Budget constraints put Butler County incentive raises in jeopardy

Credit: DaytonDailyNews

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Commissioners warning raises could be smaller next year.

Credit: DaytonDailyNews

State decisions, online purchases and slow car sales are being blamed for a Butler County budget that likely won’t include incentive raises next year.

Finance Director Tawana Keels is painting a semi-bleak picture of the county’s finances next year, not because officials have been on a spending spree, she said, but because there are exterior factors putting pressure on the county’s revenues.

The biggest impact is fewer sales tax collections with the loss of Medicaid Managed Care sales tax. That means a $3.1 million loss to the county next year. Gov. John Kasich penciled in a lump-sum payment of $2.1 million to bridge the gap for the county but that money can’t be used for operations.

The state calculated the lump-sum payments based in part on a county’s reliance on the tax and its abilities to raise taxes. Commissioner Cindy Carpenter said that is a problem.

“I do think it’s a concern and something we need to pay attention to, is the way the state calculated the amount we should be paid for the MCO, based on our ability to raise taxes,” she said. “Unfortunately for the state we are not going to be raising taxes.”

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The commissioners met with State Sen. Bill Coley, R-Liberty Twp., and State Rep. Candice Keller, R-Middletown, recently, imploring them to find a permanent fix.

Coley told the Journal-News that creating a permanent fix isn’t going to be easy.

“We’re going to need another $600 to $800 million of cuts over what we’re getting from the House today, so it’s going to be tough,” Coley said. “But we want to help our friends in local government and do what we can to help alleviate their budgetary problems too. We’re going to try to come up with a program that takes care of people and we’ll do what we can do.”

Keller did not respond to requests by the Journal-News for comment.

Failing a legislative solution, Commissioner Don Dixon said the situation is probably “more dire” than many people think.

“We’ve got to cut some costs, we’ve got to rein in some expenditures and we’ve got to get ready for what’s coming down the road, in the next several months or maybe a year or two it’s probably going to be flat or going the other way…,” Dixon said. “This year we were lucky enough to give two percent on the base wage and two percent performance, that’s probably not going to happen next year. That two percent performance is probably not going to be in the cards.”

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County Administrator Charlie Young told the Journal-News the 2018 budget is far from set but next year is looking tough.

“I think it’s too early to tell,” he said about the raises. “But I think what we are trying to do is to make people understand that there are pressures on our revenue stream and 2018 is without a doubt shaping up to be a more challenging year.”

About half of sales tax collections come from car and boat purchases and Dixon said the auto industry isn’t very “rosy” right now. Property tax collections are flat. The commissioners need to consider buying new voting machines with a $4 million price tag and the state will likely only pay about half. These are all things Keels said they need to consider while crafting the budget.

Keels also said retail sales taxes are being impacted by the increase in online shopping. She mentioned the state’s Office of Budget and Management Director Tim Keen is projecting a $161 million sales tax shortfall, or two percent.

“He cites that retail deflation, the impact of e-commerce sales tax collections and the fact that U.S. households are saving more and taking on less debt for purchases, as reasons for the negative impact on state tax revenue,” Keels said.

She told the commissioners she called the new mega mixed use development Liberty Center and was told six retail establishments have closed.

During the recession, commissioners had considered raising the sales tax to make ends meet.

The county had $38 million cash on hand to start this year which is a $9 million increase over the 2016 beginning balance. The commissioners have set aside $6 million in a budget stabilization fund. Year-to-date general fund revenues are at $35.5 million but expenditures have only totalled $24.3 million.

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All three commissioners said they wanted to make other office holders and department heads aware of the financial constraints as they craft their tax budgets, which are due next week.

“We are doing well here in Butler County,” Commissioner T.C. Rogers said. “But just like in our own personal lives, there are pressures to maintain the same standards.”

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