County eyes policy setting plans for emergency spending
Kent County is closer to deciding what type of events and financial situations define an emergency. It's an important decision because it will give county commissioners access to the county's emergency operating fund to quickly combat some sort of unforeseen adverse situation.
Currently, an official policy doesn't exist.
The balance in the emergency operating fund changes from year to year. The amount is supposed to equal 10 percent of all the county's operating budgets, including those for general operations and the airport. That designation is automatically made each year; the fund contains $22.6 million this year.
Because the fund has never been tapped, some commissioners questioned whether the money could be put to a better use than being set aside for an unpredictable event. They felt some of the funds could have been used to fill the deficit in operating expenditures and lessen the job cuts made by the county last year.
Commissioners Keith Courtade and Brandon Dillon called that situation a local emergency last year. Both felt digging into the emergency operating fund would be appropriate. But the majority of commissioners didn't agree, and the county eliminated the equivalent of 80 full-time positions Dec. 31, just prior to the start of this fiscal year.
Commissioner Bob Sync brought the matter up again a few weeks ago by saying that the $9.5 million deficit that is projected for the 2011 general operating fund is an economic emergency. "We're saving for a highly improbable disaster," he said.
Sync said the county could negotiate for a line of credit in case of an emergency and use the emergency fund to supplement operations. "I think we should do something more positive right now."
In an effort to better define what constitutes an emergency, County Fiscal Service Director Steve Duarte released a proposed policy last week and provided examples of emergency situations. A catastrophic natural event, such as a flood or a tornado, would be an emergency. An unexpected loss of revenues would also qualify, such as losing state revenue-sharing dollars without advance warning. An unanticipated public health or public safety event like a flu epidemic or a chemical fire would also be viewed as an emergency.
However, digging into the fund to balance a budget and lessen job cuts doesn't qualify. The proposed policy says that a sustained economic downturn or a permanent loss of revenue are not emergencies because both can be managed by restructuring services, reducing expenses and increasing revenues.
The policy statement also suggests that for an event to be an emergency, its cost to the county must be at least $1 million. Commissioner Dick Bulkowski, though, said the county has faced some unexpected financial challenges that were less than $1 million. County Administrator and Controller Daryl Delabbio said a sizeable amount had to be selected as a minimum for an event to qualify as an emergency.
"It couldn't be something small that could be considered, like $50,000. It had to be larger, and we chose $1 million," he said.
Commissioner Jim Talen felt the proposed policy missed a key point. He said it focuses more on preserving the organization than ensuring that the county continues to provide quality services to residents, and that bothered him. "It feels like there isn't enough in there about that. It doesn't say anything about maintaining service levels," he said.
Commissioners are expected to review the emergency fund policy this fall as part of their budget work for the next fiscal year that begins Jan. 1.
"We have to adapt to things. We know that our property-tax revenue will be down," said Delabbio. "This (policy) isn't fixed in stone."
Kent County commissioners are expected to review a proposed policy this fall that could determine how the county will spend money from its emergency operations fund.
Here is the brief proposed policy statement:
“To insulate general fund programs and current service levels from large ($1 million or more) and unanticipated one-time general fund expenditure requirements, reductions in budgeted general fund revenues due to a change in state of federal requirements, adverse litigation, catastrophic loss, or any similar swift unforeseen event.”
Source: Kent County Finance Committee, June 2010