State budgets, stalemates threaten counties

State budget decisions could cut county service funding

When it comes to talk about looming budget cuts, it may not be the feds that present the most immediate threat. For some counties, it may be statehouses that pose the greatest risk.

States have experienced lackluster revenue growth, according to the National Association of State Budget Officers. The association survey, Spring 2017 Fiscal Survey of States, released June 15, reports that 33 states missed their budget revenue projections; four states are “on target,” while 13 are experiencing higher revenue collections compared to what they projected.

A state budget spells good news for Tennessee counties

Recommended budgets for FY18 are extra cautious as states contend with slow revenue growth and limited budget flexibility, in addition to substantial federal uncertainty, the survey noted. FY18 budgets are projected to grow just 1 percent based on governors’ recommendations.

In Pennsylvania, the House-passed budget bill contains sweeping funding cuts for county-run human services, criminal justice and administrative programs amounting to millions of dollars. The proposal is even more extreme than the lean budget unveiled in February by Gov. Tom Wolf (D).

The County Commissioners Association of Pennsylvania contends that if the proposed budget cuts by the House hold firm as the Senate deliberates, counties will be forced to raise property taxes.

“Service needs and caseloads are not discretionary and do not go away just because the state does not provide funding; counties still have to meet service delivery mandates,” CCAP warned. “Under HB 218, counties would experience significant and devastating cuts, which would ultimately mean increases in local taxes to maintain these services.”

In an op-ed to county residents, Cumberland County, Pa., Commissioners Vince DiFilippo, Jim Hertzler and Gary Eichelberger wrote, “our success in holding the line on your county property taxes will be in jeopardy if the state keeps shifting obligations onto the backs of counties.”

As proposed, the House-passed budget slashes millions of dollars in state funding for mandated programs run by the county such as juvenile probation services: cut $18.9 million; adult probation services: $16.2 million; mental health services: $5 million; behavioral health services: $4 million; and homeless assistance: $2.8 million

 

Budget crisis in Illinois

In Illinois, state lawmakers failed to send a budget to Gov. Bruce Rauner late last month due to political gridlock and were returning for a special session called by the governor. Political pundits there predict the state will start its third fiscal year July 1 without a budget. The gridlock is making life difficult for counties.

“The impasse has prevented the enactment of a complete budget and resulted in only incomplete or stop-gap budgets being approved to provide for a minimum level of governmental functioning,” said Cook County Commissioner Deborah Sims, in her newsletter to constituents, about the ongoing problem that began in 2015.

“As a result, state and local projects dependent on state funding are stalled, as well as payments to vendors and departmental operating funds to provide critical constituent services,” she said. “The matter has led to the downgrading of the State’s credit rating, an uncertain business climate and an overall decrease in economic activity. These budgetary and legislative stalemates require that counties become more creative and flexible in developing solutions to minimize the impact of the crisis on the residents and communities we serve.”

The budget fiasco has hurt counties in Illinois in various ways. A shelter for domestic violence victims in McHenry County, Ill., which maintains an office in the county courthouse and is partially funded by the county, is short $300,000 in state funds after its funding fell through the cracks during a stop-gap budget measure passed last summer.

The organizations that contract with the state to run shelters for the homeless, care for the elderly and help domestic violence victims are waiting six months or more to get paid, according to news reports. Those shelters have had to make cutbacks on employees or close.

Kansas legislature says ‘no’ to governor’s tax cuts

An experiment in supply-side tax cuts started in 2012 by Republican Gov. Sam Brownback was rolled back this session by the state Legislature. Lawmakers in the Republican-controlled House and Senate overrode the governor’s veto of a bill to raise taxes and close a nearly $889 million budget gap.

How did counties make out? “We were hoping to get relief from the tax lid,” said Melissa Wangemann, general counsel and director of Legislative Services for the Kansas Association of Counties, referring to a previously passed law that requires a vote before counties can raise property taxes.

“They had bigger issues, with the mess the state has become,” she said. “Nothing bad happened to us, as it has in the past.”

Tax increases and the rollback of the governor’s tax cuts are expected to provide more money for community mental health centers ($24.2 million in 2018 and 2019), safety-net clinics, public schools, long-delayed pay raises for state workers and open additional patient beds at a state mental hospital. There is also funding that will increase pay to service providers from Medicaid’s Home and Community-Based Services. Lawmakers approved tax increases to raise an additional $1.2 billion over two years, over Brownback’s objections. The new law raises personal income taxes and repeals an exemption for some farmers and business owners. Wangemann noted another plus: County hospitals and mental health centers can now restrict open and concealed-carry guns into facilities.

Florida lawmakers toy with tourism dollars

Local tourism dollars were saved during a special session called by Republican Gov. Rick Scott who was reportedly furious after the Florida Legislature had cut those dollars from $76 million to $25 million.

Many of those dollars go to the local visitor bureaus that help bring tourists — and their dollars — to county businesses and ultimately county coffers. The entire amount was preserved during the special session, but with stiffer reporting requirements with the goal of making Visit Florida’s spending more transparent.

Marketing dollars are important to local governments like Sarasota County, where one out of every five jobs is in the tourism industry. Last year, the county welcomed 2.4 million tourists. Visit Florida President and CEO Ken Lawson told participants at a Visit Sarasota County tourism event last month that for every dollar the state spends on tourism, it sees $3.20 in return. The governor had sought an increase in the tourism budget, from $76 million to $100 million.

Minnesota transit

Hennepin and Ramsey counties in Minnesota have voted to raise transit taxes, after state lawmakers balked at funding new light-rail lines. Faced with a shortfall in the state budget, the counties increased their transportation tax to a half cent, permitted under state law. The move will give Hennepin County an addition $65 million a year; Ramsey County will see about $41 million the first year after it’s implemented Oct. 1. “The right thing is to give people [transportation] choices,” said Board Chair Jan Callison during the June 13 vote. “I wish we did not have to make this choice.” Still needed to fall in place: Critical federal dollars from the Federal Transit Administration, which is uncertain.

In South Carolina, counties asked to pony up on pensions

Budget cuts aren’t the only way that state lawmakers are socking it to county coffers. In South Carolina, a new law mandates that counties increase the amount they pay into state retirement accounts, from $11.56 to $18.56 for every $100 earned by a county employee.

That will add nearly $773,000 to the Aiken County budget, for example. The employee contribution is also going up .5 percent, from 8.66 to 9 percent and will remain at that level.

Counties however will have to raise the amount they kick in each year by 1 percent, until 2023. South Carolina Gov. Henry McMaster signed the Pension Reform Act into law in April.

Oregon counties may lose state grants

In Oregon, counties in the Columbia River Gorge National Scenic Area are looking at possibly losing funding for land use and development planning of National Scenic Area land, required under state law. A state Senate committee proposes to remove technical assistance grants to Multnomah, Hood River and Wasco counties. The funding has been provided since the 1990s to pay for staffing in each of the three counties and surrounding counties in Washington state, Clark, Skamania and Klickitat counties.

Angie Brewer, planning director for Wasco County, first raised a red flag about the issue in early 2017. Amanda Hoey, executive director of the Mid-Columbia Economic Development District, said “the counties are the most effective mechanism” for implementing scenic area planning requirements, as they have traditionally had “trained and knowledgeable individuals to conduct reviews and assist with permit reviews.”

A state budget spells good news for Tennessee counties