It includes borrowing $2.8 million from an already shrinking reserve fund.
In year’s past, such savings were usually returned to be passed on to a new budget.
Haynes said this year, because of the downtown in the economy, there was no money to carry over.
“The problem comes next year,” he said. “You need to be careful in using the fund balance, because we are not sure what is going to happen with the economy.”
He is referring to what the North Carolina state budget might have in store for the counties when it is presented in the fall.
Already, the state has delivered some nasty news to the county.
The county has already given up some categories of sales taxes to the state to get rid of its obligation to fund part of Medicaid.
Haynes said that was still a good idea because of growth of expenses of Medicaid will be greater than any increases in sales taxes.
But, he said another $800,000 reduction in other sales taxes next year, “caught me by surprise.”
Some of that loss comes from the state changing distribution of many of the sales tax categories from that based on population to point of sales. When Richmond County taxpayers shop in outside counties, the taxes they pay remain in that county.
Haynes has been working on a budget with projected revenues for the county in the coming fiscal year to be down about $5 million compared to this year.
One reduction in revenue from state accounting Haynes said he didn’t see coming was when he learned the state set values of public service companies $200,000 less than last year. “I’ve never seen such a reduction before,” he said.
Those values include electrical, gas, railroad, gas and trucking companies.
The new Progress Energy $600 million expansion is not expected to enter the tax books until next year, and then only on what amount has been constructed by then.
Continuing to borrow from year to year from the county’s fund balance will deplete it.
When Haynes became county manager in 1996, the county had $200,000 in its fund balance. “That was one half of one percent of what the state requires,” he said.
The state requires county’s to hold back at least 8 percent of its annual budget in reserve. This coming year, that would be about $3.6 million.
“By pushing away the inevitable, we could end up with the same conditions the county was in 1996,” Board Chairman Kenneth Robinette said.
For the fiscal year 2008 to 2009 budget, Haynes recommended a tax rate of 83 cents per $100 of valuation. However, commissioners voted instead to have a rate of 81 cents down from the previous 93 cents. To do that, commissioners borrowed $4 million from the savings account to balance the revenue-short budget.
At that time, there was $13 million being held in reserve. Now there is $9 million. With the proposed $2.8 million borrowed from savings in the new budget, that would leave $6.2 million, still $2.6 million over the state-required amount for the 2010 to 2011 budget for a $45,471,645 budget.
Commissioner Thad Ussery said the county needed to cut back everywhere, “We can’t afford to go broke.”
To share the pain, commissioners said the county would have to cut back its payments to Richmond County Schools and Richmond Community College.
While Haynes said now may be a good time to use the fund balance savings account, “at some point it will have to be built up again,.”
Even if the economy “turns around,” Commissioner John Garner said there might be another revenue surprise from the state.
“We don’t know about the future,” Haynes said.
As examples of the downturn in the economy, Haynes said:
n Interest on county money in banks will be down $200,000.
n Property taxes will be down $400,000.
n Motor vehicle taxes will be down $100,000.
n Court fees are down $40,000.
n Register of Deeds fees are down $50,000.
n Deed stamps are down $50,000.
n All together, sales taxes are down $2 million.
Tax collections are at 96 percent currently, “And, there isn’t a lot more money there,” Haynes said.
n Contact reporter Tom MacCallum at 997-3111, ext. 15; e-mail tmaccallum@yourdailyjournal.com.
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