While there isn’t enough space to go into all the ins and outs of the staff presentation at last month’s Charleston County Council Finance Committee meeting, it would seem the county is in relatively good financial shape.
County staff told the committee members that revenue for the current fiscal year (FY 2011) was running $4.4 million above the level projected in the $160.4 million budget for the full year. The increase reflected higher-than-anticipated property tax, and charges and fees.
The staff recommended that this projected surplus be used to replace aging capital equipment. In support of the request, it noted that because of tight budgetary condition over the recent years, replacement and refurbishment had lagged, particularly in relation to the county’s fleet of vehicles.
As for next year (FY 2012), revenues and costs were expected to be close to those of this year but because of a legislative quirk, a gap of $2 million-$3 million existed between likely costs and revenue. The quirk related to state legislation tied to property reassessment values.
Staff did not attempt to fully explain the quirk, as the majority of council already knows about the situation, but said it was complicated and the result unintended by the state.
It seems that the application of the new valuations and the application of the allowed millage will cause property tax revenue to fall by the $2 million-$3 million.
Normally, following a countywide property reassessment, the county can impose a millage rate that allows it to recover the same amount of revenue as the previous year, though adjusted marginally to allow for inflation and population growth.
Staff suggested that the state might be asked to adjust the rollback formula. If this request fails, then council might increase the millage rate to bring in the same amount of property tax revenues as the prior year.
Understandably, the latter did not sit well with committee members even though the approximate 2 percent increase would be justified on the practice of the past. Any mention of a millage increase, however justified, is likely to rouse citizens’ ire.
Staff also noted significant balances in some of the funds. A table with the balances can be seen here. These include such totals as $52 million for the general fund and $82 million for the enterprise fund.
These seemed odd considering the recent financial squeeze. Staff explained that these totals could not be taken at face value. They included amounts in accord with county policy to keep balances to equivalent to two months of operation.
For example, the general fund with a budget of about $160 million a year would require a provision of about $26 million. There was also the “rainy day” provision.
But taking into account all of the provisions and commitments, it seemed there was still a hefty surplus in the fund balances totaling $59.3 million, according to staff calculations. Take out recent commitments ($10 million from the special revenue fund for the greenbelt program) and that leaves a balance of $49.3 million.
So does the county really have $49.3 million to spend at will? Definitely not, according to the staff. Governmental fund accounting mandates placing monies in different types of funds because there are restrictions – federal, state, or local – on how the money can be spent.
For example, $27.4 million of the $49.3 million balance was generated by the solid waste and recycling user fee and, by council ordinance and bond covenants, can only be spent on those purposes. Another $4.7 million was generated by the transportation sales tax and, by state law, can only be spent on road projects, greenbelts and public transit.
These funds are not available for use in the general fund.
Notwithstanding these provisions and restrictions, modest surpluses are available for distribution.
In accordance with county council policy, staff has recommended that the balances of the funds “not obligated” be used for a series of “one time costs.”
The $9.7 million “not obligated” balance on the general fund is recommended to be split with $5.3 million to the CIP, $2.3 million for equipment replacement, $1 million for higher than anticipated workers compensation costs and $1.1 million for the cost of the voluntary retirement incentive program II recently implemented.
The $31.7 million “not obligated” balance on enterprise funds is proposed to be used largely for environment management CIP, taking $28.9 million.
The $2.2 million “not obligated” balance on debt service would be used to pay debt service in FY2012 and FY2013.
Also, because the Trident Tech nursing school project is beginning to incur expenses now but the county won’t borrow the $18 million for this project until the summer, council authorized paying those expenses from other capital funds on hand and then paying those funds back when the borrowed funds are received.
Warwick Jones is a resident of Charleston and has been involved with a number of area organizations, including the Charleston County Greenbelt Advisory Board and the Preservation Society of Charleston.