More money going out than coming in
For the first six months of this year, Kent County spent $30 million more from its general operating fund than the account received in tax revenue.
“We spent $30 million more than we took in,” said County Fiscal Services Director Robert White.
County expenditures totaled $79.3 million for the first six months, while revenue was $49.1 million with only $3.8 million of that figure coming directly from local taxes.
But that’s not unusual since state lawmakers moved the property-tax billing date from December to July four years ago. Over the first half of 2008, county expenditures topped revenue by $33.8 million, or nearly $4 million more than this year. Then property-tax receipts began arriving in September and the general fund ended the year with a $2.5 million deficit.
At the halfway mark of this year, the general fund was on track for a $2 million shortfall.
The six-month numbers showed revenue to the fund as being up by 5.2 percent from last year, suggesting at first glance that some sort of recovery had taken place in the county. But that wasn’t the case.
White explained to members of the Finance Committee last week that revenue was higher because of a one-time gain of $3.2 million from two capital projects that closed and those monies were transferred to the general fund. In reality, he said, the fund’s adjusted revenue actually fell by 1.7 percent over the first two quarters.
White then said expenditures from the fund dipped by 1.5 percent over the first half from last year. But he quickly added that a $684,000 cash infusion the county made to a child care fund July 9 brought spending back up to last year’s level, less than 10 days after the year’s halfway mark.
“You are seeing rapid declines in cash balances from January to July,” said White.
The general fund cash balance stood at $40 million on June 30, the year’s halfway date, and was down from Dec. 30, 2008, by $30 million — the amount the county spent above its revenue intake over the first six months of this year.
When the revenue-sharing reserve is thrown into the mix and other account deficits are covered, the county had a total cash balance of $47.3 million on June 30 — enough for 80 days of operations. On the same date a year ago, the balance was large enough for 107 days of operations and stood at $62 million.
White said the balance could drop dangerously close to an emergency-level status of $20 million in 2011 if the county doesn’t recapture full revenue sharing from the state that year — the year lawmakers set for Kent to be reinstated. The county is entitled to $14 million from the state’s sales-tax receipts in 2011.
“If we don’t get revenue sharing, we could go into a tailspin quite quickly,” said Richard Vander Molen, county commissioner.
It appears the county will have its smallest budget for capital improvements in years in 2010 at just $3.1 million. That amount will cover 14 projects. The largest item totals $1.17 million and is for construction debt at the Fuller Avenue Campus.
County Administrator and Controller Daryl Delabbio said four projects on the list might qualify for federal environmental stimulus grants worth $822,000. If they do, he said the county could dig deeper into the list and get a few more projects done next year.
Normally the county sets aside .20 mills from its property-tax millage for improvements. But earlier this summer, commissioners agreed to scale that figure back to .15 mills for 2010 and send .05 mills to the general fund. County commissioners will soon be asked to make the smaller set-aside permanent, possibly as early as this week.
Missing from the improvements budget for next year is a $400,000 award to John Ball Zoo for exhibit space, money that previously came from the Lodging Excise Tax Fund. In 2007, though, the payment was shifted to the CIP budget for 2008, 2009 and 2010.
The zoo funds were allocated last year and this year, but won’t be apportioned next year. Nor will the payment be shifted back to the hotel-motel tax account, as tax revenue to the fund was down by 6.3 percent at this year’s mid-year mark from the same period last year.
“If that were to continue, you’d have to make that up with a general-fund subsidy,” said White to committee members.
Right now, the subsidy to the lodging-excise fund looks to be about $350,000.