Archive | December, 2011

Summary of Monroe County Government 2012 General Fund Budget

19 Dec

Thought I would do a brief wrap-up on the Monroe County 2012 General Fund Budget, as passed by the Monroe County Council. In a future post, I will put this budget in a broader context — where it fits into a broader effort to bring the budget into a more sustainable situation.

Budget Spreadsheet

The working spreadsheet that the Council used can be found here: Monroe County Government 2012 General Fund Budget. Please note that this is not an official budget document; I will post a PDF from the County’s financial system as soon as it is available — but the working spreadsheet that the Council used is a lot easier to work with.

Overview of the 2012 General Fund Budget

First, some preliminaries:

  • The General Fund appropriated budget total for 2012 is $29,373.802.49
  • This represents a $90,686 reduction from the 2011 General Fund budget, which was for $29,464,489
  • Budgeted revenue for 2012 is $26,561,695
  • This represents a budgeted deficit of $2,812,107. Yes, you read correctly — the County is budgeting for a deficit of $2.8M in 2012. Now, admittedly the budgeted revenue number is probably slightly on the conservative side (there are a few small revenue sources that vary greatly from year to year that have not been included, for example).  And fortunately we have enough in reserves to support this kind of deficit budget this year — but the Council has some very serious issues to contend with over the next couple of years. My next posting on the budget will outline what I believe our budget needs to look like in 2013, 2014, and 2015 in order to come into balance by 2015 and not deplete all available reserves.

2012 General Fund Budget by Department

The following table breaks out the 2012 General Fund budget by department:

Dept # Dept Name 2012 Appropriated
001 Clerk $1,633,337.08
010 Voter Registration $113,111.93
062 Election Board $375,692.00
002 Auditor $550,721.55
003 Treasurer $384,035.12
004 Recorder $124,069.10
005 Sheriff $3,863,519.42
626 Animal Control $335,763.44
006 Surveyor $76,139.91
007 Coroner $188,477.02
008 Assessor $697,764.70
024 Reassessment $634,000.00
009 Prosecutor $1,473,274.75
270 Child Support $956,042.59
011 Extension Services $218,054.55
012 Comm/Veteran Affairs $66,432.21
061 County Council $329,639.08
067 Human Resources $107,563.06
068 Commissioners $2,653,364.43
069 Fleet $61,800.00
161 County Buildings $1,454,689.05
079 Planning $525,486.53
106 Tech Services $415,990.61
225 Unified Courts $4,845,529.82
271 Public Defender $1,060,926.83
277 Comm/Legal $431,946.63
308 Weights & Measures $57,896.06
312 Building Commission $581,698.93
361 Emergency Management $133,866.89
380 Correctional Center $4,267,355.52
803 Parks & Recreation $755,613.68
TOTAL $29,373,802.49

Major Changes in the Budget 

The following were some of the changes in the General Fund budget from 2011-2012.  This list is not comprehensive, but includes the changes that I thought were particularly significant. Your mileage may vary.

