New projections indicate Ellis County’s budget is set to be balanced in 2019, but the county could face deficits in the future, County Administrator Phillip Smith-Hanes said Monday.
A five-year forecast was compiled by county officials in efforts to assist the commission with financial planning in setting the 2019 budget.
“First, this is based on a set of assumptions about how the future plays out,” Smith-Hanes said. “It’s hard to project five years into the future. The farther out you go, the less true those assumptions are likely to be.”
Factors that will determine actual numbers in the future include the county’s property tax rate, property and oil valuations, and cost of employee salaries and benefits.
A five-year spreadsheet presented at Monday’s county commission meeting predicts the county’s budget will be balanced through 2019. But projected trends indicate a possible deficit of approximately $2 million by 2020, potentially increasing significantly each consecutive year.
The projections indicate the county could face a budget gap of up to $11 million by the year 2023, though Smith-Hanes noted that likely will not be the case.
Smith-Hanes illustrated how the potential deficit could be reduced by making changes such as slightly increasing property taxes and reducing spending, though he noted the county’s year-end spending is almost always less than anticipated.
Sharp increases in health insurance costs for employee benefits also have been a significant obstacle for the county, he said, noting rates are expected to increase another 9 percent in 2019.
“It’s really difficult to construct a set of scenarios that gets us back into a positive position on an ongoing basis. We’d have to assume several best cases, high revenues and low expenditures,” he said. “I think this is a cautionary tale moving forward overall, but what it’s not is it’s not a crisis. We have at least two years to deal with these issues.”
County commissioners expressed appreciation for the information, but said they need to get to work sooner rather than later to shore up finances.
“We clearly are going to have to get a handle on it today instead of waiting,” Commissioner Barbara Wasinger said. “Let’s wait a couple of years and then we’ll deal with it? No. It has to be dealt with.”
When setting the 2017 budget, the county had asked all departments to significantly curb spending in order to close a projected shortfall of more than $4 million without raising taxes, and ended that budget year with excess revenue.
The 2018 budget outlook indicates spending could exceed revenues by approximately $3 million. That’s largely due to several large expenses that happen to be falling in the same budget year, Smith-Hanes said.
Discussions about county spending and future budgeting will be revisited at a later commission meeting.
“We’re going to have to roll up our sleeves,” Wasinger said.
In other business:
• The county commission presented longevity awards to employees and heard a report from Extension services.
• They also had a 10-minute executive session to discuss personnel issues.