Rising Inflation Complicating Fayette County Budget Talks

Fayette County Commissioners continued work on next year’s budget at a meeting on Thursday, June 23.

Some recent changes in state law provided counties with a little extra time to work on their budgets this year. They’ll probably need every bit of it to deal with rising inflation and other uncertainties in next year’s economic climate.

The County has not yet calculated projected revenue for next year. That number won’t be available until the end of next month, when the Fayette County Appraisal DIstrict determines the certified property tax roll - the value of all taxable property in the County. The current year’s budget stands at $26,847,146.84. A little over 60 percent of the County’s revenue in the current budget comes from property taxes.

At Thursday’s meeting, Commissioners grappled with planning for next year’s expenses. Some departments projected a doubling of fuel costs alone next year. They’re also facing pressure for raises from employees dealing with inflation chipping away at their wages.

Salary and benefit figures were mostly left blank on the worksheets that the Commissioners reviewed at Thursday’s meeting. Commissioners asked County Auditor Cindy Havelka to return at the next meeting with two sets of numbers based on a three or five percent raise.

“We’re not sold on either one,” said County Judge Joe Weber.

Commissioners learned last week that health insurance costs for County employees will go up by 6.9 percent, amounting to roughly $190,000. Since then, the Commissioners have discussed whether to split the cost with employees or absorb the cost and keep employee contributions the same. On Thursday, the Commissioners leaned toward the latter. They instructed Havelka to calculate the budget with the County absorbing the insurance increase.

That, combined with rising fuel and material costs, would add some significant expenses to next year’s budget.

At the meeting, Weber said the following: “I come from a background, working in the military, where they come up to the commanding officers and say, ‘You guys cut your budget by 10 percent. Go figure it out. What’s important to you? We need a 10 percent cut.’”

Weber asked the Commissioners whether the County could cut expenses while possibly raising salaries.

“Put the salaries aside, and what if we said every department needs to consider taking a 10 percent cut across the board?” Weber asked.

“I think it would be hard, with the price of materials going up,” said Pct. 1 Commissioner Jason McBroom.

“What would be the services that we would give up?” Weber asked.

“Less road maintenance,” McBroom said. “Reworking roads, paving roads – that’s our biggest expense. The other stuff, maintenance, we have to provide. When trees fall down, we have to provide that. But that’s also kind of low-cost.”

“This is what concerns me about road maintenance,” said Pct. 2 Commissioner Luke Sternadel. “If I have a road that’s starting to crack up, and it’s not really bad, then I can patch it and seal it. Shoot a little oil and cover it up with rock and seal coat it, and that road will hold up for quite a few years. But say I cut back, push it off another year or two. It finally gets to a point where you can’t seal coat it. You can’t patch it. You have to plow it all up and start over.

“It’s like having a leak in a roof,” he added. “If you don’t put a new roof on it, you’re going to replace the building in a couple of years.”

Weber said economic factors could force the County to cut services.

“We’re in a recession and inflation is 10 percent,” Weber said. “The County has got to know we can’t do what we did before. We’re going to have to make a decision about what the priority is.”

“Where do the salaries come into that discussion?” asked William Bernsen, a recent Republican candidate for County Judge who attended Thursday’s meeting. “Are we planning a three percent raise for all County employees every year?”

“I don’t know, that’s something we have to talk about,” Weber said. “We gave them a three percent raise last year, and inflation is 10 percent, so they’re seven percent behind … As an employer, I’m trying to look out for them, too.”

Bernsen said he doesn’t believe workers in the local private sector will see such an increase to their wages and benefits.

“We’re looking at three percent and five percent, but when we get our projected revenues and expenses, we may not be able to give anyone a raise,” Weber said. “I think we’ve got to kind of give them something.”

“It’s probably going to have to be a combination,” Bernsen said. “You might not be able to seal coat all the roads. It’s going to be some of that, too.”

“That’s what I’m saying,” Weber said. “But the people ultimately paying for this are the taxpayers.”

McBroom said the four road and bridge precincts can cut costs more easily can other departments.

“We can just say, ‘You know what, we’re not going to do this road this year,’ and we just save $78,000 in a blink of an eye,” he said.

The Commissioners took no official action on the budget. They still have all of next month to finalize the details. A looming question remains about next year’s property tax rate. So far, Commissioners have not addressed the tax rate in their budget discussions. The rate currently stands at $0.464 per $100. Property appraisals took a big hike this year. Most residential properties in the county increased by 15 to 20 percent, with some areas seeing even greater increases.

Accordingly, the County could see a big jump in revenue next year even if the tax rate remains flat. Recent changes in state law, however, provide property owners with some protection from rising taxes. The law would force a tax election if revenue increases by more than 3.5 percent over the previous year. Depending on the value of the certified tax roll, to be announced by the end of next month, the Commissioners Court might decide to lower the rate in order to avoid an election.