  • Unfortunately we were not able to provide a cost of living pay increase to County employees (despite a real increase in the cost of living over the past year of almost 2%). Some employees still received raises, if they reached any of steps defined in the Monroe County Compensation Policy.
  • The overall fringe rate for full-time employees (which includes health and life insurance, FICA, PERF, and unemployment insurance) increased from 41.5% to 42.4%. This change included a mandatory increase of 1.25% in PERF (Public Employees Retirement Fund), which the council decided to pick up (as opposed to passing on to employees). So while employees did not receive any increase in take-home pay, they did receive an additional 1.25% of their salaries paid into their retirement accounts.
  • The total of the Clerk’s 3 budgets (Clerk, Voter Registration, and Election Board) showed an increase of around $61,800 — however, because 2012 is a presidential election year (which is always significantly higher than in a municipal-only election year, like 2011), this actually represents a significant structural decrease in the Clerk’s budget, achieved through some restructuring and several positions eliminated through attrition. Note that this budget reflects (accurately, as it later turned out) a traditional precinct-based voting system. If Monroe County had approved vote centers for 2012, this budget would go down by over $75,000.
  • The Auditor’s budget decreased by around $110K, both through elimination of two positions through attrition (one will continue to be funded through an interlocal agreement with the Solid Waste Management District), and by moving all supplies and contractual expenses to the Auditor’s Ineligible Deductions Fund (a fund that receives revenue from fines levied on property owners who illegally claim homestead deductions on multiple properties).
  • The Sheriff’s salary was increased from $113,082 to $125,647, per changes in state law. The Sheriff’s Department pension fund appropriation was increased from $215,295 to $328,460, an actuarial change that was mandated by the contract with the Sheriff’s Merit Deputies.
  • In the Surveyor’s Department, 25% of the Surveyor’s salary ($10,480) was moved from the General Fund to the new Stormwater Management budget, to reflect the amount of time that the Surveyor spends on stormwater management-related activities.
  • The Coroner received a raise, from $20,363 to $27,363, to reflect the fact that the Coroner position is becoming closer to a full-time position, based on workload.
  • In the Assessor’s Office, the Reassessment Budget dropped from $767,850 to $634,000, based on some savings that Assessor Judy Sharp identified in the budget.  This budget will disappear entirely from the 2013 budget, as future reassessments are being budgeted in a different fund.
  • In the Prosecutor’s budget, 1.5 positions (a legal secretary and 1/2 of a senior legal secretary) were moved out of the Pre-Trial Diversion Program budget (supported by pretrial diversion fees) into the General Fund (increasing the sustainability of the Pretrial Diversion Program fund). The Prosecutor also requested that the Sex Crimes Deputy Prosecutor position be moved into the General Fund from a grant fund after the grant ran out. Although many councilors (myself included) expressed support for the position, we could not find a way to pay for it. In addition, $10K was added for extradition to replace funding that used to come from court-ordered reimbursements from defendants who committed crimes and fled the jurisdiction to avoid trail. The Prosecutor’s Office and the Clerk are currently working to try to understand why this revenue has dried up. But in the meantime, the funding still needs to be available to extradite accused felons back to Monroe County to face trial.
  • In the County Council budget, the Council’s membership in the Bloomington Economic Development Corporation (BEDC), in the amount of $5250 was eliminated.
  • In the Commissioners budget, there were several changes. The classification of the Commissioners’ Administrator position was reduced, lowering the salary from $72,196 to $52,416. Liability insurance/workman’s compensation insurance  increased around $50K. The appropriation for Centerstone for mental health increased from $566,850 to $577,115, due to a change in the state-mandated rate. Note that this Centerstone appropriation, along with the Stonebelt and Options for Better Living appropriations, come out of a separate tax levy for mental health and mental disabilities, and so these three appropriations could not be spent on anything else. Area 10 Rural Transit subsidy was increased from $25K to $30K.  And temporary space was decreased from $35K to $21K, with further reductions possible as departments are moved from rented space into the Showers Complex.
  • In the County Buildings department, courthouse utilities was reduced by $35K, primarily because the Courthouse will be uninhabited much of the year during the rehabilitation.
  • In Planning, consultant fees were dropped from $16K to 0, and professional fees and training were reduced by $2K.  These expenses were reduced in order to save a vacant Planner I position, which the Council originally eliminated, but restored when the position was able to be funded through cuts in other areas.
  • In Technical Services, $100K of software maintenance was moved to the Cable Franchise Fees fund, and a Support Technical position was moved from General to the Cumulative Capital Development fund (and another Technical Services position already in the Cumulative Capital Development fund that was vacant was eliminated).
  • In the Public Defender’s office, Special Services was increased from $25,831 to $45,000, more realistically reflecting the actual costs of special services, such as depositions, DNA testing, and expert witnesses in trials.
  • In Animal Control, the Animal Shelter Interlocal Agreement with the City of Bloomington (which funds the use of the Animal Shelter by County residents) was funded at the same level as for 2011 ($327,342). However, this amount is just a placeholder, as we know that the costs of the interlocal will be greater than the 2011 amount.  This interlocal agreement also deserves its own posting.
Those were the highlights in the general fund. In the next posting about the budget, I’ll discuss how this budget fits in with an overall plan to achieve budget sustainability (hint: still a long way to go). If there are other changes in the budget that you are curious about that I didn’t describe (or would like to take us to task for a particular change!), please post a comment to this article, and I’ll be glad to respond.

