The fiscal team presented an overview of the 2013 preliminary budget it prepared, which was adopted by the Schuylkill County commissioners at Wednesday's public meeting.
Mark J. Scarbinsky, county administrator, spoke of the difficulties because the current economy challenged the team to get a grip of the escalating costs of government services because the county is tethering on the edge of a fiscal abyss. He warned that the unsustainability of wage and benefits packages has to be thoroughly addressed, taking the challenge to govern to the next level.
He also spoke of revenue restrictions placed on counties by state statutes and the continued cutbacks of state and federal funding.
"As you are aware, the county hasn't had a tax increase since 2004," Scarbinsky said to the commissioners, "but the cost to operate government has continued to escalate during those past years at an average of about 2 percent, and the county encountered its first budget deficit in 2008 and had to rely on reserved funds for four years to offset deficits." (At that time the board consisted of Mantura Gallagher, Francis McGovern and Frank Staudenmeier, whose term ran from 2008 through 2011.)
"The county also implemented a cost management initiative, which utilized focused and planned categorical reductions to realize savings," Scarbinsky pointed out. "Through fiscal cooperation with our elected officials and agency directors, but more importantly, through access to unexpected supplemental revenues, the deficit was controlled.
"Unfortunately, those supplemental revenues will no longer be available for this budget year and cannot be anticipated going forward," he added. "As we continue to struggle with balancing expenditures against revenues, the budget will have to be balanced by tapping the unassigned fund balance."
Scarbinsky went on to say, "This does not, however, complicate the matter moving forward since new standards set by the Governmental Accounting Standards Board (GASB), suggest that the county position itself to assign at minimum, the total of two months revenue or two months expenditures from the assigned reserve fund.
"Each department's budgetary requests have been thoroughly vetted and adjusted to make certain that as revenues continue to contract, budgetary benchmarks are adhered to," Scarbinsky said. "Now, based on present analysis the projected budget deficit for 2013 is approximately $2.3 million. As this deficit continues to fiscally challenge us, we continue our efforts to investigate a variety of alternatives without reduction of service levels to our county residents. The county also implemented a cost management initiative which utilized focused and planned categorical reductions to realize savings.
"The continued rise in normal operational obligations, such as our collective bargaining agreements, the rising cost of health care benefits, our pension obligations and basic facility maintenance costs are becoming structurally unsustainable going foward at their present rate of escalation," Scarbinsky pointed out.
Scarbinsky said there are five contracts still under negotiations: an ASCME contract for employees in the Recorder of Deeds Office, assessment bureau and tax claim bureau and Rest Haven Home, contracts with two court-related unions and a contract with the Pennsylvania State Social Workers Union, which covers the workers in the Children and Youth Services Agency.
To manage the budget Scarbinsky listed six steps:
1. Maintain a hiring freeze except for critical positions; 2. Continue the freeze on all travel, closely scrutinized travel requests and limit to critical travel only; 3. Continue to eliminate and consolidate positions preferably through attrition; 4. Right-size operations by considering employee furloughs in areas of noncore and noncritical functions; 5. More utilization of part-time employees; and 6. Potential outsourcing of specific job functions.
Paul Straka, budget director, spoke of facing increased costs challenges.
"When the budget was opened in August," he said, "we like many other counties and municipalities were once again faced with the challenging of increasing revenues while decreasing expenses. There are no easy answers or quick fixes to this issue; however, our row offices, departments and agencies have once again stepped up to the plate and presented budgets that I believe are both viable and fiscally prudent."
Straka listed positive savings for next year.
"Our overall health care costs have remained steady for the third year in a row," Straka said. "Moving into fiscal year 2013, we are projecting an increase of 6 percent, which is down slightly from 2012, and is now the third lowest increase in the past six years.
"Workers' Compensation costs continue to trend downward with overall claims being reduced by 9 percent, which also represents a three year trend of lower costs. The Energy Upgrade Project which began in 2008 continues to be successful. Comparing our energy usage from November 2011 through October 2012 at the courthouse, prison and Rest Haven Home, the electric saving were 350,813 kilowatt over the guaranteed amount which is an additional 20.7 percent savings of $34,300," he continued.
"Gas saving for all three facilities was 25,357 dk therms, which is 16.1 percent above the guaranteed amount, or approximately $34,900 over and above our guaranteed savings. In total the county is showing a savings of $69,200. The general fund expenses for 2013 have projected decrease of .75 percent. I believe that overall spending should remain steady and even show a slight improvement going into our next budget year."
In conclusion, Straka said, "Our ultimate goal is and remains to reform where we can; cut where we must and invest where it matters, providing greater opportunities and better services, not only for our neighborhoods and residents but to produce stronger growth for our county."
No tax increase
Paul Buber, financial analyst, prepared and presented the preliminary budget for adoption by the commissioners commented, "In summary, the 2013 preliminary budget revenues for the general fund are projected to be $2,256,485 or 4.7 percent less than what is needed to balance the 2013 budgetary expenditures for the general fund. During these difficult economic times, we are suggesting we draw down on the unassigned fund balance to cover the shortfall and to maintain the real estate millage at 11.42 mills for general fund and .56 of a mill for debt service. This is remarkable considering the county will be initiating about $18.2 million in capital projects for 2013."
The capital projects include a new roof for the county prison, Human Service building renovations, continued energy upgrade and installing a new telephone system.
"I am pleased to hear that for the ninth straight year there is no tax increase," Commissioner Frank Staudenmeier commented, "which is because the hard work of our financial team and cooperation of the row offices and county employees. Not many counties can make the same claim and we are able to accomplish this without reducing services to our citizens."
Commissioner George Halcovage, voting on his first budget, also lauded the financial team for their professionalism and expertise. Commissioner Gary Hess, also a new commissioner, echoed the sentiments of his fellow commissioners and complimented the department heads and employees in doing their job to keep down costs but warned that hard times are still ahead.