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Council rejects tapping reserves to focus on cuts

By Charles Swenson
Coastal Observer

It took Sel Hemingway just 15 minutes to show Georgetown County Council how it could erase a $2.6 million budget deficit for the coming year by drawing on its cash reserves.

“You can bang the gavel and go home,” Hemingway, the county administrator, told the council.

But instead he encouraged members to give him two weeks to come up with a plan to balance the budget with spending cuts that range between 3 and 8 percent of the budgets for general operations, Midway Fire Department and the Department of Environmental Services, which total $ 32.5 million.

Without the cuts, Hemingway forecast deficits that will add up to more than $8.2 million over the next five years. “What seemed easy, with not a lot of harm to services and people, has that sort of effect,” he said.

The council voted unanimously to give him time to draft a list of cuts. Those include reduced hours, consolidated jobs or “workforce reduction” for the county’s 570 employees.

“Nothing is off limits,” Hemingway said.

“It makes sense,” Council Chairman Johnny Morant said.

Other members said nothing until Council Member Jerry Oakley told Hemingway, “the silence is consent to your Plan B.”

“The easy way doesn’t solve the problem, it only deepens it,” Oakely said. “A tax increase is not an option.”

Property taxes make up 61 percent of the county’s $21.2 million in general operations revenue, and collections are forecast to rise slightly next year. But overall revenue is down as a result of reduced building permit fees and a cut in state revenue, both reflecting the downturn in the national economy.

The cost of general operations is up 2.5 percent, with salaries up 3.6 percent. There are no pay increases in the budget, Hemingway said. The extra payroll cost comes from staff added as a result of construction of the judicial center that is due to open this year.

His focus on jobs “is not to say we are over-staffed,” Hemingway said. But the recession has cut demand for some services, he said.

Morant noted that the county went through an internal evaluation of staff efficiency a few years ago. “We’re pretty lean,” he said.

Hemingway told council members he will also look at possible fee increases for areas such as recreation and the landfill.

The county budget for the fiscal year that begins July 1 needs $1.7 million worth of cuts in general operations to balance.

For comparison, the county spends $1.2 million on its library system and $1.3 million on its Parks and Recreation department.

Even going through the budget line by line, Hemingway acknowledged it will be hard to find enough small items to cut to make up the $1.7 million shortfall.

“We have gone through every line in every budget in every department with an eye to eliminating anything that’s unnecessary,” he said.

After salaries, the biggest expense for general government operations is utilities, which at $743,720 next year, are a third higher than in the current budget.

The Midway Fire and Rescue budget has a $71,480 deficit. That could be covered by dipping into the reserve, but Hemingway said he would look for places to cut in the department’s $3.1 million budget.

Environmental Services has a $572,384 deficit in its $6.6 million budget. Hemingway believes that can be eliminated by renegotiating an agreement with other local governments and Georgetown County Water and Sewer District to produce compost.

The compost facility was started in the 1990s, and the county was told it could make money on the venture. Hemingway said the county recently had an offer from someone who said he would take the compost if the county paid the transport costs.

If the county can cut costs to balance the budget for the coming year, Hemingway forecast a $126,590 deficit in 2011 and surpluses in the following years.

He expects building permits to rebound along with property sales, though even by 2014 he doesn’t expect them to return to the level seen in 2006.

Property taxes should also continue to grow slightly, he said.

While it would be easy to balance this year’s budget with reserve funds, Hemingway pointed out those funds won’t be available next year. He called that solution “a faith-based approach.”

“We would have to pray for a miraculous turnaround in the economy,” he said.

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