By KEVIN FLEMING, guest columnist
Four months ago, a report the county government had been waiting for arrived. The contents of that document were the subject of a presentation at the county council meeting in August. It seemingly was presented with a very measured, even tone by a representative of its author, consulting firm Baker Tilly. From all indications I’ve seen, the information provided didn’t appear to raise concerns among county officeholders. It should have.
The Baker Tilly document was a financial report and forecast of county revenues and expenditures covering the period 2017-2022. The decision to commission the BT forecast was a very wise one which I highly commend. It contains essential information in light of the pandemic. County revenues and expenditures are affected by the pandemic’s disastrous impact on the economy.
The BT forecast indicates we face a very rough road ahead. It indicates three major county funds, the general, public safety and motor vehicle highway funds, will be about $1.5 million in the red by the end of 2022 at the current rate of expenditures and forecast revenues. That means based on that projection, those three funds will all be depleted sometime during 2022. That’s from 13 to 25 months from now. Public safety is actually projected to be in deficit before the end of the coming year.
These deficits are red ink in the county ledger. But BT projects a net deficit of over $750,000 in all operating and capital funds. Being that overdrawn at the bank can’t happen. Something’s got to give.
Among the recommendations BT made for addressing this significant shortfall is raising our local income tax. That’s not a desirable decision, considering that we already have one of the state’s highest local income taxes. And that may not provide enough funds to do more than offset the deficit in the general, public safety and MVH funds.
I raised my concerns at the commissioners meeting Dec. 9. Work had been ongoing on a plan to refinance the debt obligation for construction of the county jail. At a previous meeting, commissioner Biddle had indicated an objective of refinancing the current debt balance at 1 percent interest, with the same payment as currently, paying the debt off earlier, thus yielding a net savings in 2029.
I concur that refinancing to obtain 1 percent interest is a good decision. But I suggested that paying off a debt sooner rather than later that carries only 1 percent interest, with deficits looming, is not.
The BT forecast is daunting. It only makes sense, in light of it, to borrow all the money the county can at 1 percent. And although it’s often a good idea to take advantage of low interest rates and retire debt earlier, this time it’s not.
It was my impression that commissioner Biddle was not as concerned as I about the forecast. She pointed out that the request was made that BT base it on conservative assumptions. My response was that the forecast was created sometime prior to mid-August, and the current state of the pandemic in Indiana is far worse now. It would seem highly speculative to assume BT envisioned our current state of the pandemic.
Of course, a refinance of the jail to obtain the lowest possible payment will only have a small impact on the necessary cost-cutting which will be required. Commissioner Biddle also rightly pointed out that county agencies and departments have been spending less than budgeted amounts, creating budget reversions to add back to the pot. But neither will the recent rate of budget reversions address this matter. And most of those amounts in the previous three years have come from the MVH and cumulative bridge funds. Many county residents will attest that we have the roads to prove that.
I was encouraged to hear county council President Dave Redding address his concern about costs arising from county responses to calls of a public safety nature into Department of Natural Resources properties in Brown County. Perhaps this is a situation for which the county can be reimbursed by DNR. It was a good start to what needs to become an in-depth search to reduce expenditures.
If the road ahead for the county’s financial future is as serious as the BT forecast predicts, it will require an “all of the above” approach to getting through this. The gridlock in Congress makes it impossible to know what help will come from the federal government. We are not alone and the ideas from other counties may be helpful.
One possible silver lining might come in historically low interest rates so that some borrowing can be utilized to get us farther down the road where hopefully there’s light at the end of this pandemic tunnel.
Kevin Fleming is retired from state government where he worked at agencies including the Indiana State Board of Accounts as a field examiner, and the Indiana Department of Labor as a field auditor. While with SBOA, he and a colleague completed an audit of Brown County. He resides in Van Buren Township.