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2012 County Income Tax Revenues

15 Dec

In a previous posting (Local Income Taxes), I discussed the County Option Income Tax (COIT), the only form of local income tax used in Monroe County, Indiana. In this follow-up, I wanted to show how much money is actually distributed to the various taxing units that receive income tax in Monroe County.

Taxpayers

The County Option Income Tax is collected from individual taxpayers (not corporations) who live in Monroe County. Monroe County does not receive any income tax from individuals who do not live in Monroe County, regardless of where they work (this is also a topic for another post).

Timing of Collections

The timing of collections and payouts is a big complicated: taxes are collected on the State of Indiana’s fiscal year (July 1 through June 30), but are paid out to the County monthly throughout the County’s following fiscal year (January 1 through December 31). For example, the taxes collected by the state from Monroe County taxpayers from July 1, 2010 – June 30, 2011 are paid out to Monroe County in 12 approximately equal monthly payments from January 1, 2012 – December 31, 2012.

Distribution of Revenues

The incomes taxes collected are then distributed among the various taxing units in Monroe County, according to a formula that is roughly proportional to the property tax levy of the taxing unit. The following chart shows the amount of taxes distributed to each of the taxing units, for 2011 and 2012.  As the chart shows, the county as a whole saw a 3.2% reduction in income taxes from 2011-2012, which represents a reduction in taxes collected from 7/1/2010-6/30/2011 as opposed to 7/1/2009-6/30/2010. Accordingly, most taxing units will also see a reduction in their distributions from 2011-2012 (the exceptions being Bean Blossom Township and the Town of Ellettsville). Note that the increases in Bean Blossom Township and the Town of Ellettsville do not necessarily represent increases in the incomes of taxpayers within their boundaries; it simply means that their share of the total income taxes collected in Monroe County increased from 2011 to 2012, because of increases in property taxes in the taxing districts served by Bean Blossom and Ellettsville.

Taxing Unit 2011 COIT Revenues 2012 COIT Revenues 2011-2012 % Change
MONROE COUNTY  $7,836,112.00  $7,534,491.00 -3.8%
BEAN BLOSSOM TOWNSHIP  $24,923.00  $28,241.00 13.3%
BENTON TOWNSHIP  $45,213.00  $41,326.00 -8.6%
BLOOMINGTON TOWNSHIP  $328,929.00  $312,222.00 -5.1%
CLEAR CREEK TOWNSHIP  $49,149.00  $47,655.00 -3.0%
INDIAN CREEK TOWNSHIP  $18,785.00  $17,781.00 -5.3%
PERRY TOWNSHIP  $147,176.00  $144,478.00 -1.8%
POLK TOWNSHIP  $12,178.00  $11,943.00 -1.9%
RICHLAND TOWNSHIP  $181,351.00  $174,364.00 -3.9%
SALT CREEK TOWNSHIP  $15,931.00  $15,560.00 -2.3%
VAN BUREN TOWNSHIP  $339,742.00  $312,201.00 -8.1%
WASHINGTON TOWNSHIP  $19,901.00  $19,565.00 -1.7%
BLOOMINGTON CIVIL CITY  $7,422,322.00  $7,275,430.00 -2.0%
ELLETTSVILLE CIVIL TOWN  $392,005.00  $394,332.00 0.6%
STINESVILLE CIVIL TOWN  $2,232.00  $2,154.00 -3.5%
MONROE COUNTY PUBLIC LIBRARY  $2,087,229.00  $1,979,229.00 -5.2%
BLOOMINGTON TRANSPORTATION  $303,633.00  $298,537.00 -1.7%
PERRY-CLEAR CREEK FIRE PROTECTION  $393,275.00  $374,611.00 -4.7%
Total  $19,620,086.00  $18,984,120.00 -3.2%

Total Income Tax Distributed 2008-2012

The following chart shows the overall income tax revenues distributed to local taxing units in Monroe County, from 2008-2012. As the chart shows, we were seeing steady increases up until 2011, which saw a very steep dropoff.

