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County departments told to lower budget requests: Judge-executive calling for 5 percent cuts
[June 13, 2007]

County departments told to lower budget requests: Judge-executive calling for 5 percent cuts


(Messenger-Inquirer (Owensboro, KY) (KRT) Via Thomson Dialog NewsEdge) Jun. 13--During hearings on the 2007-08 budget, Daviess County commissioners repeatedly said county finances are being stretched to the breaking point by rising retirement and health care costs.



To avoid more strain on cash reserves, Fiscal Court members are telling county department heads to plan on tighter budgets next year.

Meanwhile, they are also informing nonprofit groups that receive county funds that cuts are likely.


In a letter sent to department heads May 31, Judge-Executive Reid Haire said: "For 2007-08, we will reduce our surplus (the money the county has in savings) by over $2 million. If that continues, we have two choices -- either raise taxes or reduce services."

The letter says that when departments submit budget requests for fiscal year 2008-09, "the bottom line ... should be at least 5 percent less than this year's."

The changes are necessary because health insurance costs have risen and because the county is paying more into the state's employee retirement system, Haire said Tuesday. The state sets the rate counties and cities pay into the retirement system.

"As long as those two issues continue to increase in cost, we -- meaning government, business and all employers -- are going to have to look at ways to cut back," Haire said.

County Treasurer Tony Sook said the 5 percent decrease in department spending would be based on what the departments spend, as opposed to what they budget. Many departments spend less than they budget during the fiscal year -- and they will be expected to cut 5 percent from what they actually spend, Sook said.

County Commissioner Bruce Kunze said the changes are in response to rising retirement and health care costs.

"It's not a matter of us raising the budget," Kunze said. " ... It's a matter of rising expenses we can't control."

Sook said: "I don't think we have been spending in excess. But we can't keep dipping into the reserves without making some changes."

Haire's letter said he'll recommend funding for nonprofit groups in next year's budget be cut by 5 percent. The county provides funding to a wide variety of nonprofit groups, such as the RiverPark Center, the Owensboro Museum of Fine Art, Boulware Mission and the H.L. Neblett Center.

With county departments looking to reduce costs, agencies that receive county funds will have do with less as well, he said.

"If we're going to tighten our belts, we need to at least communicate to the agencies ... that we may need to ask them to cut back, too," Haire said.

The county has already increased premiums and co-payments on its employee health insurance plan to control health care costs. Sook said commissioners are also considering setting starting salaries for employees at a fixed rate. In the past, starting salaries have risen annually based on increases in the cost of living.

Sook said officials would like to keep starting salaries at a set rate for several years until the labor market requires them to be increased.

"So five years from now, if we can't hire an administrative assistant or service technician ... the Fiscal Court will come back and look at" the starting salary, Sook said.

Haire said smaller county departments will have a harder time cutting their budgets by 5 percent, because salaries make up much of their budgets. But a 5 percent reduction seems like an achievable goal, he said.

Counties across the state will have to take action to control expenses as long as state legislators don't address problems with the retirement system, Haire said.

"I have not seen the will there (in Frankfort) to grapple with it," Haire said. "I know Senator (David) Williams attempted to (during the 2007 General Assembly session), ... and it was not successful.

"It's not a real popular issue" with legislators, Haire said. " ... But local governments cannot continue to absorb the costs of mandates coming down from Frankfort."

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Copyright (c) 2007, Messenger-Inquirer, Owensboro, Ky.
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