Budget Hijinks

MaryEllen Odell is playing games with the Putnam County budget. The ramifications could be costly!

Budget Hijinks

by Bernie Kosberg

 

Putnam County Executive MaryEllen Odell, supported by her close-knit team of Republican Party cronies, unveiled her proposed County budget for 2016 at the Putnam County Golf Course a few weeks ago.  An appreciative crowd of “party faithful” listened admiringly as Odell described the primary strategy she’ll use to keep taxes below the state-imposed tax cap and enable homeowners to continue to qualify for their state rebate. Odell plans to raid the county’s general fund to the tune of about $8 million, thereby depleting that stand-by reserve of better than 40% of its value in one fell swoop.

Incredulously, not one discerning question or comment was made by the audience regarding this questionable practice of spending down reserves, or the lack of a cogent plan to deal with future budgetary shortfalls. After gaining taxpayer confidence by staying within her budgets and keeping yearly increases low over the last several years - in spite of the excessively wasteful  spending and fraudulent practices committed at Tilly Foster and the PC Golf course - Odell now offers the truly outrageous:  She proposes to balance next year’s budget by appropriating reserve funds which are legal savings that are almost always entrusted for investment in capital improvements, such as infrastructure needs, equipment, and emergency essentials. 

By law, Putnam County is legally required to pass a balanced budget each year. But a budget that is balanced isn’t always one representing a healthy spending plan. At the most basic level, a justifiable operating budget is one in which normally-occurring revenues are equal to regularly-occurring expenditures, and extraordinary sources of revenue should only be used for one-time expenditures.

Regularly-occurring expenditures not only encompass the daily expenses of salaries and supplies, but also include long-term liabilities like retiree healthcare, benefits payments, and annual infrastructure maintenance.

For 2016, Odell plans to use better than $4 million of the reserve fund to pay for general operations.  Yes, general operations!  That’s like you and me using our hard-earned savings for everyday expenses and then patting ourselves on the back for our prudent budgeting.   

Odell also plans to use almost $4 million of the reserve fund to reduce pension debt incurred by the county’s underfunding of pension liabilities several years ago.   This one-time $4 million payment will, she says, “get this monkey off our back.”   Why make this huge payment now from the reserves?  The interest rate on borrowed money today is extremely low.  Why spend $4 million in one bulk payment when there’s scant chance it’ll ever be replenished and available when truly needed? 

For some time now, Putnam County has been accused of deferring maintenance on its infrastructure.  We see this in the condition of our facilities, in the weakening performance of our roads and bridges, in our lack of investment in business development, and in the scarcity of services for those in need.  Unlike underfunding pension liabilities, which will become the next generation’s problem, the reality of deteriorating programs and infrastructure is apparent today.

Reserve funds provide a degree of financial stability by reducing reliance on indebtedness to finance capital projects and acquisitions. During a significant economic downturn, the reserve could be used to moderate the need to cut services or to raise taxes. But, at present, our local economy is stable.  This money is not needed for current purposes and is being used, it seems, to prop up the current administration, which is at a loss as to how to create industry and foster economic development.

 

Accumulating cash for future capital expenditures and other allowable purposes is good practice.  However, under the Odell administration, we appear to be bonding one project after another, putting off till tomorrow what good practice says should be paid for today.  A strong reserve fund is best used to protect the budget against known risks: lawsuits, storms, or even gross financial mismanagement.

 

Is the Odell administration putting Putnam County in a precarious financial position by not carefully considering all of the risks this county needs to be protected against and indiscriminately spending down this reserve to foster its own best interest?   

 

Odell’s budget also offers few solutions to some significant problems. Putnam County has stopped growing.   Overall population is decreasing, while the percentage of senior citizens on fixed incomes is growing dramatically.  Economic development is almost nonexistent, as is small business creation.   The commercial tax base is stagnant.   The underemployment of women and young adults, and a sparse influx of new jobs into the county, is impacting family size; so is the cost of housing. There are almost no higher education and job training opportunities.  As our population decreases, school enrollment and the state’s per-pupil funding does as well, affecting the quality and quantity of educational services rendered.  All of these factors influence the value of real estate, creating a domino effect. 

 

As financial resources dwindle and our reserves disappear; as mandates imposed by the state increase and employee benefits swell - pension costs, contracted health care, salary and step increases - we can anticipate significant reductions in public services in order to keep pace.  This, coupled with a county government rife with cronyism, inefficiencies, and unsophisticated management practices predicts trouble ahead.  Is an insular county government - with no avenues for healthy discourse - what the residents of Putnam County really want as we face a challenging economic future?  

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