The county’s financial adviser is expecting only a 5-percent drop in property tax revenue from the effects of COVID-19 in 2021.
For local income taxes, Baker Tilly also factored in a 5-percent shortfall for 2021, and a 10-percent decrease in 2022 due to the pandemic.
“In theory, if everyone paid their taxes on time, there really shouldn’t be a shortfall in 2021,” said Jason Semler with Baker Tilly.
“The impact really won’t hit people until 2022, but we are showing a slight reduction in 2021 in case there are some people who might not have paid their income taxes on time because of the COVID situation. We’re trying to be conservative.”
The Brown County Council conducted budget hearings at the end of last month.
Because department heads kept their requests to a minimum and only asked for raises plus longevity pay for their employees, or kept increases below $1,000, the council did not have to make as many cuts as in years past.
The council was able to make adjustments that would allow for county employees to receive 3-percent raises next year.
The budget will be formally approved in October.
The council does plan to take the “growth quotient” for 2021. Members don’t know yet if that will impact the taxes that property owners pay.
Jacque Clements, an adviser from the Association of Indiana Counties, said the growth quotient the state allows is 4.2 percent. The growth of the county’s assessed value (AV) will determine whether or not capturing the growth quotient will impact tax rates, and the AV isn’t known yet.
Brown County hasn’t always had the option of taking the growth quotient. In July 2019, the county council voted to “thaw” a property tax levy freeze that had been in effect for the past five years.
Making adjustments
Clements sat in on the hearings to help keep track of cuts that would make the budget fundable at the state level for 2021.
At the beginning of the hearings, Clements told council members they would need to cut around $136,000 from requests to make the entire budget fundable.
Some areas the council will focus on as the budget is refined are the county’s contract with Columbus Regional Hospital for ambulance service and the county’s health insurance plan, because both have increased, or are expected to increase, in cost this year.
The largest adjustments came from the budgets of the county clerk, the election board and the county commissioners.
There is also a possible reduction opportunity of $25,000 in the probation department’s budget if the county’s court system is switched to Odyssey by the end of the year. Currently probation pays around $25,000 for the current online court system.
The council was able to cut $1,400 by eliminating the the clerk’s office “office chairs” line, then around $77,000 from the election board’s election equipment lease line. Clerk Kathy Smith had originally submitted that budget line as $107,144, but the actual lease amount for next year was closer to $30,000, commissioner Diana Biddle explained.
The county council also cut $6,000 from its professional services line by having the retainer for Barnes and Thornburg reduced by 50 percent, council President Dave Redding said.
The commissioners’ budget requests were already trimmed for next year. For example, the economic development income tax fund was set at $835,500 for 2021 compared to $942,248 this year.
The biggest adjustments came to the cumulative capital development fund, which needed almost $76,000 cut from it make it fundable, Clements said on the last night of hearings. Biddle was able to cut $50,000 from the request for the buildings line in that fund, reduced the grounds upkeep line by $16,000, and removed a “security improvements” line that was set at $10,000.
Within that fund, IT Assistant Laura Minett was moved from part-time at $30,344 to full-time in 2021 at $40,678.
“Right now she is over what her budgeted time is because of all of the technology things we had to do to get our employees working from home,” Biddle explained.
“The work they had to do on this building (the music center for meetings), the work they will have to do on the court here when Odyssey will get instituted, she will need time for that; she’ll have to program all of the computers.”
The commissioners added a Salmon Room clerical job to their regular budget at $33,080 to cover the cost of the employee who is responsible for greeting visitors to the County Office Building and ensuring visitors follow social distancing guidelines. Biddle said the job is refundable through CARES Act funding.
The council also approved a staff change for parks and recreation.
Director Mark Shields requested an additional $18,272.36 from the county council to bring his maintenance supervisor up to 100-percent full time. Currently that job is 80 percent of full time.
