During the Mobile County Commission 2013-2014 budget meeting on Sept. 5, there was some good news… and some bad news.
The good news is the county saw an increase in projected revenue for the upcoming fiscal year. The increase will be $322,034 or .27 percent. In fiscal year 2013, the county received $120,950,169 in revenue. In 2014, the county is expected to take in $121,272,203.
The bad news came quickly from Mobile County Finance Director Michelle Herman.
“I will note that even though the county has a revenue increase, the expenditures have increased by much more than that,” she said.
That’s when Herman told the commissioners there is a $6,100,106 gap between revenues and expenditures. The shortfall is just .05 percent of the county’s total revenue expected to be collected so the gap didn’t seem extremely worrisome to the commissioners.
However, the county will still have to find $6.1 million to cut to present a balanced budget.
Before the recommendation for cuts started, there was more good news for county employees. They are set to receive some type of pay raise even with the cuts discussed.
There are two types of pay increases proposed for county employees. One way would be through a 2.5 percent increase in salary. The other would be to increase subsistence allowance from $5 per day to $10 per day.
A subsistence allowance was created in the 1980s, following a lawsuit by law enforcement officers. The allowance currently gives employees $5 for every day the person works an eight-hour shift. The money is paid to offset expenses the employee incurs during a workday.
The two types of pay increases would benefit different ends of the employee spectrum.
A 2.5 percent raise would be more beneficial for high paying positions because the increase would amount to more than the extra $5 per day. However, lower paying positions would benefit more in the short-term by having an extra $5 per day worked.
Both would be losing out in the long run if the y went with the subsistence allowance. The allowance is not reflected when calculating retirement pay.
“There are pros and cons to the subsistence allowance and a pay raise,” Herman said. “Also, the two options would be a nearly equal expense of $1.3 million.”
The raise does contribute to one of the largest increased expenses to the county’s budget —personnel funds. In 2013, the funding for personnel was $64,975,770. In 2014, that number is expected to increase by $2,700,023.
Regardless of the pay increase option selected by the county, it seemed during the Sept. 5 meeting that Commissioners Merceria Ludgood, Connie Hudson and Jerry Carl supported an increase.
Herman explained why the personnel funding went up.
“We have adjusted retirement expenses to the new annual contribution of 10.26 percent. This is an increase of nearly 1 percent — .99 percent — from last fiscal year,” she said.
Also, the allowance or raise will result in a $1.3 million new cost. Insurance rates have also gone up, but another cost associated with health care was created.
“We have been asked to budget an additional $500,000 for new fees that must be paid in connection with the affordable health care act,” Herman said.
The next largest increase for the 2014 budget is to transfer $1,142,534 more to engineering, which brings the amount spent in the upcoming fiscal year to $3,883,674.
The operational funding was increased by nearly $1 million with $231,000 of it going to postage fees for the license commission. The customer will reimburse the office for the postage. Another portion of the money will go for bank service fees in the revenue commission office.
Debt service only went up $732,968 and brought the total debt service for the county in 2014 to $10,739,150.
Herman said this is exactly where the county wanted it to be for the year.
After explaining why the $6.1 million increase was needed, the discussion of shrinking the $6.1 million deficit began.
Ludgood, Hudson and Carl didn’t seem daunted by the task. Hudson and Carl even presented some ideas on Sept. 5 that met or exceeded the needed amount of cuts.
Hudson was the first of two commissioners who made suggestions in ways to add savings to the budget, while still favoring a 2.5 percent raise.
Hudson suggested adding a 3 percent attrition rate for departments with more than five employees. This would result in a payroll decrease of $1 million.
By adding this, the county would not have to reserve the money for salary and benefits if someone was hired to fill the position, so essentially a hiring freeze in those departments.
“This would be a one-year adjustment because we have some things happening in this fiscal year that will make up the $1 million from attrition,” she said. “We can’t count that money yet because it’s considered phantom money, but it will be real soon enough.”
Another savings would come from taking the administration cost of $500,000 from the Fund 112, which deals with the road and bridge department. By removing the money from Fund 112 and placing it in the general fund it would be added to the overall budget and not tucked away in a specific fund’s expenses.
Hudson and Carl also had three recommended budget cost savings in common.
The first was to transfer $1 million from the Industrial Development Authority, which would still leave a balance of $2.75 million for the authority. Hudson went one step farther and suggested to stop the monthly transfers from the county to IDA. This would result in $2.75 million save.
The second suggestion by the two commissioners was to convert the county’s health insurance plan to Local Government Health Insurance Plan instead of being self-insured. The conversion would not be able to be implemented on Oct. 1, but if the plan were in effect for six months, then the savings would be $650,000.
The last combined suggestion from Hudson and Carl was applying funds derived from the sale of fixed assets such as land. The county is expecting between $1.2 million and $1.3 million from a land sell in 2014. The number is not yet reflected in the budget and Carl and Hudson suggested adding it to the sale of fixed assets line in the budget.
Carl said he knew some people might take issue with three of his ideas, but they were just ideas.
“This might not be a popular idea, but it’s just a suggestion,” he said. “We can decrease the animal shelter budget by $300,000 if we stop taking in every stray and do what the state requires us to do.
“Once again, this is just an area where the county can save.”
Under state law, the animal shelter is only required to take in strays, but not required to accept every stray animal.
He also suggested decreasing the budget of environmental enforcement by $200,000, which would decrease the custodial schedule by half.
Currently, the custodians clean Government Plaza every day and it costs the county $1 million. Carl suggested the staff clean only every other day or even every three days, which would mean a savings of $500,000.
Other suggestions from Carl are as follows:
• $100,000 transfer from marketing fund to General Fund
• $1,000,000 transfer from tobacco tax to General Fund
• $1,050,000 transfer of District Funds to General Fund
The discussion on Sept. 5 was the first of many to come for the county officials. The commissioners do not have to approve a budget until Sept. 30.