County attacks $1.3 million tax revenue shortfall

County Council President Greg Kendall announced Monday night’s meeting could be considered Black Monday due to the recent revelation that the state would be withholding about $1.3 million of tax revenue from the 2015 county budget.

The state will send $8.2 million to the county for 2015; $1.3 million less than the $9.5 the county budgeted. Kendall explained the decrease is due to lowered tax revenues created by property tax caps as well as the elimination of inventory and inheritance taxes.

“It is really quite simple,” Kendall said. “We are talking about a lot of tax revenues that were funding our county funds and our needs.”

The council decided to pull money from the economic development income tax (EDIT) fund to cover the $1.3 million difference for the 2015 budget. The county could have used the rainy day fund —which has about $4 million in it — but decided to pay the difference out of the EDIT fund which has about $10 million in it.

Here is how this works.

The annual budget is submitted to the State Board of Accounts for approval. This is the money the county will use to conduct its normal operations. Although the county budgets a certain amount of money into the budget for contingencies and extra expenses, it doesn’t always use all the money budgeted.

For example in 2013, the county had about $708,000 left over in the county’s general fund that was included in the annual budget. It was funded but not used so this amount was rolled back into the county’s cash, or operating, balance. That operating balance can later be used for extra appropriations that are not included in the approved annual budget.

For 2015, the State Board of Accounts notified the county it would not receive the amount budgeted in the annual operating budget.

To handle the $1.3 million shortfall from the state, the council approved paying for certain line items with the EDIT fund. For 2015 the following budgeted items will be paid from the EDIT fund; Southern Hills for $323,818.00, FICA taxes for $400,000, Solid Waste District for $200,000, and Public Employee Retirement Fund for $425,000. That transfers $1,348,818.00 from the state funded general fund to the EDIT fund.

According to Kendall, the county will have to make budget cuts in the future if the shortfalls continue because they don’t want to deplete the Rainy Day Fund or EDIT Fund. “There is very little fat in this (county) budget,” Kendall said. “But, if we need to cut then we cut.”

The council also took the following actions.

–Rescinded the $50,000 appropriation for the wage determination study previously approved. The council decided that the reasoning behind doing the study was an over-reaction to the situation earlier this year county engineer, Jason Heile, left his position because of an offer for more money from Daviess County.

–Reviewed the scored the tax abatement application of Temple-Inland on the plant near St. Anthony.  The application was received on October 30. The tax abatement will span six years. The committee on tax abatements recommended the council accept the schedule and noted that a public hearing will be held in December.

–Also in the meeting last night, newly elected members of the council were in attendance. Becky Beckman, Craig Greulich, and Charmian Klem, along with County Commissioner Elmer Brames.

Jim O’Neal contributed to this report