Summit County to begin drawing from historically high reserves
By the end of this year Summit County is estimated to add $1.1 million to the general fund’s ending balance, bringing reserves up to more than $15 million for possibly the first time in county history.
But the county will begin drawing down its fund balance in 2014 as part of a plan that has been in the works since 2009, county officials said Tuesday during a public hearing about the 2014 proposed budget.
“We knew when the world fell apart in 2009 we were going to pay the piper when the downturn caught up with us,” Summit County manager Gary Martinez said. “We decided to trim the county’s budget in preparation for leaner days ahead.”
Those cost saving measures first came in the form of personnel cuts, Summit County Commission chairman Thomas Davidson said. In 2009, the county laid off 20 employees, equal to $1.5 million in annual operations savings, in preparation for steep reductions in Summit County’s assessed property valuation.
In 2008 and 2009 county officials and local real estate experts predicted Summit County property valuations would take a hit due to trends in the local housing market at the time. Although no one knew exactly how steep that hit would be, local experts predicted it could be as high as 20 percent.
Those reductions were realized in 2011 when the county’s assessed property values dropped by 17.2 percent. Assessed property values dropped another 3.6 percent in 2013, which equates to an additional hit of more than $500,000 to the county’s operating funds.
Property appraisals, which are conducted by the state, are valid for two years and revenues from property taxes account for about a third of the county’s general fund budget.
“There was no point in waiting until 2012 when we knew these big decreases in revenue were coming, and the direction in 2009 was to prepare for these valuation shortfalls,” Davidson said. “We decided to make a very painful round of layoffs of people who didn’t deserve to lose their jobs, but it was our only fiscally conservative option.”
However painful those layoffs were, the county is now in a position to subsidize a variety of funds that have been hurting since the 2008 economic downturn.
Going into 2014 the county plans to appropriate more than $1.2 million of its general fund balance to maintain ambulance, communications, solid waste and transit operations. Those excess funds will continue to be spent on operations through 2016, Martinez said, which will be the earliest year Summit County can expect to heal from the sharp dip in assessed property valuations. The 2017 target ending general fund balance is $9.6 million.
“When governments dip into their reserves it’s typically perceived as a bad thing, but this was deliberate planning on our part to maintain operations in 2014, 2015 and 2016,” Davidson said. “Depleting general fund reserves is completely planned and using $1.2 million is certainly big-picture conservative financial planning in my opinion.”
According to county code, the commission is required to maintain a three-month operating reserve. Even with the $1.2 million in extra spending slated for 2014, the county will still maintain more than six months of operating reserves, Davidson said.
“Make no bones about it, this is an out of balance budget, but it is a budget we can afford with the fund balance we have drawn up,” Martinez said.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.