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Sectors share fiscal problems
Although its work force is larger than most and most of its workers belong to a union, Kent County isn't that much different from local employers.
County officials are trying to cut expenses as revenues shrink, yet reward their loyal workers with moderate raises and satisfactory benefits. And just like the pickle that many local companies are in, the county knows it's getting more and more difficult to do both.
Members of the county's Legislative and Human Resources Committee recently tabled a vote to create a new committee and establish a new policy to determine how to handle workplace vacancies. At nearly the same time, county commissioners endorsed a new four-year, higher-paying labor agreement for more than 900 unionized court workers.
The proposed committee, the Personnel Review Committee, would be responsible to appraise the need to replace a worker who has left the county's employment. The new policy would suspend filling a vacant position until the committee could conduct a thorough review of whether the vacancy would need to be refilled.
"This creates a formalized process to look at vacancies on a countywide basis," said Daryl Delabbio, county administrator and controller.
The committee and the policy would apply to all county positions, regardless of whether an employee leaves voluntarily or involuntarily. The inclusiveness of the policy became an apparent dilemma for members of the Legislative Committee after they heard from Kent County Sheriff Larry Stelma.
Stelma said he generally agreed with the policy but wanted the committee to consider the effect it would have on public safety. He told members that it takes up to eight months to get a new deputy up to speed. Having a committee review the need for such a replacement would only add to that timetable and could leave the department in a lengthy short-handed state if multiple vacancies exist.
"For those positions that are critical to public safety, I would ask the board to consider exemptions," said Stelma.
The Legislative Committee agreed to set aside its vote to an unspecified future date after County Commissioner Brandon Dillon noted that the new review panel didn't include a seat for a member of the committee, that is responsible for human-resource decisions made at the county.
The four-year labor agreement for 835 full-time and 82 part-time unionized court workers will cost the county another nearly $9.4 million in wages and benefits through 2011. The employees work at the 63rd District Court, the 17th Circuit Court and the Probate Court and belong to United Auto Workers Union Local 2600. The wage increases range from 2 percent to 2.5 percent annually.
A few commissioners questioned whether county employees should receive pay hikes when their counterparts in the private sector weren't and instead were losing their jobs.
"Some of these increases could cost someone else their job," said County Commissioner Harold Voorhees.
But others noted that despite the dismal economy, the demand for county services hasn't diminished, and employees are being counted on to deliver those services.
County Commissioner Richard Vander Molen, though, was concerned about the "step" pay increases UAW workers get each year. These are automatic hikes that are separate from the increases in the labor contract. "The UAW doesn't recognize that as an increase, but it comes out of our shoebox," said Vander Molen.
Vander Molen said step hikes would cost the county an additional $450,000 yearly, but Dillon said the hit wasn't that big. Dillon also said inflation was 4.4 percent last year and he noted that the 2 percent wage hike in the contract wasn't inflationary.
"If we do have to make cuts, I hope we do it with a scalpel instead of a machete," he said.
"The county isn't taking all the hits. The workers are taking some of the hits, too," said County Commissioner Keith Courtade.
Courtade, who was laid off by General Motors, said the court employees were picking up a bigger share of their health insurance premiums.
"Somehow we have to let our employees know that things are tight," said Art Tanis, county commissioner.
County Fiscal Services Director Robert White said revenue to the general fund for the first quarter was on pace with the first three months of last year.
But he also said the county spends "significantly more" in the first two quarters than it receives in revenue as property taxes support the general fund, which covers many employee wages. Receipts from that source don't starting coming to the county until the third quarter.
"You spent $37 million more in the first seven months of last year than you took in," said White to the county's Fiscal Committee last week.
Commissioners have already cut $3 million in spending from this year's general fund and delayed two construction projects in order to transfer $3.2 million into the fund from the capital improvements account.
Those actions were taken to alleviate what was projected a month ago as a $5 million deficit to the general fund this year. But despite more than $6 million in adjustments, the latest forecast still has the general fund coming up nearly $1 million short for the year.
"The continued worsening of the economy has put us into uncharted waters," said Dean Agee, county commissioner. "Revenue has seemed to slip off the scale and we can't predict it."
White has forecast a 1 percent increase in revenue to the general fund this year, an amount that has been figured into the budget's deficit. He also said the county can legally raise its property-tax levy, which could add up to $900,000 in new revenue for next year.
The county has $22 million in its emergency operating fund that commissioners would only dip into if a natural disaster occurred or if there was a steep drop in revenue from the state or from local sources. But not that long ago that fund held more than $120 million. The county was heavily criticized then for having such a large reserve, so commissioners spent many of those dollars.
"We took a lot of grief from the whole world because we didn't spend it," said Vander Molen.
"We have to find a way to build that up," added County Commissioner Jim Talen.
At the end of March, the county had enough in its reserve fund to cover 112 days of general-fund operations. But White said that number would drop by half by the end of July.
"We are actually far healthier than other governmental bodies," said Agee, "if that makes you feel better."
First quarter deficit up by 11 percent
First quarter deficit up by 11 percent
Even though total revenue for the first quarter to the Kent County general fund came in at last year's figure, the fund lost nearly $1 million more over the first three months of this year compared to the same period in 2008. The quarter ended with expenses topping revenues by $9.1 million.
Spending for the first quarter was up by 3 percent from last year. One of the quarter's largest spending increases was made to the Department of Human Services Childcare Fund, an expenditure that grew by 21 percent from $1.75 million to $2.12 million. In the budget forecast, spending for that fund was expected to rise by 5.1 percent for the entire fiscal year.
First-quarter spending normally accounts for 21 percent of all general fund expenditures over a fiscal year.
Here is an outline of the first quarter numbers.
Source: Kent County Fiscal Services, April 2009