County finances worsen

Published 12:00 am Tuesday, December 1, 2009

By Jessie Burchette
jburchette@salisburypost.com
A plunge in sales tax collections and a state dip into lottery funds has significantly worsened the county’s financial picture.
Last month, the county was looking at a deficit of $1 million after a freeze on hiring and a 5 percent cutback on department expenses.
County Manager Gary Page said Wednesday the deficit has grown to more than $2 million and that none of the potential options are good.
Carl Ford, chairman of the Rowan County Board of Commissioners, said Wednesday that everything is now on the cutting table as commissioners look for ways to save money.
Ford said the planned central administrative office for the Rowan-Salisbury Schools is likely off the table.
The two major hits involve the state taking $681,000 in lottery money and a significant drop in sales tax collections.
“When you lose that kind of money, it changes the landscape,” Page said.
Comparing the county’s current finances to six weeks ago, Page said it “may be twice as bad.”
The lottery money is part of $300 million the state took last week to get through what was termed a temporary cash-flow problem.
The $681,000 is earmarked for payment on the school bond debt, which runs almost $10 million a year. “We have to make the payment,” Page said.
It’s uncertain when or if the state will return the lottery funds, or if additional money will be taken.
If the state opts to permanently divert lottery monies, Page said the county would have no option but to raise taxes to pay the bond debt.
Page said some state officials view county fund balances at 21 percent and figure taking revenue away won’t do that much damage.
Page has met with commissioners and with top school officials this week looking at the overall financial situation. He noted the state move in the 1990s to take inventory taxes from local governments.
“I know the legislature has a tough time, I’m not sure using the county government as a piggybank is the answer,” Page said.
The drop in sales tax revenue came during the quarter ending in December, typically the best quarter for collections. Page will provide the numbers on the sales tax shortfall to commissioners Monday.
He will give an updated report to the board of commissioners Monday night and lay out options for cuts.
Page left open the possibility that commissioners might ask the school board to return money as many other counties across the state have done.
“At this time we have not asked for money back from the schools,” said Page, adding, “It could come later.”
When the shortfall was at $1 million, Page said he would likely recommend some unpaid furloughs and other cuts.
During a retreat last month, commissioners also discussed the possibility of using some of the county’s $22 million fund balance to cover part or all of the $1 million deficit.
Now the potential deficit has doubled, and the county faces a larger deficit in the upcoming 2010 budget.
The county has already saved an estimated $700,000 from a freeze on hiring and a 5 percent cut in department expenses.
Ford, who took office in December, echoed Page’s concerns about the state dip into county money.
“The state is broke and we’re not,” Ford said, adding that the state may try to shift more and more costs to the counties.
As the economy worsened, he said he expected the budget situation to be bad, “but not this bad.”
Ford said some projects will likely be delayed or eliminated. “The central (administrative school) office is likely off the table.”
Looking back on the decisions that went into the current budget, Ford said two commissioners ó Tina Hall and Jim Sides ó warned repeatedly that the economy and the budget situation would worsen. While they were accused of having a “doom and gloom” view, Ford said Sides and Hall were right.
Contact Jessie Burchette at 704-797-4254.

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