act. The County, after months of negotiations with the Justice Department, received a waiver on the walk–way and will begin rehabbing the bridge between the courthouse and the parking facility in 2014. Additionally, court rooms are currently being rehabilitated and brought up to code over a multi-year schedule. All existing employees and elected officials have received the required ADA and FOIA training, a new personnel code has been approved and a drug testing program is now in place.
Organizations that depend upon County funding will continue to be asked to shoulder some of the proportional burden, and will have to institute painful but necessary cost saving. As in 2013, St. Clair County cannot absorb any of the reductions in funding to community-based organizations from the state and federal government, and all grants that are being cut or defunded may have to be reduced or abandoned.
Additionally, as mentioned over the last three budgets, the time is fast approaching to aggressively explore establishing a centralized dispatch center not operated by the county, but jointly by all organizations currently involved in dispatch activities.
The County will also have to explore combining Detention Center based services with other counties. Currently, the number of adolescent residents in the entire downstate area has diminished to the point that operating separate facilities is cost prohibitive. However, the state has amended existing statutes, without regard to local finances, placing seventeen and eighteen year old felons in county detention centers. The impact at this time is unknown. It is clear however, the Detention Center tax levy will have to be increased in 2014 to meet increasing expenditures. The State statutes were changed in 2010 through the efforts of our local legislators, and now the St. Clair Detention Center Tax Levy can be used, if necessary, to purchase services from other county providers.
As always, I wish to thank the County Board, elected office holders, and department heads for a successful 2013. 2014 will once again, unfortunately, be a fiscally challenging year despite this, St. Clair County, because of conservative budgeting in past years, will continue to maintain an experienced and dedicated workforce, abate general fund taxes, and continue to maintain a six-month general fund reserve.
If you have any questions concerning the 2014 budget, please don’t hesitate to contact me at Extension 2201 or Dan Maher at Extension 2207.
Sincerely,
Mark A. Kern, Chairman
St. Clair County Board
MAK/jj
No Comments