Start with revenue

Revenue needs to drive the budget process.
Reiterating the need for planning and delving deeper into the message he presented last month, financial consultant Greg Guerrettaz urged commissioners and council members Wednesday to begin making decisions about Jay County’s financial future during the first meeting of its budget committee. Those decisions, he said, should be based on how much money the county is bringing in each year.
“What I’m trying to do is instill in you that you need a process,” said the Financial Solutions Group accountant who was hired as an adviser after the county used $500,000 from its rainy day fund in an attempt to balance the general fund budget. “And the process is looking at everything.”
During a meeting that lasted two and a half hours, Guerrettaz told committee members Faron Parr, Ted Champ, Jeanne Houchins, Anna Culy, Bob Vance, Dan Watson and Doug Inman that money expected to flow into the county should be the basis for the annual budgets. (Inman, a county commissioner, was not originally a member of the group, but was asked to join after Parr suffered a loss in his bid for a fourth term in Tuesday’s primary election. Parr and Jim Zimmerman, who did not run for re-election, will both end their terms as commissioners on Dec. 31.)
Rather than starting the budget process by looking at requested appropriations (spending), Guerrettaz suggested another approach.
The first step is to forecast how much money the county expects to bring in during the coming calendar year.
County council should also decide how much of a year-end balance it would like to have in each fund. (Twenty percent of annual operating costs is a good goal, Guerrettaz said, with 10 percent as a minimum.)
Those two numbers, along with current balances, would then be used to determine how much money the county has available for spending. From there, it would be up to local officials to decide how to allocate those funds.
That process represents a challenge for Jay County, which has spent more general fund money than it has brought in during three of the last five years and is projected to do so again this year.
“This is a three-to-five-year mission for you to get out of a hole,” said Guerrettaz, who encouraged looking not just at the coming year’s budget but also several years down the road. “It doesn’t take long to dig the hole. Now we’ve got to dig out, but it’s tough digging out.”
The budget committee and Guerrettaz looked Wednesday at several parts of the budget — some that could help provide financial stability and others that have been a drain on county funds.
The cumulative capital development (CCD) fund falls into the stability category. It has mostly been used over the years for road improvements. With the state providing a one-time influx of local option income tax (LOIT) dollars earmarked for roads this year, Guerrettaz suggested paying for other expenses from CCD.
He also told the group that each department should have a five-year capital improvement plan — a schedule for equipment upgrades — rather than just replacing equipment as it breaks down. He added that all capital expenditures should be reviewed by the commissioners and planned for in the budget.
The longest discussion about a department that has been a budgeting challenge involved Jay Emergency Medical Service (JEMS), which was $146,817 in the red in 2015, projects to be $123,891 in the red this year. It has been helped via the rainy day fund ($300,000 in 2010, $400,000 in 2014 and $44,098 annual for a paramedic salary and benefits since Feb. 2014).
“This is one of the really important decisions for the 2017 budget. Are you going to keep (JEMS) at $1.3 million? Then my best guess is you’re going to need $50,000 to $100,000 more out of the general fund, and guess what happened to our balance?” he asked.
Essentially, Guerrettaz noted that the county has three options to make JEMS financially viable:
•Shift more tax dollars to the service, which would result in fewer tax dollars for the general fund.
•Generate more revenue for JEMS from other sources.
•Cut services.
“These are decisions that we’re going to have to make going forward because we’ve got to balance the budget,” said Champ, who was a vocal critic of using the rainy day fund to prop up the general fund this year. “The bottom line, to me, is if you’re going to offer this service, you’re going to have to get some help somewhere because we can’t afford to continue to do it without taking out of the general fund. And when the general fund is empty and rainy day is empty, then we have no choice but to make these cuts.
“But if we get on top of this now and make some hard decisions, that are probably not going to be the most popular thing in the world … we’re preparing this county for 10, 15 years from today, not just taking care of it today and tomorrow.”
Guerrettaz asked several questions involving the possibility of raising more JEMS revenue from non-tax sources, including whether Portland and other municipalities pay for the service, whether Jay County Hospital is charged for runs and if user fees should be raised.
Inman also asked whether or not a policy to accept all runs has been a positive or negative financially for JEMS, saying he brought up the question before but that it has not been answered. JEMS previously focused on in-county service, but in 2012 began making runs to transfer patients to facilities outside of the county. At that time, the policy was sold to commissioners as a way to bring in more revenue.
“To me, with all of these departments that are generating revenue, there needs to be cost accounting applied to them so we know, up or down,” said Inman. “How much are we supplementing this each year? Are they breaking even? …
“We should at least fundamentally know what it’s costing us to make a run with an ambulance, and we do not know that.”
Other funds that were looked at as possible ways to boost the budget were infrastructure and LOIT public safety. The former is predominantly used for roads but could provide some flexibility, while the latter is already being used to its full potential.
The committee also reviewed the budget for Jay/Portland building and planning, noting that it projects for a slight deficit in 2017. That problem, it was agreed, could be remedied with an increase in fees.
A review of the retirement center’s budget was put on hold after assistant directory Tammy Davis, who was one of five local officials in attendance along with recorder Betty St. Myers, building and planning director John Hemmelgarn and Jay County Development Corporation employees Bill Bradley and Ami Huffman, pointed out an error in the funding projection. The numbers will be adjusted for discussion at the committee’s next meeting, which is scheduled for 4:30 p.m. June 1.
Each department will be asked to present a three-year capital improvement plan to be reviewed at that meeting.
Inman summed up the goal.
“We’ve got to be proactive,” he said. “We can’t be reactionary.”