South County is a non-charter county, which has been enjoying healthy fiscal years under stewardship of devoted, skilled and diligent board of commissioners. The country is under direct jurisdiction of county administrator as well as the director in the Office of Management and Budget.
This year’s low revenue returns has caused South County to face financial problems thus hindering funding of the multi-million dollar budgeted county projects, which include library programs, rural fire protection units and parks management.
South County has been protecting it natural resources such as limestone and pure water sources for a long period by choosing the type of industrial development to be set up in the county.
This has minimized the county’s ability to attract more business investments in the area that would have lead to increased realisation of Ad Valorem revenues. Secondly, Ad Valorem revenues in South County are low because of the fact that 75 percent of properties in the county are tax exempted. Therefore, this indicates that private property and businesses on the remaining 25 percent is responsible for revenues used in maintenance, construction and basic operating expenses of the county. Due to the growing unplanned and unbudgeted projects passed by the board, the county has been using General Fund Contingency thus resulting to a shortfall of property tax revenues in the previous five years. “This general Fund Contingency has dropped from a healthy $16 million to $9million, the bare minimum amount permitted by county policy (Groves, p.172)”.
Fourthly, the other cause of financial problems at South County has emanated from the county’s board commissioners. They have been holding the yearly property millage rate and probably reducing it in the same five-year range. This has negatively affected the growth of revenue base of the county.
In order to increase revenue, the county should come up with policies to attract investments that are more industrial. They also ought to ensure preservation of the county’s natural resources and environment rather than limiting the type of industrial activities.
Private sector investment will result in more employment and subsequently more spending during paydays thus leading to more revenue realisation. The diverse industrial engagements would guarantee the county increased revenue, which will consecutively ensure timely funding of projects. On the same note, there will be a boost on Ad Valorem’s returns due to increase in private and individual property ownership in the county. Thirdly, the Office of Management and Budget should inform the board how holding of annual Ad Valorem millage rate is adversely affecting the achievement of county’s budget goals. This will be convincingly achievable through highlighting procedures for funding more projects due to steadily expanding revenue base from increments in Ad Valorem millage rate. It would be possible to avoid current and future budget dilemmas should the county board accept to adopt and implement these among other strategic plans.
Obviously, every county board member has personal interests that he/she wishes to reflect in the budget.
This is the reason why development of a budget plan encounters many challenges. Other than the politics of the county, there are other challenges. First among the challenges is the fact that the commissioners have been previously adamant to adopt the obviously available revenue options. They fear that presenting opposing plans will be a turn down by the commissioner since they feel that the public will also reject the adoption. Another challenge is low revenue sources in the county. As seen earlier, a large portion of South County is under tax-exempted facilities therefore limiting tax generation. Thirdly, the Office of Management and Budgeting (OMB) lack authority to push for plans that can ensure economic sustenance and growth without obstruction by commissioner who have personal interests.
Among the favourable options, I would recommend a raise of the millage tax and extension of sales tax. Due to unstable nature of taxing districts, I would not opt for Municipal Services Taxing Units (MSTUs), since even the public will reject such units (Groves, p.173). This combination will ensure reliable revenue increase to oversee funding of planned projects and save on Ad Valorem revenues. The advantage of sales tax is that, every person even those people passing through South County do pay.
Before starting to develop a plan, I would request the OMB to provide me with previous budgets, which would help in analysing the budget growth for a couple of previous years before making decision.
I will also request for factors used to decide on budgetary allocation programs especially those that officials in OMB have no full control over (Groves, p.202). Ad Valorem revenue data will be important since I would sort to estimate the amount needed in case of a deficit budget. Such information among other data would be crucial guides in deciding the cause of action and assist in developing a plan.
After identifying the way forward and before presenting pre-budget plans, other important considerations are a requirement in order to build political and public support of the plan. Above all, the plan should convince and guarantee increase in revenues and should not be over taxing to the public.
To add on that, it should not conflict people’s political interest, such as the board of county commissioners.
Groves, Satanford et al. Evaluating financial condition: A handbook for local government, Nebraska, NE: ICMA Publishers. 2003.