A five-year projection of Chemung County’s finances shows a gap between revenues and expenses continuing to widen, cutting deeply into the county’s fund balance if current conditions continue.
The county’s long-term general fund plan, presented this week to the legislature’s budget committee, shows a fund balance that was $23 million at the end of 2016 could dwindle down to $5.87 million, or 4 percent of the county’s operating budget, by the end of 2020.
As of May 30, a document officials call a map to the county’s financial future is charting a path to continued losses.
“We’re spending down our fund balance,” said Budget Director Steve Hoover. “If we don’t change course, we’re going to have to either increase revenues or decrease expense, and what that means is tax increases or service cuts or a combination thereof.”
The long-term plan projects Chemung County’s expenses outpacing revenue growth for the next few years, with an estimated $1.69 million deficit in 2017 growing to a $6.68 million gap by 2020. Revenues are projected to grow $3.15 million from 2017 to 2020, while expenses are anticipated to increase by $8.15 million in that same time period.
Sales tax receipts — which made up 25 percent of the county’s revenues in the 2017 budget — have been on the decline, and the county is paying more in costs to absorb some City of Elmira employees as a result of shared services agreements enacted in the last few years, Hoover said.
Meanwhile, salary and health insurance costs continue to increase, and the county’s largest source of revenue — sales tax — isn’t growing, although Hoover thinks the declines have bottomed out.
The county’s $21.6 million in sales tax collected so far in 2017 is only about $113,000 less than what was collected in that time in 2016, Hoover said. Sales tax revenues increased 1.3 percent at the end of the first quarter compared with the first three months of 2016.
While the property tax rate in Chemung County has decreased or remained steady each year since 2005, Hoover warned that practice could come to an end if the structural deficit continues.
The ultimate decision to raise taxes is left to the elected county executive, but Hoover said he’d recommend a tax increase once the fund balance dips below the recommended 10 percent of the total operating budget, an event projected to occur in 2019.
But for now, County Executive Tom Santulli doesn’t anticipate raising taxes. County leaders are always looking at ways to streamline operations in the face of state-mandated programs — which cost the county $37.7 million in 2017 — and other financial conditions, he said Thursday.
Several initiatives have already saved the county millions, he said, including health insurance changes, shared services, a change in the employee salary step system, and selective filling of vacant positions. And an increase in sales tax, should that occur, would further ease the burden.
For Santulli, the long-term plan shows “what we need to do from a revenue standpoint and an expense standpoint to stabilize our finances, keep a reserve and hopefully not raise property taxes,” he said. “My goal is to come out with a 13th (consecutive) no tax increase.”
Chemung County 15th District Legislator Rodney J. Strange opposes any raise in the county property tax and believes the county’s finances are on the rebound, “We are seeing more economic development, more jobs and our sales tax beginning to trend in the right direction after a long period of a downward spiral,” Strange said, “I think better times are ahead in terms of a better economic outlook for our county.”
Over the last few years, Chemung County’s financial position has benefited from one-time revenue sources, Hoover said. In 2016, those amounted to about $3 million, including a $700,000 tobacco settlement, $800,000 in license fees from Tioga Downs and del Lago casinos, and about $500,000 in revenues from boarding out-of-county inmates at the Chemung County Jail.
About $1.3 million from the sale of the former Sikorsky building will serve as a revenue boost in 2017’s budget, Hoover said.
The long-term projections mainly serve to encourage a look at further efficiencies before it’s too late, he said.
“It’s not bad news if we react,” Hoover said. “It’s only bad news if we simply watch the headlights and just stand still.”