The Aiken County Council punted on the Fiscal Year 2016-2017 budget last Tuesday night. Though Council approved a balanced budget, little was done to resolve the ongoing fiscal gap between operational expenses and recurring revenues.
But first the good news: Council didn’t raise taxes in next year’s budget. And in one area, the Stormwater Fee, the rate will drop by $2 from $18 per parcel to $16 per parcel. Thankfully, County Council will wreak no additional havoc – unlike the City of Aiken – against taxpayers’ pocketbooks
And in fairness, the County’s structural financial issues are relatively small. The gap in the General Fund between expenditures and recurring revenues is approximately $3 million out of a $62 million budget. This is less than $20 per capita across Aiken County’s 169,000 residents.
The challenge for Council is that it must approve balanced budgets. No borrowing for operational expenses is legally allowable. Therefore, Council is relying on non-recurring revenues and fund balance to paper over the gap.
Normally, Council’s budget battles pit (a) those who decide first what they want to spend and then raise the revenue versus (b) those who determine first what revenue is available and adjust spending accordingly.
This year, Council did neither. Taxes weren’t raised, expenditures weren’t slashed and the structural deficit remains.
Instead, Council relied on makeshifts and expedients to balance the budget.
First, one-time, non-recurring revenues helped fill the gap. Originally, these totaled nearly $3 million. Then, the assumed Winter Storm Pax reimbursements failed to materialize and Council was $1.7 million further in the hole.
Second, Council revised its revenue forecasts upward. This is usually a risky stratagem, but unlikely this year as the original budgeted forecasts were conservative. Nearly $0.7 million of additional revenues were “discovered” in this manner.
And third, $1.2 million of fund balance bridged the remaining gap and covered additional expenditures. These additions included two new positions in the Aiken County Sheriff’s Office and a larger Christmas bonus for County employees in lieu of a pay raise.
Raiding the fund balance was the most unfortunate part of Council’s balancing act. Using fund balance is like consuming seed corn. Fund balance is the County’s financial reserve. It should only be used for emergencies and never for routine expenses.
Ultimately, Council lacked the will to reduce expenditures. And in Aiken County, this means reducing the organization’s total headcount. Yet, no amendments were incorporated reducing the County workforce.
And by not raising taxes or slashing spending – including unfunded mandates from the state legislature – no margin was created to give employees a raise this year. The County’s problem with turnover will only intensify.
Further left undone was any plan to compensate for the loss of inmate labor resulting from the closure of the Lower Savannah Pre-Release Center.
But the long-term situation isn’t hopeless. Two Councilmen advocated complementary approaches to gradually close the fiscal gap.
First, Chuck Smith rightfully pointed out that most of the revenue problem is due to the state legislature’s refusal to adhere to the Local Government Fund’s statutory formula. Almost the entire gap stems from this one source.
In turn, Smith proposed limiting County funding to other outside entities. These include Aiken Technical College, USC Aiken, the Lower Savannah Council of Governments and the Aiken County School District.
Why, Smith asks, does the County subsidize these entities – helping them grant pay raises for their employees – when these subsidies prohibit the County from giving its own staff increases?
Council’s approved budget initiated the first step in this campaign. The Department of Energy (Savannah River Site) Payment in Lieu of Taxes revenues were previously split 60/40 between the School Board and the County, respectively. In the approved budget, the split will be 50/50 – a net gain to the County of $165,100.
In addition, Camille Furgiuele discussed her plan to transform County government with a “smaller but better paid workforce.” She seeks to gradually reduce headcount, with the savings going back to the remaining employees. Essentially, Furgiuele envisions a smaller, better paid and more incentivized workforce.
But such a strategy requires continual pressure. Will a majority of Council consistently back Furgiuele’s efforts over the next 12 months?
Overall, Council’s approved budget produced a decidedly mixed bag of results with both missed opportunities and hope for the future. Though Council passed on the hard decisions, both Smith and Furgiuele charted paths out of the fiscal wilderness.
Will Council heed their calls? Or will it punt again next year?
Gary Bunker is a former member of Aiken County Council.