Year Income Tax Distributed to Taxing Units % Change
2008  $20,407,324.00
2009  $22,113,415.00 8.4%
2010  $23,453,657.00 6.1%
2011  $19,620,086.00 -16.3%
2012  $18,984,120.00 -3.2%

Sources:

Update on Tasus Tax Abatement

14 Dec

This is an update from my post on the Draft Tasus Tax Abatement Memorandum of Understanding from 12/13/2011:

Last night, the Monroe County Council approved a tax abatement request from Tasus Corporation. Tasus requested and received a 10-year abatement on the new personal property taxes that would be assessed based on their intended purchase of a 1450 ton press and some related equipment. The company estimates that this investment will result in 7 additional jobs. The abatement passed 4-1, with councilors Dietz, Henegar, Kelson, and Langley voted in favor, and Thomas voted against. Councilors Hawk (illness) and McKim (out of town for work) were absent.  The Memorandum of Understanding with Tasus was accepted unmodified.

This abatement was almost identical to a previous abatement granted to Tasus in 2010, for their first 1450 ton press. The Tasus Abatement ERA 2010-10-12 Excerpt from Council Minutes, in which the Council votes (6-0, councilor Newmann is absent) to declare the Tasus property an Economic Development Area (ERA), which is the first step of the County Council in granting a tax abatement, gives some good background on the project. Tasus president Melanie Hart also gave the following presentation to the Council.

Update on Monroe County Public Library Bond Issue

14 Dec

Update on my Library Bond Issue posting from 12/13/2011:

The Monroe County Public Library bond request passed the County Council last night (12/13/2011) 5-0. Councilors Dietz (in his first meeting on the County Council), Henegar, Kelson, Langley, and Thomas voted to approve. Councilors Hawk (illness) and McKim (out of town for work) were absent.

Draft Memorandum of Understanding for Tasus Tax Abatement

13 Dec

This article is an update on the previous post EDC Recommends Approval of Tax Abatement for Tasus Corporation. The Monroe County Council will be voting tonight (12/13/2011, beginning at 5:30 PM) on approval of a tax abatement on personal property (capital factory equipment) for Tasus Corporation, which the company estimates will result in the creation of 7 new jobs.

Beginning in 2009, with the tax abatement granted to Printpack, the Monroe County Council began the practice of requiring a Memorandum of Understanding (MOU) with all companies that receive a tax abatement. The MOU is a contractually binding document that clarifies the mutual responsibilities of both parties — the company receiving the abatement and Monroe County Government. Monroe County Government agrees to provide the abatement on new taxes generated by the company’s investment, and the company receiving the abatement agrees to actually make the investment and generally maintain some particular level of employment. Other terms may have to do with the contractors used in any construction, green construction requirements or other environmental requirements, and wages and benefits for employees.

There are also two other very important clauses in all MOUs from Monroe County: (a) one that requires that any litigation be conducted in the Monroe County Circuit Courts (so a company couldn’t breach the agreement and make it too costly for Monroe County to enforce the agreement by dragging the litigation into an out-of-state court); and (b) one that makes the agreement binding on any other companies that may purchase or be purchased by, or merge with the company signing the MOU.

The reason for the MOU is that in the past, the only remedy for non-compliance with the terms of an abatement would be rescission of the abatement, a remedy that is so likely to be contested successfully in court that almost no local government would attempt it. The MOU defines “substantial compliance” with the terms of employment that the company promised when it sought the abatement (in the so-called “Statement of Benefits”) precisely. This way, with the MOU, local governments and the company can both determine unambiguously if substantial compliance with the terms of the abatement, and noncompliance can trigger specific remedies — usually refunds of the tax benefits gained through the abatement.

