Jefferson County is spending more money than it takes in, and $3.9 million in expenses may need to be cut from the budget to right the problem.
Such was the report of Tim Stanton, county finance director, during the Jefferson County Commission's regular meeting Thursday.
According to Stanton, for fiscal year 2013, ending June 30, 2013, the county spent $1,085,000 more than it took in. For the current fiscal year that began on July 1, 2013, the expenditure level exceeded revenue coming in by $3.4 million.
"They're all reoccurring expenditures," Stanton said. "Between the budget results of last year and this year, it's a clear indication that there's some type of corrective action that we need to take or (the county commissioners) will totally expend your entire fund balance."
Stanton's presentation dealt only with the general fund for the county, and did not examine capital accounts or other accounts. He said he has been communicating with department directors throughout the county, and the general consensus is that the county needs to reduce its expenditures.
"You certainly do not have enough money to fund the county departments and also fund the component units and fund all the charitable organizations," Stanton said. "(What I'm presenting) is a scenario of how you can resolve the issues. I think it's up to the board to decide how much you want to cut and from where."
According to Stanton, charitable organizations in Jefferson County requested more than $260,000 in FY 2013. The figures he used in his report are based on the assumption that the county commission is not providing funding to any of the organizations.
"It's very important for a government entity to manage their fund balance and make sure it is at a healthy level so that you can maintain your liquidity in cash flow in the county," Stanton said. "For this year, my calculation is that we need to cut $3.9 million of expenses."
Stanton said the FY 2014 revenue is $21.8 million and FY 2014 expenditures are at $25.2 million, leaving the county with a budget deficit of $3.4 million. The June 30, 2013 fund balance was $3.1 million. If the $3.4 million dollar deficit is subtracted from the FY 2014 expenditures at $25.2 million, the revised expenditures must be brought down to $21.8 million to match the revenue coming in and balance the budget, Stanton said.
Stanton said the Government Finance Officers Association, the professional organization of finance officers for government entities, recommends fund balances should be a minimum of 16.67 percent of general fund operating expenditures.
"You have to determine what your fund balance should be based on that level of expenditures," he told commissioners. "You need to increase your fund balance by $500,000 this year."
Stanton gave each of the commissioners a packet containing nine financial policies, which, if followed, could help reduce the deficit and balance the budget. Among these is a policy for the capital fund and more information on how to manage the fund balance.
Stanton said the FY 2012 budget was balanced. Growth in the county government since then, especially the addition of new employees and positions, may have contributed to the deficit, he said.