Government can budget in one of two ways. Either total spending is based on perceived “needs” and the revenues are raised accordingly, or revenues are estimated first and spending is forced to stay within these bounds.
The later course, with a no-millage-hikes starting point, has been followed by the Aiken County Council in recent years. From the 2007-2008 fiscal year through the 2012-2013 fiscal year, the general fund budget rose from $49.6 million to $52.4 million. This was an increase of 5.7 percent, or approximately one percent per year.
The flip side of the coin, however, is that when revenues surge, spending will surge pari passu. This, in a nutshell, is the story behind the 2013-2014 Aiken County budget.
On June 18, Council approved a $56.5 million general fund budget for 2013-2014. This is more than $4.1 million greater than the 2012-2013 budget, an increase of 7.8 percent in both revenues and expenditures.
This growth in the General Fund was made possible by:
• A $1.2 million increase in property taxes due to growth in the register (and not due to rate increases).
• A $900,000 increase in the Local Government Fund (state funding to support state functions performed by the county).
• An $850,000 transfer from other funds to consolidate engineering resources.
• An $800,000 increase in fees and fines; sales and services; and license, permits, and registrations.
• A $200,000 increase from “fee-in-lieu-of-taxes” industrial development agreements.
Some of the budgeted increases in expenditures were unavoidable, such as state mandated increases in health care and retirement related to payroll costs. Others, including $400,000 to move offices to the new county administrative complex early next year, are clearly one-time expenditures. In addition, the consolidation of engineering resources had a zero-sum impact when the donor funds are factored in.
Other increases, however, were purely discretionary. These included $600,000 for salary increases, $400,000 for Christmas bonuses, $245,000 for organizational “restructuring” in several departments and net new hires, and $100,000 for employee grade reclassifications.
These increases will drive up the county’s cost structure in coming years. Increasing these expenditures may have seemed painless, but sustaining these increases – if and when the economy slumps – may prove difficult.
While council focused on spending this year’s revenue growth on personnel, little or no thought was given to paying off more debt, purchasing replacement equipment or returning tax revenues back to the public. Council is counting on Capital Project Sales Tax dollars to bridge the equipment replacement gap into next year.
Disappointingly, during budget work sessions, little time was spent rigorously examining the proposed budget. In prior years, council squeezed significant dollars out of the budget by conducting line-by-line reviews. Outside of a line of questioning by Councilman Phil Napier, little was done to systematically analyze the spend plan.
And there were no lack of candidates for closer scrutiny: contingency and insurance reserves, funded vacancies, assumptions behind the planned carry forwards, millage shifts between funds and so on.
Within this context, the $5 per vehicle Road Maintenance Fee increase to fund emergent projects was likely unnecessary. Trimming expenditures from across the budget could have allowed a millage shift between the general fund and the road maintenance fund. The fee hike could have been reduced, if not eliminated outright.
Napier’s failed amendment to eliminate this $5 increase (also supported by Councilmembers Ronnie Young, Willar Hightower and Kathy Rawls) would have gained greater traction if reductions had been identified elsewhere to cover the balance.
Council, however, did enact several positive measures.
Councilman Scott Singer was partially vindicated in his quest to reinstitute the merit system for employee pay raises. Of the two percent increase granted to county employees, 1.5 percent will be paid across-the-board while 0.5 percent will be based on merit.
Singer also succeeded in establishing an Other Post Employment Benefits fund. Annual contributions to offset the county’s retiree medical benefits liability will be retained in this new fund.
A centralized criminal domestic violence court, championed by LaWana McKenzie, was funded by council. By making better use of limited county resources, this is a worthwhile experiment.
Finally, council didn’t raise the property tax millage rate for the sixth straight year. Compared to other counties across the state, this makes council – relatively speaking – rock stars.
The Aiken County Council demonstrated a modicum of fiscal conservatism by “rolling with the revenue.” Regrettably, numerous opportunities to tighten this year’s budget were missed.
Gary Bunker is a former
Aiken County Councilman.