County Budget: More Structural Change Needed

At the Washtenaw County board’s May 15, 2013 meeting, the county financial staff and administrator Verna McDaniel gave an update on the 2013 budget status as well as a preliminary look at the next four years.

At its May 1, 2013 meeting, the board had approved development of a four-year budget. Looking at that period from 2014-2017, McDaniel told the board on May 15 that she hopes to identify $6.99 million in structural cuts in the first year of that four-year period. That’s a slight increase from the $6.88 million in structural changes that McDaniel targeted in her previous budget briefing, delivered at the board’s Jan. 16, 2013 meeting.

If the $6.99 million in structural changes can be identified in that first year, it would eliminate compounded, projected deficits over the four-year period that would total $34.45 million. [.pdf of 2014-2017 budget estimate] The projections do not factor in a possible major bond proposal that the board is considering.

The approach to addressing this $6.99 million target depends on whether the county moves ahead with a major bond proposal that’s in the works, to cover the county’s pension and retiree healthcare obligations. [See Chronicle coverage: "County Board Debates $345M Bond Proposal."] If the board does decide to bond for those obligations, McDaniel said, then the goal in 2014 is to reduce operating costs by $1.83 million, cut $100,000 from outside agency funding, and realize $5.06 million in cost savings from bonding for obligations for the county’s pension and retiree heathcare.

If the board decides not to bond for those obligations, however, then McDaniel said that most of the $6.99 million would need to come from a reduction in operating costs, as well as $100,000 in cuts to outside agency funding.

Both scenarios assume an additional $2.4 million in revenue for 2014. It’s expected that will be achieved from an increase in property tax revenues, as property values in the county climb.

McDaniel told the board that she and her staff need direction in terms of setting priorities and identifying core services. She indicated that the county can no longer provide the broad range of services that it has in the past.

The board held its first budget retreat on March 7, 2013. Commissioners will convene for a second retreat on May 16, starting at 6 p.m. at the county’s Learning Resource Center at 4135 Washtenaw Ave., near the county jail complex. The meeting is open to the public.

For 2013, the county’s financial staff is now projecting a $818,999 shortfall for the year. That amount is lower than the $3.03 million shortfall that was originally projected for 2013. The county had anticipated covering that $3.03 million by tapping its fund balance, but it’s now expected that the county will need $2.21 million less than that from the fund balance to cover the shortfall. The projected fund balance at the end of 2013 is expected to be about $16 million.

This brief was filed from the boardroom of the county administration building, 220 N. Main in Ann Arbor. A more detailed report will follow: [link]