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Hernando Today

County Tries To Spend Down Surplus

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By MICHAEL D. BATES

Hernando Today

Published: April 2, 2009

BROOKSVILLE - At the end of the calendar year, many people balance their checkbooks to see where they stand financially going into the next 12 months.

For example, when they get that final bank statement, they may discover they have anywhere from $20 to $2,000 left over. They will carry that forward into the following year.

In the same way, the county closes its books at the end of its fiscal year, which is Sept. 30.

Whatever is left in the budget is called the fund balance and is carried over as cash balance forward to the next fiscal year.

At the end of September 2008, the county had $37.4 million left over in its general fund balance, where property tax dollars generate much of the revenue.

With all the dire warnings emanating from downtown Brooksville about budget shortfalls, that may seem like a high fund balance to start 2009.

County Budget Director George Zoettlein admits $37.4 million is a good-sized amount.

However, he doesn't expect that to last once the county spends it down. In fact, he anticipates only about $22 million in that fund balance at the end of the 2009 fiscal year.

"We are spending it down because we realize it is a high fund balance," Zoettlein said.

Now he said it's time to bring it "back in line where it should be."

Four Major Reserves

So how will the county disperse the $37.4 million?

Zoettlein said it is a mix of reserves, operating expenses and a much-discussed judicial center that goes into the equation.

Of the $37.4 million, $4 million is restricted library grant money that must be used strictly for the library system.

So now the balance is down to $33.4 million.

Zoettlein said there are four major reserves that are included in the expense side of the general fund budget that account for $19.4 million.

They are:

• Reserve for contingency, used to cover unexpected minor expenses that may come up during the year. That amounts to $311,900

• Reserve for emergencies, for major disasters such as hurricanes. The county has socked away $5.8 million in that fund.

• Stabilization reserve, to be used in case of a significant economic downturn or severe revenue loss. There is $3 million in that fund. County commissioners are considering removing $500,000 from the stabilization reserve to be used for economic development incentives.

• Cash carry forward reserve, used to help the county fund government for the first two months until it starts receiving tax money. That reserve has $10.3 million.

The Rest Of The Money

After accounting for the $19.4 million in the four major reserve categories, the fund balance is now down to $14 million.

Out of that, $7 million was transferred from the general fund to the capital improvement fund to help pay for a proposed judicial center.

Another $4 million will be used to fund the 2009 operating budget and prepare for the expected economic downturn, Zoettlein said.

Of the remaining $3 million of the original $37.4 million:

• $1 million is for the cleanup of the contaminated former public works compound in downtown Brooksville.

• $500,000 went to fund the "post employment benefits," or the premium differential for retired workers who choose to remain on the county's health plan at their own expense.

• $1.5 million is the savings realized in jail expenses in 2008 that will be carried into 2009 to offset the cost of future jail expenses.

Ready For The Shortfall

That accounts for the $37.4 million fund balance.

But questions remain.

How much of the $37.4 million that's in the fund balance is budgeted to be spent between now and the end of the fiscal year, which ends Sept. 31?

Zoettlein estimates $4 million, to help offset expected expenses.

Additionally, Zoettlein said he will have to cut another $3 million from the budget after the state notified him March 18 of projections of revenue sharing and sales tax shortfalls. Also, interest earnings are coming in lower than anticipated, which will be another $500,000 loss this year, he said.

To make up for a projected $7.5 million shortfall for the 2009 budget year, Zoettlein said he will use $4 million carried over from 2008, which is part of the $37.4 million fund balance. Plus he is looking to cut budgets by another $3.5 million to make up the total shortfall of $7.5 million.

Zoettlein said the cuts will be across the board in every general fund department.

The county is expecting a $10 million shortfall in fiscal year 2010, due to lower property taxes and a falloff in sales tax, he said.

"The same things that are affecting our budget this year will continue into 2010," Zoettlein said.

Reporter Michael D. Bates can be reached at 352-544-5290 or mbates@hernandotoday.com.

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