“Right now he typically takes off Wednesday, which isn’t that big of a deal unless he has tournaments he works all weekend, then we don’t have him the next week,” Shields said.
The maintenance supervisor does multiple jobs around Deer Run Park and also maintains the Salt Creek Trail and the skate park. “I would consider him a jack-of-all trades,” Shields said.
The council agreed to move the job to 100 percent full time at a pay grade seven, but wants parks and rec to cover 50 percent of the salary from its non-reverting fund.
Shields said the non-reverting fund is something the department can not always adequately budget for, since a lot of the money comes from program fees. Parks and recreation currently is not offering any programming due to the pandemic.
“If things are going upside down, please come back. A healthy parks and recreation is in the community’s best interest for sure. We’ve seen numbers go way up. They’re not there paying money, but there’s a lot of people using facilities now,” Redding said.
“We’re committed partners with you.”
Parks and rec uses volunteers to handle the mowing at Deer Run Park, and since April, the department has received $4,000 worth of labor for mowing, Shields said.
The maintenance supervisor is responsible for servicing those mowers every 20 to 30 hours of use. Even with no programming currently happening, Shields said the supervisor keeps busy with weed-eating, maintaining the playgrounds, removing trash and other general upkeep of the grounds.
To help with funding, Shields said his department is looking into grants, including pursuing a $50,000 grant to improve soil conditions on the baseball and softball fields at Deer Run Park.
Last week, Redding said the council was still awaiting what the new amount will be to bring that job to full time with parks and recreation picking up the 50 percent.
Some departments did make requests for more money in certain line items, but most made cuts to items to cover it.
Increase requests
Judge Mary Wertz requested $1,000 more in her jury supplies line to cover a follow-up mailing next year to the county’s juror pool after only 50 percent returned their summons this year. Wertz also cut $10,000 from her circuit budget for 2021.
The Public Defender Board requested $5,000 more for its budget line that pays public defenders more who put more than 20 hours into a case. The board also requested $2,800 more for transcripts.
Public Defender Board President Rick Kelley said it is difficult to tell how much this board will spend each year. Last year, the board spent an additional $30,000 on hiring counsel for cases where a lawyer had a conflict of interest.
Prior to the budget hearings, the council unanimously approved giving the public defender board an additional $20,000 from the general fund to the line for over 20 hours worked on a case. That money is used to pay public defenders extra who take on difficult cases.
Coroner Earl Piper requested $1,125 more in his autopsy fees line for 2021. That line was approved at $6,500 for 2019. Earlier this summer, the council approved moving $7,500 from the general fund to the coroner’s autopsy fees line after Piper exhausted all of his resources for autopsies already this year.
The $7,500 will cover four more autopsies this year with toxicology tests. For 2021, the autopsy fees line is set at $8,625.
Piper also cut $650 from his budget in his auto insurance line since he now uses a county vehicle.
On night three of budget hearings, the council approved a pay grade increase for health department vital records clerk and front officer assistant Taylor Hardesty, which is an increase of about $1,125. This was requested due to Hardesty’s work with putting septic data into digital files.
Last year, the council approved giving Hardesty a one-time stipend of $1,200 for data work. Hardesty has recently completed putting in septic data for Jackson Township and is almost done with Hamblen Township. She is also responsible for tracking the pump-and-haul data for the health department.
Office Administrator Judy Hess requested the council give Hardesty another stipend next year if they did not approve the pay grade increase.
CVB and music center
The Brown County Convention and Visitors Commission’s (CVC) budget for 2021 is set at $900,000. The budget was set at $800,000 this year, but due to the pandemic, collections of innkeepers tax have been lower than expected.
Within the budget for 2021, the CVC set aside $240,000 to cover payments for the Brown County Music Center if needed.
For this year, the CVC had set aside $140,000 to help cover mortgage payments for the venue if it did make enough on its own. The doors to BCMC have been closed since the beginning of March due to the pandemic. Currently, the bank is requiring the venue’s management group to make interest-only payments until at least the end of the year, CVC President Kevin Ault said.
