County Makes Mid-Year Budget Adjustments

Washtenaw County commissioners passed a resolution making mid-year budget adjustments and allocating this year’s higher-than-expected property tax revenues, as well as a $3.9 million surplus from 2013. The 6-2 vote was taken at the board’s July 9, 2014 meeting, with Dan Smith (R-District 2) and Conan Smith (D-District 9) dissenting. Andy LaBarre (D-District 7) was absent.

The adjustments increased the general fund budget’s expenses and revenues by $720,486 for 2014, $733,233 for 2015, $745,980 for 2016 and $758,727 for 2017. The county operates on a four-year budget, with the fiscal year matching the calendar year.

The adjustments also followed the recommendation of county administrator Verna McDaniel, and set aside the $3,920,818 surplus from 2013 in unearmarked reserves, rather than spending it. The projected year-end 2014 fund balance is $20,638,675. The county board had previously approved a goal of holding a fund balance equal to 20% of its general fund budget. For 2014, the general fund budget is $103,127,202. [.pdf of staff memo and mid-year budget resolution]

In addition, the following mid-year budget adjustments were made to the general fund:

  • Structural adjustments resulting in a $494,677 increase in expenditures for (1) providing employee health care coverage for autism; (2) a consultant to help with the board’s budget priority work, (3) a “local government initiatives” intern; (4) reinstatement of two full-time equivalent positions in the sheriff’s office; and (5) salary adjustments for non-union employees.
  • Non-structural, one-time, adjustments that increased expenditures by $65,000 for homelessness initiatives.

The administration recommended that the remaining $160,809 be held as an undesignated allocation until budget projections improve as new information becomes available. The administration will present a second-quarter budget update on Aug. 6, 2014.

In explaining his dissent, Dan Smith noted that it’s been about three months since the board learned that there would be surplus revenue this year, and they’re already spending almost $600,000 of that surplus, which hadn’t been included in the original 2014 budget. There are no shortage of things to spend this money on, he said, including over $250 million in unfunded liabilities “which we have no particular plan to pay for, other than amortizing payments over 26 years – something that our actuary is recommending against us doing.”

One of the reasons to have a four-year budget is to have a plan and then execute that plan, Smith said. If the board wants to “constantly be in budget mode,” then they could simply have a one-year budget. He thought it would be more appropriate to make these changes in the fall, during the board’s annual budget reaffirmation process.

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