TO: Department Directors
FROM: Garry W, Earls, P.E.
Chief Operating Officer
DATE: July 21, 2008
RE: 2008 Budget Policies
At the 2009 Budget Kickoff Meeting, you heard the Budget Director forecast that each of
the County’s general funds would become insolvent between 2010 and 2012 unless we
identify new, recurring revenue, or dramatically reduce costs. We face this situation due
to the convergence of several trends.
The costs to deliver services to our citizens have been growing consistently. Salaries
continue to increase and health care benefits are more expensive. Our aging facilities cost
more to operate and maintain. The cost of food and other commodities have risen
dramatically. And, as you are aware, gasoline and diesel fuel prices are at record levels.
We believe these trends will continue for, at least, the near future.
At the same time, revenues have failed to keep up with increasing costs. Revenue from
our two main sources is forecasted to decrease in the coming years. Assessed values are
estimated to decrease by 1.7% in the 2009 reassessment process due to the depressed
housing market. Sales taxes show signs of weakness as consumers have slowed their
spending and dedicated a higher percentage of their budget to gasoline which does not
produce sales tax revenue for the County. The 2008 budget included an estimate of 1%
sale tax base growth; however it is likely that we will have to decrease our projections
later this summer.
Our general funds all started 2008 with budgeted structural deficits. This means we
appropriated more in the 2008 budget than we expected to receive in revenues – in 2008.
To the extent this is true, we will use our fund balances to make up the difference. This
practice has worked well for us in the short term, but is unacceptable as a long-term
strategy. These structural deficits will worsen in the coming years to the point where our
fund balances will be exhausted and severe service reductions will be necessary to
balance the budget.
While part of the solution to this problem is to restrict budget growth in 2009, I do not
think it makes sense to wait. I feel strongly that we must take action now to protect the
financial health of the County. Therefore, I am instituting the following budget policies
for all County funds effective immediately:
Ø Complete Hiring Freeze
Departments may continue to submit “Request to Fill Vacancy” forms; however I will
only approve those requests that are critical to our mandatory operations or generate
sufficient revenues to support the position. Special attention should be paid to the
justification section of the form.
Ø Communication Equipment
Departments shall review the assignment of all cell phones, PDAs, and other electronic
communication equipment. Service for equipment that is not vital should be
discontinued.
Ø Contracts
Departments shall review all contracts with a special emphasis on consulting services.
Contracts that are not critical should be terminated or allowed to expire if termination
would result in a significant penalty.
Ø Purchase Orders
Directors shall personally review and approve all purchase orders exceeding $1000.
Discretionary spending should be stopped.
Ø Travel
Departments shall minimize the volume of travel requests. Although adequate staff
training remains important, only the most beneficial and cost effective trips should be
authorized. Aside from their normal review for compliance with the County’s travel
policies, I have instructed the Department of Administration to forward any questionable
requests to me for my review.
Your cost cutting efforts should be summarized in a written report to me, with electronic
copies to Pam Reitz and Paul Kreidler, by August 15th. This report should include detail
on the actions you have taken, the savings associated with each action, and an analysis of
the impact of the action. Special attention should be paid to any actions involving
positions such as the elimination of positions, delays in filling positions, restructuring of
job assignments, etc.
These policies alone will not fix our structural problems; however, they will allow for
some level of cost containment. Keep these policies in mind as you finalize your 2009
budget requests, which are due by August 8th. When we meet to discuss your 2009
budget in late September, you should be prepared to talk about the actions you have taken
in 2008, as well as the analysis of activities you could eliminate or reduce if necessary, as
was discussed in the Budget Kickoff meeting and in the 2009-2011 Budget Guidelines.
The identification and cost estimation of these activities is a crucial planning tool for us
for the next few years. Take the time to do them well.
cc: Pamela Reitz, Director of Administration
Paul Kreidler, Budget Director