Now, the bank is requiring the CVC to hold back 50 percent of innkeepers tax collected, beginning with what was collected in July.
“They don’t want us to turn it over; they want us to hold it and it will cut into CVB budget through the end of 2020,” Ault said.
That holding back of innkeepers tax affects the budget of the Brown County Convention and Visitors Bureau (CVB). The CVB’s budget was adopted at $660,000 for 2020.
“They (the bank) know the CVB is an integral part of the community,” Ault said.
The CVB already has had to cut back on its budget “significantly.” It is now down to only two full-time and two part-time staffers, including Executive Director Jane Ellis and a part-time bookkeeper.
BCMC has shows scheduled for February if the virus gets under control, Ault said.
The BCMC has only three people on its payroll who have all taken a 50-percent pay cut due to the pandemic and the venue being closed.
“We scaled back as much as we could,” Ault told the council.
Until shows can resume, the BCMC and the CVB are pursuing grants to help get through the first quarter of next year. BCMC applied for an $880,000 grant through the Indiana Department of Tourism. The CVB is also pursuing a grant, but the amount was not known at the budget hearings. Ault said there are smaller grants, around $25,000 to $30,000, that are also being pursued.
Ault said that innkeepers tax collection picked up in June and that the collections for June were only down $15,000 compared to last year.
The venue has been recently used for county meeting space and there is a plan to move the health department out there, so that vaccinations could be done and possibly more COVID-19 testing.
The grant for more COVID-19 testing also includes $5,000 in funding to cover the venue’s utilities, which runs around $8,000 to $10,000 a month with no shows happening. Other costs for using the venue as meeting space due to the pandemic could also be covered by the CARES Act.
“If the virus is behind us, or under control, I think we’ll have a very good 2021 for Brown County tourism,” Ault said.
A public hearing will take place in October before the entire county budget is finalized.
[sc:pullout-title pullout-title=”More budget suggestions to plan ahead” ][sc:pullout-text-begin]
For 2020, the county’s general fund is projected to bring in $7.7 million. Baker Tilly, the county’s financial adviser, made that calculation.
However, expenses from that fund are projected to total $8.4 million, according to an updated five-year financial plan that was presented to the Brown County Council on Aug. 17 ahead of budget hearings.
One of the expenses to the general fund is the county’s health insurance plan, which Baker Tilly increased by about $520,000 for 2020 than what was originally budgeted.
The county is working to make changes to its health insurance plan to cut costs. At the Aug. 19 meeting, the Brown County Commissioners unanimously voted to proceed with recommendations from SIHO Insurance Services. SIHO proposed eight strategies for the county’s health insurance plan that would result in savings.
One of those is to increase deductibles and maximum out-of-pocket amounts for the traditional preferred provider organization plans, which could save the county around $252,000 based on claims last year.
Increasing premium contributions is another strategy that could potentially save the county around $54,000 based on the current enrollment.
The plan also encourages participants to utilize a Health Savings Account, which would hopefully encourage them to seek medical treatment in-network, like at the Brown County Health and Wellness Center.
The county’s motor vehicle highway fund, which is funded by the gas tax, also had a 40-percent reduction factored in for a portion of this year, as travel slowed at the beginning of the pandemic in March. But Baker Tilly estimated this tax would go back up in 2021 and 2022 as travel picks back up.
The local and road street funds also had a 40-percent reduction factored in this year with it bouncing back the next two years, according to Baker Tilly’s plan.
The county is estimated to lose about 50 percent of earnings on investments this year as a result of the pandemic, according to the updated plan.
In order to have a 15-percent operating balance at the end of this year, Baker Tilly recommended cutting $237,000 from the budget or using cash on hand currently to cover the difference. Having a 15-percent operating balance would allow for the county to cover two months’ worth of expenses for the county without borrowing money.
