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Officials examine budget

Tuesday, September 11, 2012

Clay County Council President Mike McCullough
Last week the Clay County Council met each day for budget hearings. The council met with each elected official and went over his or her budget line by line.

Some officials had already made cuts to their budgets. For others, the council had to make cuts.

According to Clay County Council President Mike McCullough, almost every county department had cuts to their budget.

At the beginning of budget hearings, the council knew they had to cut an estimated $300,000 overall from the funds supported by property tax. Realistically, the county needed to cut that amount in order to break even.

"By the time we were finished, we surpassed that," McCullough said.

The council was able to eliminate more than half a million dollars from the budget requests.

"That allowed us to have an operating balance," Clay County Auditor Mary Jo Alumbaugh said.

For the past three or four years, according to Alumbaugh, the county has had little to no operating balance.

"Without an operating balance, you find many units that have to go out and do tax anticipation borrowing, but Clay County has never done that," Alumbaugh said. "If we fall short in a fund, we borrow from fund to fund, which means there's no interest paid on that borrowing."

She explained that when the county does the fund-to-fund borrowing, it always pays back the amount borrowed by the end of the year, once the tax revenue is settled.

"We've never had to borrow money from an outside source," McCullough said.

This year, it doesn't look like Clay County will have to borrow any money, even from its own funds.

"Last year, we went in with a proposed $300,000 operating balance," McCullough told The Brazil Times. "The cuts we made this year will allow us to increase our operating balance to about half a million dollars."

"It's much more encouraging," Alumbaugh said. "One of the big things that helped us this year was when the state settled up the money they owed us that they had not been paying us. That was really what caused our problem last year -- that lower revenue."

In April, Clay County received $778,835.32 from the state of Indiana after state officials found $300 million that should have been but wasn't distributed.

The state revenue, as well as the county's operating balance, can only be used in certain areas.

"That money couldn't be used for the roads," Alumbaugh explained. "Highways revenue comes from highway distributions directly from the state and is not supported at the county level by property tax."

McCullough agreed.

"We're restricted by the Indiana State Board of Accounts on how we can use our funds," he said.

Meanwhile, the 911 Fund, which worried the council, is looking good for 2013.

Due to decreasing landlines, the state decided to charge 911 fees for cellular phones in order to keep the 911 dispatches running. The state took the average of the last three years' landline income in order to decide how much income each county should receive. However, the landline income has been decreasing during those three years, making the anticipated revenue insufficient.

"The state established a hold-harmless average for each county, taking the average of the three previous fiscal years," Alumbaugh said. "Clay County will receive $410,628 for fiscal year 2013 (July to July). The budget for calendar year 2013 comes in at slightly over half a million dollars, so you can see the problem."

"If those numbers hold true," McCullough said, "we're already $100,000 in the hole, were it not for the operating balance we went in with."

With the money the county had and the amount of money the state gave it, the council will be able to fund the 911 operations without subsidy for 2013, only because the council took $120,000 out of the Rainy Day Fund in 2012 in order to keep the fund in the black.

"We are anticipating that the amount of money the state sends us every year is probably not going to be sufficient," McCullough said. "So we are anticipating in the beginning of 2014, we may have to subsidize that out of our LOIT Public Safety Fund."

Because the council took the money out of the Rainy Day Fund, the operations for 2013 will be sufficient. However, the county will have to take money out of LOIT funds in order to maintain operations for the county's 911 dispatch services, including costs for office supplies, maintaining the telephone system, training, repairs, salaries and equipment.

As far as county debt, the only debt Clay County has is due to the Clay County Justice Center, which is supported by its own CAGIT revenue. The jail was refinanced in April.

Originally, the jail bonds were to be paid off by 2034. With the refinancing, however, the bonds could be paid off by 2028, eliminating six years. Through the refinancing, the county is estimated to have a gross savings of $3.7 million.

"We're still in good shape with the jail funds," Alumbaugh said.

Overall, Alumbaugh and McCullough agreed Clay County is in good shape financially.

"We're very pleased with where we're at," McCullough said, "the fact that we don't really have any debt, we've been able to raise our operating balance and we have an A+ credit rating. We could be a lot worse off. There are a lot of counties out there that are a lot worse off than we are."

The final passage of the county budget will occur on Monday, Oct. 1.

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