County government has hit financial rough patch

July 26--HENDERSON, Ky. -- July was a rough month for Henderson County government -- and the next few months probably are also going to be rocky for Road Department employees.

Employees who are paid out of the Road Fund, which also includes the Parks and Recycling operations, bore the brunt of salary cuts approved Tuesday by Henderson Fiscal Court. Their workweek is going from 40 to 32 hours.

The average hourly wage of those employees is $15.28, so the average gross salary loss per month will be nearly $489 out of the $2,444 they had been getting.

Personnel in the office of County Clerk Renesa Abner, as well as most other hourly earners in the courthouse except for the Sheriff's Department, will be furloughed one day a month. For the average clerk's deputy, who earns $16.70 hourly, than means their paychecks will be $133.60 lighter per month.

Unhappy Workers

Some of the county's 218 employees are unhappy, although none contacted by The Gleaner were willing to have their name used for fear of retribution.

"Some of us struggle financially, something (Fiscal Court members) would know nothing about," said one.

"They were awful happy coming out of the courtroom after Fiscal Court to have just messed with people's livelihood," said another. "There is no one in our office happy."

Those good spirits probably could be attributable to relief. Interviews with Fiscal Court members this past week show they feel they narrowly dodged a financial bullet -- one they had not expected.

Judge-executive Hugh McCormick had been off work for about 10 weeks recovering from back surgery, so Magistrate Butch Puttman was acting judge-executive.

The second week of July things began to go amiss, Puttman said. "The cash flow became an issue when Hugh was off and I was filling in," he said. "I was in a panic. I'm not a numbers guy. There was a whole lot going on."

For several years the county has been dealing with severe cuts in coal severance tax and gas tax revenues More recently, it has seen an upsurge in health coverage, retirement benefits and operational costs

Coupled with that was the usual lean times of June and early July, when relatively little revenue comes into county government, and the usual mid-year insurance premiums that had to be paid.

There were more demands than there was money to pay the bills. The situation became so critical that the only way the county could meet its mid-July payroll was by dipping into its reserves and cashing a $500,000 certificate of deposit.

But that was just a thumb in the dike; more needed to be done.

A New Tool

The financial software that Treasurer Brenda Rider uses is 25 years old, and has limitations. County Attorney Steve Gold was called in at an early stage of the discussions about how to deal with the crisis.

He brought in his assistant, Kyle Evans, who "created an ingenious and robust spreadsheet that was capable of putting actual numbers to the various schemes that we were hearing about. We created that because I was afraid that decisions were going to be based more on conjecture than data," Gold said.

Gold said he was "pretty proud" of Evans' work, and hopes the tool will be used in future budget preparations. But he made it clear "all we did was put spreadsheets together that showed the county financial picture and make it possible for people to run their own scenarios. We were not involved in the formulation of policy."

"They looked at our numbers a different way," said McCormick. "They were showing the numbers were worse than we had anticipated. They looked at where we've been spending more than we had coming in over the years."

Overspending

Not counting payroll costs, the county spent $371,769 more from the General Fund last fiscal year than it had budgeted. The largest chunk of that was $120,664 spent at the Judicial Center. Those costs are reimbursed by the state.

But in nearly half of the line items in the General Fund the county had overspent its budget. Most of those expenses are not paid by the state.

"The thing that amazed me was the amount of things we were over budget on last year," said Magistrate Carter Wilkerson. "It was never showed to us that way. We're going to try to get (the treasurer) to use that."

McCormick said the county has altered the way it does business so cash flows more smoothly. "We've changed ... the way we're doing these things all the way across the board," he said. Where possible, payments will be made quarterly or monthly instead of annually or semi-annually.

After the recession hit in 2008, the county froze its property tax rate for eight years, which he said was probably a mistake. When the loss of coal severance tax revenue became apparent the court should have taken the modest increase allowed by law.

"I'm trying to keep from spending the way it's been spent before," he said.

Squires Speak

Some of the magistrates made similar comments.

"We need to keep doing what we've been doing: Back off working on the parks, overtime, make sure we need what we're purchasing," said Magistrate Bruce Todd.

"They overspent last year on the blacktop and we're a little bit heavy (in manpower) at the Road Department," said Magistrate Carter Wilkerson. "It kind of caught up with us. We're not broke. We've still got $4.3 million in the reserve fund, but it's dwindling down too fast. We need to cut back."

Magistrate Charles Alexander said he thinks the county should have started cutting spending three or four years ago. During that time, he said, it has spent "a lot of money out at the parks, a lot of money at the recycling center. And we have not increased funding through taxes for eight years, and we lost a huge amount of coal severance."

Magistrate George Warren said projects and programs that used to be funded with coal severance tax money will have to be re-evaluated.

The Future?

Most court members, however, expressed confidence that county government is back on the right track to financial health.

Alexander said the county will need to take a hard look at continuing to fund the recycling center and "it's not a secret we're looking at doing something about the ambulance service." The county currently has budgeted $264,622 as its share of ambulance costs.

But much of the cost cutting can be done through attrition, Alexander said. "The hiring freeze is going to be the crux of it."

"Hopefully it will work itself out in a couple of months and we'll get everybody back to work," said Puttman.

"I think we can work through this," said Warren.

"We're just trying to keep ahead of the game," said Todd. "I think we'll be all right."

"Everything's going to be OK," said Wilkerson. "We've got everything under control."

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