The MOU with Tasus Corporation that the County Council will vote on tonight, if they vote to approve the tax abatement, is available here: Tasus MOU Draft 12 December 2011.

The most salient clause in the MOU is the definition of substantial compliance with their statement of benefits:

Tasus shall be considered in substantial compliance with the terms of this MOU provided that
the equipment is purchased, installed and utilized at its Monroe County manufacturing
facility throughout the duration of the Abatement, maintains a total full-time workforce of
at least 128 persons, beginning at least by April 15, 2011, and meets the provisions of IV
B, below.

Tasus currently has 123 employees, before this new equipment is installed. In this MOU, Tasus is essentially agreeing to maintain a minimum of 128 employees throughout the 10 years of the abatement, meaning that at least 5 net new jobs will be created and maintained (and that other jobs will not be eliminated in the process).  Any full-time employment level lower than 128 would trigger the remedies identified in the MOU.

 

 

Library Bond Issue

13 Dec

At tomorrow’s meeting (5:30 PM, 12/13/2011, in the Justice Building room 253), the Monroe County Council will be voting on a request by the Monroe County Public Library to approve a bond issue of $1.8 million over 3 years to cover capital improvements, maintenance, and equipment.  This would require a tax rate of approximately $0.01 per $100 of assessed value. The resolution that the council will be voting on is here: Resolution 2011-55 Library Bond Issue.

The reason that the library is requesting the bond is that they are expecting approximately a $500K drop in their income tax (COIT) revenues for 2013. For a point of reference, their 2012 income tax revenues are set at around $1.98M. The cause of the drop in 2013 income tax revenues isn’t what you would expect (i.e., declining income tax collections) — instead, it has to do with the way that income taxes are distributed among all of the taxing units of government in the county.

County option income taxes (COIT) are collected at a county level into a big pool, and then that pool is distributed out among the various taxing units that receive COIT: Monroe County, Bloomington, Ellettsville, Stinesville, the townships, the public library, Bloomington Transportation, and the Perry-Clear Creek Fire Protection District. The total, after removing a portion as a homestead property tax credit (more on that in a future posting), is divided up amongst those taxing units in proportion to their previous year’s property tax levy + their previous year’s COIT – any property tax levy associated with a new (post-2005) debt issue (the county’s share is also adjusted to account for their 1999 and 2008 welfare levies).

The 2005 date in the above formula is important. Prior to 2005, debt service levies (i.e. property tax levied to pay off a bond) were counted in the taxing unit’s slice of the COIT “pie”.  However, from a fiscal policy perspective, this isn’t a great idea; taxing units could actually increase their revenues (at the expense of other units) simply by taking on more debt. So in 2005, the Indiana General Assembly changed the law, such that any new debt taken on after 2005 would not serve to increase a unit’s share of the COIT revenues. Overall, this is clearly a much fairer way to allocate income tax revenues.

The library currently has a debt service levy that was taken on prior to 2005 (the mortgage for their building) that has counted towards their share of the COIT revenues — approximately $0.03 per $100 of assessed value. However, that mortgage will be paid off in 2012.  While overall this is clearly a positive development, it means that the library will lose some of their COIT revenue (because that debt service will no longer count towards their share), and because of the change in the law in 2005, no new debt service would count towards their share of the COIT. Of course, what is the library’s loss will be the gain of the other taxing units; Monroe County and the City of Bloomington will be the primary beneficiaries. But nonetheless, it will represent a substantial loss in revenue to the library for 2013 and beyond.

