Faced with shortfalls in the general fund starting in 2020, Ellis County’s only choice next year is a trifecta of unsavory solutions: Increase revenue, draw on dwindling reserves, and find budget cuts.
That’s the verdict of County Administrator Phillip Smith-Hanes in comments Monday evening to the Ellis County Commission at its regular meeting in the Ellis County Administrative Center, 718 Main.
“I would suspect that budget solutions for 2020 will involve a three-way split of some kind,” Smith-Hanes said, “some additional revenues, some additional drawdown of reserves, and some budget reductions. Unless the three of you have strong opinions that one of those three things is off the table, I really don’t see how we don’t do all three of those things for 2020.”
Smith-Hanes on Monday presented the commissioners with a financial forecast that sets the stage as county department heads start crafting their 2020 department budget proposals. Commissioners at next Monday’s meeting will have to decide to tell them what tack to take.
Smith-Hanes said if the county carries $2.3 million into 2020, the bad news is that on the current trajectory it will eat into that by another $1.1 million, leaving a $1.1 million balance at year’s end to carry into 2021.
“That, as I’ve stated to the commissioners previously, is not a good number.” Smith-Hanes said. “That number needs to be closer to $3 million than $1 million, so that’s really a delta of about $2 million that we need to solve for in the 2020 budget year. Of course, in budgets there are two ways to change the ending number: Increase revenues and decrease expenses.”
Coming up with $2 million would require about a 10 percent cut in spending across the board.
“I think all of the departments will tell you that is not a number that is achievable without staff reductions,” Smith-Hanes said.
The other possibility is to increase revenue, but it’s unlikely the county could get $2 million by adjusting property taxes, given the state-imposed tax lid.
The most the commission could raise from property taxes is probably about $400,000, he said, falling $1.6 million short.
If the commissioners ask the public to approve a sales tax in the November 2019 election, it would be April 2020 before collections could start.
Assumptions in Smith-Hanes’ projection assume a 3 percent increase in salaries, as well as a 9 percent annual increase in health care costs, which has been typical.
County Commissioner Dustin Roths said he’d like to see the county come up with a three-year plan to get the shortfall turned around.
“We either have to start talking about services, we have to start talking about taxes, or we have to start talking about employee pay,” Roths said.
County Commissioner Butch Schlyer said a tax increase might not be enough.
“We’re probably going to have to see our taxes go up, I think that’s a given,” Schlyer said. “Even if they go up, we still might have to curtail some services.”