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Making the Tough Call | Politics

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Making the Tough Call
Making the Tough Call

Making the Tough Call

By Commissioner Jeff Rader

It was a classic example of being stuck between a rock and a hard place. 

In the last official meeting of the Board of Commissioners (BOC) before the July 15 deadline to finalize DeKalb County's millage rate, I was asked to vote on a mid-year budget proposal.

It was the one submitted by the county CEO who, for the fourth time in two years, was asking for an increase in the millage rate.  I voted against the three previous requests for an increase.

But this time, there was no alternative budget proposal on the table.  Three of my fellow commissioners, who compose the BOC's Finance, Audit, and Budget Committee, were tasked with reviewing the CEO's proposal, but came back with no formal recommendation or counter proposal.

So the choice was either to approve the CEO's budget or stick with the BOC's budget from February. The problem with the February budget is that its revenue projections, in hindsight, were significantly off target due to the real estate slump, and had been overspent in many areas. Thus, the county would have run out of money later this year forcing a government shutdown.

Millage rate increase or government shutdown?  Hence, the rock/hard place analogy.

To avoid a millage rate increase in its February budget, the BOC eliminated $33 million in proposed spending from the CEO's proposal.  To do the same with the July budget would have required another $37 million cut in expenditures.

To cut another $37 million in the same fiscal year would be a tall order under any circumstances, but is not feasible with DeKalb's current government. Why? The CEO has not taken the comprehensive steps needed to improve the efficiency, top to bottom, of government operations, which in turn would lead to financial savings.  Several county departments and most constitutional officers (independently elected officials such as judges, prosecutors and sheriff) are unable or unwilling to adhere to assigned budget limits.

In 2009, the CEO promised, but did not follow through, to conduct a formal review of the county work force.  The BOC finally took the initiative to hire a group from Georgia State University for a staffing analysis that was presented in April 2010.  The study suggested that the county's work force was substantially larger than needed.  Rather than build on the study with more in-depth analysis, the CEO chose to criticize the report's methodology and findings.

In 2010, the constitutional officers, who operate independently of the CEO and BOC, refused to accept budget cuts necessitated by the country's economic crisis. The Chief Judge of the Superior Court threatened to issue an order from the bench, if needed, to restore proposed budget cuts. They refused to follow the lead of the county administration by furloughing staff in the last quarter of the year.  This year, most departments headed by constitutional officers are on pace to exceed the budgets assigned to them in February.

So, sticking with the February budget, without cooperation from the CEO and constitutional officers to reduce spending, meant the county would have run out of money later this year forcing a government shutdown. A shutdown would have curtailed essential county functions, especially the police, fire and sheriff departments, which comprise roughly half of the general budget. Hence, a shutdown was too drastic an option.

So given a choice between two bad options (i.e. rock and hard place), I reluctantly voted for the CEO's budget, which increases property tax bills by roughly 11 percent. Overall, county government accounts for one-third of property tax bills, the other two-thirds is to fund the county school system. Except for voter-approved bond levies and a 2009 Dunwoody budget “reset” that I opposed, the county has seen no millage rate increase since 2000.

The bulk of revenue from the millage increase eliminates the budget deficit so the county complies with its legal obligation to maintain a balanced budget. The remaining money is used to bolster the county's reserve fund, which was empty at the end of last year but is now budgeted at $22 million, the county's highest in more than a decade.  

Ideally, the reserve fund would have about $42 million, which represents one month of operational expenses.  Having a healthy reserve fund is crucial to restoring the county's bond rating, which was downgraded in March.  The bond rating dictates how much interest the county pays on borrowed money.  

That is especially relevant this year because the county is about to borrow a substantial amount of money for two purposes.  The first is to temporarily fund county operating expenses until money comes in from property tax payments.  This is the first time in my tenure, which dates back to 2006, that the county has to use this mechanism known as a tax anticipation note.  In previous years, there was enough cash in the reserve fund to pay the bills until property taxes were collected.

The second purpose for borrowing money is to fund a five-year plan to upgrade its water and sewer system at a cost of $1.3 billion, more than half of it due to upgrades mandated by the Environmental Protection Agency.

Going forward, the BOC is again pushing the CEO and the administration to reduce county spending, so that taxpayers do not have to bear another millage rate increase next year.  While the BOC can insist on spending reductions, it does not have the legal authority to compel the CEO to follow through on recommendations.  

Here are a few of my recommendations, some of which were included in the BOC's mid-year budget resolution (for complete content, see link at end).

•    Appoint an Internal Auditor
Last year, I sponsored legislation to structure an Office of Internal Auditor, which has broad investigative powers to root out waste and improve efficiency.  The legislation, which was approved by the BOC, calls upon my commission colleagues on the Finance, Audit, and Budget Committee to hire someone as the internal auditor (for details on the position, see link at end).
•    Put It Out to Bid
Many administrative and service functions are the focus of specialized companies that compete on price and quality.  Except for unique public functions such as police patrols, the county should seek out opportunities to outsource any function to save money. 
•    Resolve the Benefits Crisis
DeKalb's current benefit structure is overburdened and will become more so.  Health care costs for current and former employees continue to rise at an unsustainable pace. The county needs to structure its compensation package (wages and benefits) to attract a select workforce of highly skilled resource managers.  Public servants shouldn’t find advantage in retiring prematurely to collect benefits.
•    Fix the Broken Windows
Every illegal sign, derelict structure, abandoned car, illegal car wash, late-night speakeasy, and trash-filled lot is an invitation to take liberties with life and property.  DeKalb shouldn’t tolerate sleazy businesses that break the law.  If its communities are orderly and look like they’re on an upswing, people and businesses will invest in them, which will build up the tax base and make it possible to lower taxes.
•    Partner and Volunteer for DeKalb
Almost every important and legitimate government function has a volunteer component.  Policing, recreation, libraries, code enforcement, public welfare, etc. are all made better when the community lends a hand.  Saves money, too!  Volunteers are more involved and aware of government’s performance.  If volunteers can’t make an operation better, the county should consider outsourcing it.  Many non-profits are ideal vehicles for achieving these goals, and DeKalb should partner with them whenever possible.

Voting for a millage rate increase is certainly an unpopular decision. Regardless of which option I chose, there was a financial consequence to county taxpayers.  In the end, I made the tough call on which one was best for the county's long-term prognosis.

Independent Auditor

Budget Resolution

 3 budget intent item#5274E9.pdf (92.2 kB)

(Commissioner Jeff Rader represents District Two on DeKalb County's Board of Commissioners. He was reelected in November of 2010 for another four-year term.)