Despite having cut staff through attrition and made other budget cuts, the library has determined that they cannot absorb this $500K cut without making material cuts in hours of operation. Coincidentally, however, the library also has a separate tax rate, referred to as the library Capital Projects Fund (CPF), which also generates about $500K per year, and is restricted to capital expenditures. This tax rate has been voted on and approved by the County Council since 2007, and while controversial when it was first established, it enjoyed unanimous support on the council in 2011. A change in the law in 2008 allows the library to combine their regular operating tax rate and their CPF tax rate into one unrestricted tax rate.  In order to replace the $500K that is being lost through COIT, the library is proposing to combine what was formerly earmarked for capital projects through the CPF into their operating levy.

However, that move then leaves the library without a means of paying for necessary capital improvements, including chiller replacement, computer replacement, and other building repairs. This is where the new proposed bond comes in. The idea is that the library can borrow for its capital improvements – and assess the $0.01 tax rate to pay for the debt service.

In essence, this is a tax increase — but it is coupled with what will be a $0.03 tax decrease (because the library is paying off its bond on the building, so that $0.03 tax rate for debt service will go away), so the net effect on the taxpayer will be a $0.02 tax decrease. Of course, if the bond is not approved, the taxpayers would see a $0.03 tax decrease instead of a $0.02 tax decrease. And as a tax rate that isn’t created through a referendum, this tax rate to service a new library bond would count against the property tax caps now embedded in the Indiana Constitution (though it is coupled with the tax decrease, so the net effect will still be a net decrease in the library’s overall tax rate).

On a personal note, I strongly support this library bond request. The library is a vital community institution that provides service across the community, from young to old, from rich to poor.  The administration and board of the library have demonstrated that they are willing to cut costs, and they have done so both through attrition and restructuring and through effective investments in technology. And in a world of technological change, they have managed not only to remain relevant but to remain essential.  The use of small amounts of debt to finance capital improvements is a responsible government practice. And at the very least, this arrangement gives the library 3 more years to find other new revenue sources and/or to continue to find new efficiencies in operations. The library’s bond proposal is a sensible and responsible way to maintain its commitment to the public and to remain sensitive to the struggles of taxpayers across the community.

Unfortunately I will be out of town on business and will not be able to attend the Council meeting. I sincerely hope my colleagues on the Council will support the library’s request.

Note: Materials provided to the County Council on the bond issue can be found here: MCPL Council Packet Materials.

On Proposed CBU Wastewater Increases

12 Dec

City of Bloomington Utilities is considering a 53% increase in wastewater (sewer) rates. The Herald Times wrote about this proposal here and editorialized against it here (unfortunately both articles are behind the HT paywall).

While I agree that raising rates some is inevitable in this case (and in the previous increase in the water utility as well), and that investment in utility infrastructure is critical, the Utilities Service Board (USB), which is the governing board for the utility, should make some policy changes first before raising rates. Here is a guest column that I wrote (but wound up not submitting) back in 2007 when the water rate increase was first being discussed. In it I recommend a couple of policy changes: water hook-on fee increase, conservation pricing, public relations campaign with the City’s wholesale customers (over 35% of CBU’s water usage is by customers of another utility that purchases water wholesale), and the elimination of the Summer Sewer Average (SSA) billing practice.  The first three of these suggestions are relevant to the water rate increase issue (by law, the water and wastewater utilities are run as separate businesses), but the SSA applies both to water and wastewater.

The SSA should be eliminated. The SSA is where residential customers are charged a wastewater bill based on their spring water use average during the summer months, rather than their actual water use. The theory is that the extra water used during the summer is for irrigation (lawn sprinkling, gardening, car washing) and therefore also doesn’t go down the sanitary sewer. But not only is this policy ripe for abuse (swimming pool filling could be subsidized, even though that water does go down the sewer), but it discourages conservation in exactly the areas in which much of the water use is discretionary (car washing, anyone?).

We should be encouraging the use of rain barrels and other low-water waste gardening practices. Urban farmers or others who really do have a need for significant amounts of water during the summer can get an irrigation meter, which measures the water that doesn’t go down the sewer. We certainly don’t need to be subsidizing swimming pools or car washing, though.

The USB should first eliminate the SSA before raising wastewater rates.