Carroll facing budget shortfall of $2.7 million

By Allen Worrell -

Currently facing a shortfall of approximately $2.7 million to balance its budget for Fiscal Year 2017, Carroll County has pushed back its budget calendar.

During the April 11 meeting of the Carroll County Board of Supervisors, the board voted to amend its budget calendar for the coming fiscal year. With the changes, the board will now adopt and appropriate the Fiscal Year 2017 Carroll County school budget during its May 9 meeting. The board will also be presented with the county budget during the same meeting. A public hearing on the proposed Fiscal Year 2017 county budget will be held June 13, while a special called meeting will be held June 27 to adopt and appropriate the county budget and 2016 tax rates. The board was originally scheduled to be presented with the county budget in April.

“We are not ready to present a budget tonight, which is why (Interim County Administrator) Nikki (Cannon) is not presenting a budget tonight,” Carroll County Board of Supervisors’ Chairman Joshua Hendrick said. “Trust me, if we were ready, it would be there but we need more time.”

Some board members revisited the issue later in the meeting during Supervisors’ Time. Supervisor Rex Hill said he’s been reading board minutes back to 2009. He said each year the board fusses about the budget and the coming dire straits.

“We have a tendency to kick the can down the road. This year we have kind of kicked the can into a dead-end alley,” Hill said. “It’s going to be tight this year. I want to let everybody know up front it is going to be very, very tight. We have one of the highest property rates in Southwest Virginia. I don’t want to, and probably will not, vote for increasing taxes so we are going to have to make some hard choices in the budget.”

Supervisor Bob Martin said he knows this year’s budget cycle “is going to be bad.”

“I just don’t understand why we cut those real estate two cents and now that’s one of the options of getting some revenue,” Martin said, alluding to last year when the board dropped the real estate tax rate two cents per $100 of valuation.

Canon noted that while the county did cut the county’s real estate tax rate by two cents last year, the personal property tax rate in Carroll increased by 35 cents. Carroll also eliminated the county’s farm machinery tax rate.

“It was more of a shifting of the tax money for the budget process last year,” Cannon said.

Hendrick noted a recent report put the county’s budgetary gap at $3.5 million, but it is currently down to $2.7 million. Still, that’s not great news for Carroll County during the budget process.

“You have two options, whether it is local government or in a business, if you are doing a budget and you have a gap or shortfall, you either have to raise capital, cut costs or both,” Hendrick said. “Rex said kick the can, and I always call it kicking the can further down the road. Once you catch up to it you’ve got the option to either do something about it or kick it again. We are at the point of no more kicking the can.”

Hendrick said things have “worked out just right” with recent budgets, and the county has actually had to use a “little bit of cash balance” to balance budgets in the past. Hendrick, who serves on the board’s budget committee with Hill, said the committee’s philosophy is not to use the cash balance to balance the budget.

“It’s not a good practice and I can tell the rest of the board that is going to be a recommendation from Rex and myself as the budget committee – no cash balance to balance the books,” Hendrick said. “It’s a little bit different approach and that means more cuts or more capital raised. That’s a position I am willing to take. The difference is we have to figure out what the balance is between the two.”

Martin noted the board’s auditor recently recommended the county to have more in cash reserve. Hendrick said the county’s cash reserve has been down since he started on the board in 2012.

“Nikki would strongly recommend a higher cash balance, and I think that is the goal. My personal goal, and Rex would agree wholeheartedly, is we need to not rely on cash balance for operating and we need to increase the cash balance,” Hendrick said. “I can remember in 2011 when I was running the first time that was one of my goals then, to take steps in the county and work on increasing the cash balance. So far as a board we haven’t been able to do that. I know for me and Rex, we are kind of dug in and doing everything we can to move in that direction. It’s going to come at a price whether it’s cuts to the system or increases of capital. That is the reality of the situation.”

Hendrick said one of the main problems is the $15 million Qualified School Construction Bonds (QSCB) the county is now paying for the renovations of Carroll County High School and Carroll County Middle School. The county made a QSCB payment for the current budget year of $1.5 million through its cash balance, Hendrick said. Another $1.25 million QSCB payment is earmarked for Fiscal Year 2017.

“The fiscal budget we are working on now, there is no earmark money, number one, and number two, there is not enough money there to earmark and it’s still $1.25 million approximately we have to pay for that QSCB money,” Hendrick said. “That is a direct increase in our debt service that was not previously accounted for. There is no more kicking the can down the road. We are going to have to make some hard decisions.”

Martin said the great news with the QSCB money was it was an interest-free loan for 15 years. The bad news was it couldn’t be drawn out over 25 years.

“But by the same token I am a person that we have to find some positive, and the positive is that the county has renovated or even built new schools and we’ve done all that with very cheap interest money,” Martin said. “So we are way ahead, it just sort of hurts in the meantime. But some of these counties and cities that have to look into funding where the cost of everything has gone up…we are still ahead, but it’s just a tough time right now.”

Allen Worrell can be reached at (276) 779-4062 or on Twitter@AWorrellTCN

By Allen Worrell

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