January 21, 2019

County projects budget deficit for 2019

Projections similar to 2018

Posted

MIO — Once again Oscoda County has projected a budget deficit, meaning the county is poised to spend more money than it will take in throughout the year.

The 2019 budget was passed by the Oscoda County Board of Commissioners at its Dec. 11 meeting. When looking at the bottom line, total revenue for the county in 2019 is expected to be approximately $4.51 million. Expenditures are projected to be more than that, at almost $4.95 million. That leaves a projected total net loss of roughly $436,000 by the end of year.

Former Commissioner Larry Wilson said although the budget looks rough, this is nothing new for the county.

“This budget is close to what we’ve had for the last six years,” Wilson said. “We’ve come out OK in the end then as well, so I’m not worried.”

The 2018 projected budget had similar amounts of money planned for revenue and expenditures, with a projected net loss of roughly $280,000. However, as of late November, the county had actually reversed that deficit, resulting in a nearly $400,000 revenue surplus.

Although the county finished 2018 in the black, that was not the case for 2017. After similar projections, the county ended 2017 with a deficit of roughly $280,000. The county did better the prior year, 2016, finishing with a $170,000 surplus.

Former Chairperson LaNita Olsen said she believes the county department heads are doing the best they can with what they have. She said she trusts they are utilizing their funding in a fiscally responsible way.

“We have very responsible department heads,” Olsen said. “They work to better our county’s financial situation.”

One department that has a new person heading it will be the county EMS. Robert Hunter was recently hired to take the reins and be the director of the service.

The ambulance equipment budget that Hunter will be in charge of is projected to have more than 10 times the revenue and expenditures it had in the previous three years. This is due to the county taking in $97,000 in taxes due to the passage of the EMS equipment millage. Projected revenue for 2019 is roughly $98,000 and expenditures are at roughly $87,000. If this projection is accurate there would be a net gain of roughly $11,000, which is significantly better than how the county did the previous two years when it was in the red by more than $6,500.

The ambulance personnel budget follows a projection similar to the previous three years. Slightly less than $1.15 million has been projected for revenue, and slightly less than $1.1 million is projected for expenditures. The net gain is expected to be roughly $50,000, which is more than the $3,600 the county was in the red for last year.

The veterans affairs office is expected to see lower returns than what it has seen in the previous three years. Its projected revenue is at $130,000, and projected expenses are at roughly $110,000, resulting in a net gain of nearly $20,000. Previously, when accounting for all revenue and expenditures, the department brought in roughly $53,000 in 2018, $48,000 in 2017 and $75,000 in 2016. While there were some increases to the expenditures associated with travel, training and veteran relief, there do not seem to be any line items that are drastically different from previous years.

The county childcare fund is projected to see an increase in revenue; however, the increase in expenditures is projected to outpace it. Revenue is projected to be slightly less than $320,000 and expenditures at $355,000, putting the county at a net loss of approximately $35,000. Last year the fund saw a nearly $11,000 surplus, in 2017 there was a $66,000 deficit and in 2016 a surplus of nearly $90,000.

Former Commissioner Jack Kischnick said he believes department heads have done all they can to help the county with its budget. He also said he has confidence that the county’s newly elected officials will be able to help save money when needed.

“The department heads have worked diligently to cut corners where they can. I commend them, and our elected officials,” he said. “I think they have a budget they can work with going forward, and I wish them the best of luck.”

One final fund in the budget residents may be confused by is the courthouse fire fund. In that there is no money projected for expenditures or revenue, which is by design. Board Secretary Brenda Moore said the reason is because the county is not sure what, or when, it will be responsible to pay. Therefore, the county will make amendments to the budget as different expenditures arise. In 2016 the fund had a net gain of $0, with the county spending roughly $330,000 of insurance money. In 2017 there was a net gain of $890,000 after the county received roughly $1.44 million and spent $550,000. In 2018 the budget shows a $975,000 net loss as the county returned funding it had been given the previous year on top of other expenses.

Although the current budget projection shows a significant loss of funds, county Treasurer Bill Kendall said the county will still be able to break even by dipping into the fund balance. Kendall described a fund balance as being akin to a savings account for the county. In years when the county ends with a surplus budget, the leftover money goes into a special fund for the county to use as needed.

“For example, let's say the end of the year comes and we’ve cut some expenses and turned that deficit into a $50,000 surplus,” Kendall said. “That $50,000 would be put into the fund balance for the county to use at a later date.”

Kendall said while the budget projections are less than stellar, the county will be OK even if it ends the year with the current projections. As of now, he said the fund balance is sitting at roughly $2.5 million.

“If everything rang true right now, that ($430,000) would be pulled from the fund balance,” he said. “That $2.5 million would fall to $2.1 million, and the county would go into the next year.”

Kendall said while the county can utilize the fund balance to cover a rough year, it is not something that should be taken lightly. He said once money is taken from the fund balance, it is important to pay back into it, ensuring the county has the backup funding for situations like this that arise in the future.

Kendall said pulling from the fund balance is something that would be done at the end of the year, after the county has made all cuts it possibly can to lessen the amount of funds pulled. If the current projections do come to pass, the county’s fund balance would be taking a 17 percent hit.

Near the end of the commissioners’ discussion the former board took a moment to praise the new board members for taking proactive measures and being present for budget discussions that will affect them after taking office.

“Thanks to the new board for coming in and being involved in these discussions,” Olsen said. “There are a lot of times when it can seem as though we are being hard on parts of the budget, but that is because we are responsible for taxpayers’ money.”

When asked about how the county will handle the deficit, new board Chairman Kyle Yoder said he is confident in his financial acuity. He said he is “very fiscally conservative,” and that he is knowledgeable about financial issues as he is a controller for a construction company.

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