“You can handle that shortfall because you do have a healthy balance. If you look at the end of last year, you were able to increase your balance to over $1.6 million, so by having that shortfall of $600,000 this year, you’re still going to have a positive balance of about $1 million,” explained Jason Semler with Baker Tilly.
The plan also showed that the county would be spending $588,000 more next year than what will be brought in taxes.
“You can handle that, because you have $1 million cash on hand, but at the end of next year, your ending balance will only be about $400,000. Then, we’re showing you if that trend continues, you wouldn’t be able to support that budget in 2022,” Semler said.
In 2019, the county spent 99 percent of what was budgeted.
One of Baker Tilly’s suggestions was to allocate some of the county’s maximum levy from healthier funds, like the reassessment and health funds, to the general fund.
Another suggestion was using a three- to five-year capital improvement plan, then issuing short-term bonds for any projects identified. In 2018, the council voted to take out a $2 million loan to fund a variety of projects.
Baker Tilly also suggested re-establishing the cumulative capital development rate to the maximum of 0.0333 on each $100 of assessed value, which would produce an additional $42,000 in revenue for the county. The deadline to raise that rate has passed for 2021, but Semler said it’s something the county could consider for the 2022 budget.
If the county spent the entire 2020 budget in the cumulative capital development fund, it would end the year with a 10-percent operating balance, but Baker Tilly advised that pace would not work for 2021 or 2022 with the revenue projected for that fund.
Baker Tilly also suggested raising the local income and wheel tax rates to bring in more money. If the county chose to increase the economic development or public safety tax rates, it would bring in an additional $1.4 million.
Baker Tilly also recommended the county spend about $253,000 less than what was budgeted for 2020 in the local income tax for economic development (EDIT) fund to keep a 15-percent operating balance at the end of this year. “This is one fund you want to pay close attention to the remaining part of the year, because we’re showing here if you do spend your entire budget, you will be short $82,000 come the end of the year,” Semler said.
The local income tax public safety fund is estimated to end the year with $69,000 left, or a 6-percent operating balance. “You can fund that budget this year, but next year, in 2021, we’re estimating you would end the year in the negative and would not able to fund that entire budget,” Semler said.
Part of the increase in expenses for 2020 is the county’s ambulance service contract with Columbus Regional Hospital. This fund also pays a sheriff’s deputy, a jailer, some health insurance, sheriff vehicle leases and other equipment for the sheriff’s department.
To keep a 15-percent operating balance in that fund would require the county to cut around $266,000 next year and $586,285 in 2022.
The county has a net-zero contract with CRH for ambulance service, which means CRH bills the county for any costs not covered by health insurance. Biddle said that the county has tried to bid out the contract, but CRH is the only organization that puts bids in.
A recent change in Medicare and Medicaid insurance coverage closed a loophole that allowed for more payment to ambulance service for transporting patients with either type of coverage, commissioner Diana Biddle said. “Then, the hospital was not receiving as much insurance reimbursement from the Medicare and Medicaid patients, so then our costs went up,” Biddle said.
In 2019, council approved moving more than $100,000 from the county’s rainy day fund to pay for the rest of the county’s ambulance contract with CRH.
Biddle said that having this contract is still cheaper than the county having its own ambulance service, which she estimated would cost around $3 million a year to purchase ambulances and staff the department. “We can’t touch it any cheaper than what we’re getting now, even as expensive as it is,” she said.
Baker Tilly also suggested the county refinance the bond that was taken out to build the Law Enforcement Center at a lower interest rate to save money. The last payment for the 2018 bond will be due at the end of next year, so Baker Tilly also suggested thinking of projects that would come out of the general fund that could instead be covered by another bond, which would keep the tax rate level when the 2018 bond is paid off.
The county would have to close on a new bond before the end of this year to get the tax rate in place for next year.
The county’s debt limit is $7.9 million.
The council did not formally vote on any suggestions from Baker Tilly.
[sc:pullout-text-end]
