By Jeff Rader
It was a classic example of being stuck between a rock and a hard place.
In the last official meeting of the Board of Commissioners (BOC) before the July 15 deadline to finalize DeKalb County’s millage rate, I was asked to vote on a mid-year budget proposal.
It was the one submitted by the county CEO who, for the fourth time in two years, was asking for an increase in the millage rate. I had voted against the three previous requests for an increase.
But this time, there was no alternative budget proposal on the table. Three of my fellow commissioners, who compose the BOC’s Finance, Audit, and Budget Committee, were tasked with reviewing the CEO’s proposal, but came back with no formal recommendation or counter proposal.
So the choice was either to approve the CEO’s budget or stick with the BOC’s budget from February. The problem with the February budget is that its revenue projections, in hindsight, were significantly off target due to the real estate slump, and had been overspent in many areas. Thus, the county would have run out of money later this year, forcing a government shutdown.
Millage increase or government shutdown? Hence, the rock/hard place analogy.
To avoid a millage increase in its February budget, the BOC eliminated $33 million in proposed spending from the CEO’s proposal. To do the same with the July budget would have required another $37 million cut in expenditures.
To cut another $37 million in the same fiscal year would be a tall order under any circumstances, but is not feasible with DeKalb’s current government. Why? The CEO has not taken the comprehensive steps needed to improve the efficiency, top to bottom, of government operations, which in turn would lead to financial savings. Several county departments and most constitutional officers (independently elected officials such as judges, prosecutors and sheriff) are unable or unwilling to adhere to assigned budget limits.
So, sticking with the February budget, without cooperation from the CEO and constitutional officers to reduce spending, meant the county would run out of money. A shutdown would have curtailed essential county functions, especially the police, fire and sheriff departments, which comprise roughly half of the general budget. Hence, a shutdown was too drastic an option.
So given a choice between two bad options (i.e. rock and hard place), I reluctantly voted for the CEO’s budget, which increases property tax bills by roughly 11 percent. Overall, county government accounts for one-third of property tax bills, the other two-thirds is to fund the county school system.
The bulk of revenue from the millage increase eliminates the budget deficit so the county complies with its legal obligation to maintain a balanced budget. The remaining money is used to bolster the county’s reserve fund, which was empty at the end of last year but is now budgeted at $22 million, the county’s highest in more than a decade.
Ideally, the reserve fund would have about $42 million, which represents one month of operational expenses. Having a healthy reserve fund is crucial to restoring the county’s bond rating, which was downgraded in March. The bond rating dictates how much interest the county pays on borrowed money.
That is especially relevant this year because the county is about to borrow a substantial amount of money for two purposes. The first is to temporarily fund county operating expenses until money comes in from property tax payments. This is the first time in my tenure, which dates back to 2006, that the county has had to use this mechanism, known as a tax anticipation note. In previous years, there was enough cash in the reserve fund to pay the bills until property taxes were collected.
The second purpose for borrowing money is to fund a five-year plan to upgrade its water and sewer system at a cost of $1.3 billion, more than half of it due to upgrades mandated by the Environmental Protection Agency.
Voting for a millage rate increase is certainly an unpopular decision. Regardless of which option I chose, there was a financial consequence to county taxpayers. In the end, I made the tough call on which one was best for the county’s long-term prognosis. For more details, see my website: www.commissionerrader.com.
Commissioner Jeff Rader represens District 2 on DeKalb County’s Board of Commissioners.