|December 5, 2011
Mr. Mark Grebner, Chairperson
Ingham County Board of Commissioners
Ingham County Courthouse
P.O. Box 319
Mason, MI 48854
Dear Chairperson Grebner:
I am pleased to present the 2012 Ingham County Budget as adopted by the Board of Commissioners on October 25, 2011. The budget is focused on the 2012 budget priorities and the long-term strategic planning objectives established by the Board of Commissioners. This budget will continue to assure accessible health care, support for public safety, assure judicial processing, encourage the use of appropriate sanctions for adult offenders, provide appropriate treatment and sanctions for at-risk juveniles, promote recreational opportunities, and foster economic well being.
This budget reflects the Board’s priorities including continued support for the jail and sheriff patrols at 2011 levels, a new $50,000 general fund appropriation to continue the jail tether program for indigents, increased use of the Ingham Academy, and continued support for indigent health care provided by the Ingham Health Plan and the Federal Qualified Health Centers.
The total adopted budget is $194.6 million, a $1.36 million or 1.14% increase from the 2011 adopted budget. Please note the overall budget increase is artificially inflated because 2012 represents the first year the Delinquent Tax Revolving Fund (DTRF) is included as a part of the overall budget ($4.5 million increase). But for the inclusion of the DTRF, the overall budget would have decreased by $2.3 million or 1.2%.
The general fund budget is $71.5 million, a $2.35 million or 3.2% reduction from the 2011 adopted budget. 2012 will represent the fourth consecutive year that the general fund budget has declined.
The total property tax levy supporting the adopted budget will be 9.5463 mills. The levies for County operations, 911, juvenile justice, Capital Regional Airport Authority, Potter Park Zoo, indigent veterans support, and Farmland and Open Space remain unchanged. The special transportation millage is increased slightly from a total of .4768 mills to .48 mills, due to the 2010 voter approved renewal which goes into effect for the 2012 budget year.
Clearly, the single largest contributor to the County’s multi-year budget shortfalls is the decline in property tax values. Property tax revenues have traditionally accounted for approximately 60% of the overall general fund revenues. Property values declined for the third year in a row, and will likely continue to decline through fiscal year 2014. The adopted budget includes a property tax levy for county general operations that will remain unchanged at 6.3512 mills. The operating levy will generate $41.34 million, a decline of $1.5 million or 3.5 percent, from the 2011 adopted budget.
During the initial stages of the budget process, the Controller’s Office estimated the general fund shortfall for 2012 at $5.3 million. The shortfall is the difference between projected revenues and what it would cost to fund services at current year levels. Overall revenues were estimated to be $2.8 million below the 2011 amended budget. This includes a decrease of $1.5 million in property tax revenues, a $1.5 million reduction in state revenue sharing, and a $100,000 decline in department generated revenues. Overall expenditures were estimated to increase by $2.3 million in order to cover the cost of current services.
The general fund budget was balanced with a mix of targeted reductions. Please note that the solutions do not include the layoff of any county employee. The solutions included but were not limited to the following:
Increase in the use of unreserved general fund balance from $1 to $2 million
- Continue the hiring freeze and 8 week hiring delay
- Assume a 1% savings associated with employee bargaining concessions
- Elimination of 13 Vacant FTEs
- Re-project Employee Health Insurance Costs
- Liability Insurance Decrease in Premiums and Rebate
- A reduction in the Health Department’s general fund appropriation, including attrition savings, an increase in Medicaid and Health Plan Management revenue, and jail medical savings
- A reduction in the Parks general fund appropriation
- Child Care Fund - Juvenile Delinquency Private Placement savings
- Child Care Fund - Foster Care Private Placement savings
- A reduction in controllable expenditures across the departments
- A net increase in department generated revenues
Similar to most units of government, a significant portion of the County’s budget is used to support employee compensation costs. In Ingham County, approximately 65%-70% of the general fund budget is personnel costs. It is not possible to continue to balance the declining general fund budget, on an annual or an ongoing basis, without reducing these costs. The 2012 budget reflects these realities and includes the following reductions in personnel costs: the elimination of 13 vacant FTEs, the continuation of the hiring freeze, and the continuation of the 8 week hiring delay. This 2012 budget also assumes a permanent 1% savings in overall employee compensation costs. The permanent 1% savings assumed in the budget will of course be addressed as part of the current collective bargaining negotiations for the 2012-2013 contract period. The 1% in no way represents the only cost cutting proposal that may be pursued by management at the bargaining table.
As in past years, the budget proposal included $300,000 in unallocated strategic planning initiative funds. Taking under consideration the recommendations of the liaison committees, the Finance Committee used these funds to create two new positions, continue an existing position for the last three months of 2012 (after the grant funding for the position has been discontinued), and to address backscanning needs related to the one of the county’s ongoing document scanning projects. The budget also includes $494,888 in contingency funds.
As we look ahead, we should assume that property values will continue to decline with a corresponding reduction in property tax collections. More specifically I would estimate that the property tax collections will decline in fiscal years 2013 through 2014 by an additional $1.5-$2.5 million per year. State and federal revenue sources are also likely to decline, putting even more pressure on the County’s future budgets. Therefore, we need to continue to plan ahead and implement long term cost savings ideas in order to get through the next few budget cycles without decimating our program priorities.
Despite all this bleak news, the County’s reserves remain steady. The general fund undesignated fund balance at the end of fiscal year 2012 is projected at $14.3 million and the Public Improvement Fund at $800,000. The budget stabilization fund should remain at $10.6 million through 2012.
I would like to thank the elected officials and judges, department heads, agency directors, budget staff and all others involved in the budget process for their assistance and cooperation in the development of this difficult budget. I would especially like to thank the county employees and unions for their cooperation and sacrifices in this time of fiscal crisis. The acknowledgment of the County’s financial constraints on the part of all involved will enable Ingham County to continue to provide the quality of services our residents expect.
Mary A. Lannoye
Ingham County Controller/Administrator