Some serious financial belt-tightening is ahead for Douglas County leaders as they start work on the 2009 budget.
If the county maintains the same level of services it is providing in 2008; adds no employees but gives workers a 1 percent cost-of-living pay increase; and provides funding for an industrial park, the county's share of the mill levy would increase 5.75 mills, County Administrator Craig Weinaug said.
A mill is $1 in taxes for every $1,000 of assessed property valuation. That much of a mill increase would mean about $130 in additional tax on a $200,000 house. And that does not include what would be needed for school districts and cities.
Weinaug doesn't expect county commissioners to allow that much of an increase. He will hold a preliminary budget discussion with them at tonight's commission meeting.
"That budget will have to include difficult choices to get it down to a workable number," Weinaug said. "I recognize that it's certainly not feasible or appropriate to increase the mill levy by that amount."
Cuts are ahead
Weinaug said he has identified a significant number of expenses in the budget that commissioners could cut. How much those cuts amount to will be worked out during the next couple of weeks as commissioners meet with department heads and hold public hearings, he said. He wasn't ready to discuss those cuts during an interview earlier this week.
The downturn in the U.S. housing market as well as skyrocking oil prices are taking a toll on county funds, Weinaug said.
Most of the county's budget is funded by property taxes. A big hit was taken recently when the state reported that assessments on properties such as railroad beds and utility improvements declined by 10 percent - double what was expected, Weinaug said. That's a loss of $170,000.
That 10 percent downturn affects the overall assessed property valuations in the county, which is now up only a tenth of a percent from 2007.
Last year, the assessed valuation had increased by 3.5 percent from 2006, and the year before saw an overall increase of 5.52 percent from 2005.
And the ripple effect continues.
Mortgage registration tax revenue is $750,000 lower than budgeted for 2008, and Weinaug said he doesn't expect it will improve in 2009. That would cause another $750,000 loss. The net effect of the revenue loss on the 2009 budget would be 1.313 mills, he said.
The county's general fund ending year balances in the recent past have averaged $1.19 million.
But not this year.
"We are currently projecting that this balance will likely be depleted in 2008," Weinaug wrote in a budget memo to department heads. "Replacing this balance would require a mill levy of approximately 1.042 mills."
Weinaug also noted that the 2009 budget will include a 12 percent increase in health insurance costs - about $1.05 million in additional costs.
Other revenue reductions include drops in interest rates on county investment and checking funds by about half, Weinaug said.
Costs on the upswing
Just about all materials used for maintenance of roads and bridges are oil-based, Weinaug said. Transportation costs also are increasing because of fuel prices.
Commissioners can "hide" the problems for short periods by delaying road maintenance and purchases of replacement vehicles such as sheriff cars and dump trucks, Weinaug said.
"In the short term you can get away with that," he said. "What happens over the long haul is maintenance costs go up and eventually you still have to replace police cars and maintain roads."
Commissioners will meet at 6:35 p.m. today on the second floor of the courthouse, 1100 Mass. Most of the budget discussions, however, will be conducted during the next two weeks.
Last year the county reduced its share of the mill levy by 0.013 mill.