Douglas County government is facing some major budget issues that could require leaders to cut at least $600,000 from this year’s budget.

During a meeting with county commissioners and department heads Monday, County Administrator Craig Weinaug outlined options that included reducing personnel and services or increasing taxes to stem a continued decrease in revenue.

No decisions were made.

Commissioners Bob Johnson, Jere McElhaney and Charles Jones said they weren’t ready to hit the panic button.

“It’s important that we not be too dire about this today,” Jones said.

Weinaug said the county ended 2007 with about $500,000 less than projected in its year-end balance that is carried over into 2008.

“For the first time, starting in the last three months, we are now spending more than we are taking in on the revenue side,” Weinaug said.

The county is not off the revenue mark by much, but it will be a problem if steps aren’t taken now, Weinaug said. That’s because county revenue sources – property, sales and mortgage taxes and highway funds from the state – have increased by less than 1 percent from last year, he said.

At the same time, county expenditures are up because of inflation. Personnel costs are growing by 5 percent to 6 percent a year, with the bulk of that caused by cost-of-living and merit pay increases, Weinaug said.

Options outlined by Weinaug include freezing or limiting pay increases; limiting the hiring of additional personnel; or cutting the number of employees the county has through a selective hiring freeze and not replacing some employees who leave.

Weinaug offered other options that included reducing replacement expenditures, road and bridge maintenance and support to outside agencies.

In addition, Weinaug suggested removing three new positions created in the 2008 budget. Those positions were for two corrections officers at the jail and one officer at the juvenile detention center.

“We’ve gotten to the point now that whenever we want to add something new (to the budget) we’re going to have to be willing to increase revenues,” Weinaug said.

Complicating the budget picture, especially for 2009, is the national and local economic downturn in real estate sales and construction. County Appraiser Marion Johnson said he doesn’t anticipate the real estate market will improve this year.

Commissioners said they didn’t want to make any decisions Monday about personnel matters or increasing taxes. They said they wanted to study additional financial information during the next few weeks.

McElhaney said he thinks the county should consider doing away with cost-of-living pay increases for employees and base salary raises only on merit.

“I think we certainly are going to have to think about different ways of doing government,” he said.