OLLIDAYSBURG - It's been six years since Blair County commissioners levied a record 7-mill increase in real estate taxes to address budget-balancing woes that became evident in late 2006, a year when spending exceeded revenue by $3 million.
Since then, annual audits have shown an improved financial picture for the county; the most recent report for the 2011 fiscal year showed a $4.3 million fund balance.
While county department heads are carefully watching the bottom line, there are danger signs ahead, which could lead to a further tightening of the county's purse strings, a tax increase or both - as soon as 2013, county officials warn.
Blair County Finance Director Robert Kuntz said Thursday that he continues to work on an end-of-year projection for the 2012 budget and on the 2013 budget. While 90 to 95 percent of the 2013 budget will probably mirror the 2012 budget, Kuntz said he is not yet ready to offer a prediction on a tax increase, layoffs or any other action to balance the 2013 spending plan.
"I'm about three-quarters of the way through the year-end projection, but I am still loading numbers for the budget," he said.
Based on last year's schedule, Kuntz has about a month to complete his tasks and come up with recommendations for commissioners, probably on Nov. 13.
Last November, Kuntz recommended the county cover the projected 2012 budget deficit with $457,359 from its fund balance, reasoning that if you have a surplus every year, it's OK to use some of it. But he also advised commissioners against repeatedly doing so and said a property tax increase might be in order for 2013.
Kuntz said his philosophy hasn't changed.
"If we continue to have deficit budgets and begin dangerously digging into the fund balance, then we're going to need a tax increase," he said.
Commissioners, who vote annually on property tax levies, await Kuntz' work. They've offered no promises about next year's budget, even though the most recent audit report showed the county with a $4.3 million fund balance.
That fund balance, commissioners said, could be wiped out by making a higher contribution to the county's pension system that was shorted in years past. Or, a portion of the fund balance could be used to help balance next year's budget, just like when the commissioners adopted the 2012 budget of $66.7 million.
The $4.3 million fund balance is no guarantee that the county will be able to continue adopting no-tax-hike budgets, Commissioners Chairman Terry Tomassetti said in August after hearing the audit report from David Scott of Young, Oakes, Brown & Co.
"At some point, it's going to end," Tomassetti said of the no-tax-hike budgets.
When Scott addressed commissioners, he said Blair County is like many government entities struggling to cover operating costs and fund its pension plan while its real estate tax base declines. But the auditor also praised county officials for efforts to control costs and clear away some accounting issues raised previously. The audit describes the county's financial situation as "strong."
"Our county is in a lot better shape than some other counties," Scott said.
While many counties do much of their budget work in the last three months of the year, a few have already assessed their finances and advised their residents of a pending tax increase.
In Mercer County, where the 2010 census counted 116,638 residents, 10,451 fewer than Blair County's 127,089 residents, property owners have been told to expect a tax increase for 2013. That prediction was offered in July by Mercer County's finance director, based on revenue shortfalls and budgeted expenses indicating the western Pennsylvania county would have a $2 million deficit by the end of the year.
On the eastern side of the state, Northumberland County commissioners recently announced their intention to increase taxes 20 percent for 2013, a move they characterized as a better alternative than raising taxes even higher. That county, with a 2010 population of 94,528, is also struggling with the current year's budget and intends to borrow $5 million to pay bills.
Closer to home, Bedford County leaders have spoken of furloughing employees to address a projected year-end $600,000 deficit, a factor that will likely influence that county's 2013 budget.
Blair County Controller Richard J. Peo said he foresees no problems with payment of this year's bills. But he said he does expect typical end-of-year delays with bill payments, linked to the arrival of revenue. As usual, Peo said, payroll and utility bills will be paid first.
Based on monthly reports tracking departmental expenses, Peo said he believes this year's spending is close to budget estimates.
"I give the credit to our department heads for that," Peo said. "They're not going over their budgets."
Six years ago, Blair County's financial picture was very different.
After years of carrying a fund balance and using portions of it to make up the difference between revenue and expenditures, then-county commissioners Barry Wright, Donna Gority and Terry Wagner voted in late 2006 to levy a 7-mill increase in real estate taxes for 2007.
At that time, the county didn't have enough money at the end of the year to pay back the $4.5 million tax anticipation note it traditionally secured at the beginning of the year to cover bills while waiting for property tax revenue to arrive. Commissioners opted for the tax increase so they would have enough revenue in 2007 to cover expenses.
In the years leading up to that fiscal crisis, county leaders admitted to being worried. With diminishing federal funds and predictions of cuts in state revenue, commissioners suggested the county's financial situation could go from bad to worse. To address that, they enacted a hiring freeze, rejected requests for salary increases and asked department heads to restrict spending as much as possible.
Since the 7-mill tax increase, Blair County's financial picture and its annual audit reports have steadily improved. While audits showed the county breaking even in 2007 and 2008, its reserve fund began growing in 2009, leading to the $4.3 million balance identified in the 2011 audit.
While the tax increase helped to generate the fund balance, changes in spending and general operations have helped, too, county officials say.
After taking office in January 2008, commissioners Tomassetti and Diane Meling joined Gority in a year that seemed focused on saving money.
Meling secured $85,000 in grant money for a study to identify options the county could pursue to save money. One suggested the county identify and distinguish mandated from non-mandated services, something Meling spoke of when describing the county's intent to close its solid waste and recycling department this month.
At one time, the state set up funding for the county department through a tipping fee. But that fee was later declared to be illegal, leaving the county to operate on reserve funds.
Opposed to having the general fund cover the department's costs, commissioners agreed this year to close the department and furlough six employees. The state mandates the county to name a recycling coordinator, something Meling says can be met by designating that title and related assignments to the Intermunicipal Relations Committee, a group formed by Altoona, Logan Township, Hollidaysburg and Tyrone where recycling is mandated.
Some other cost-containing efforts since 2008 include:
n The county reduced the use of constables to transport county inmates to and from the county jail and Central Court.
n Commissioners initiated a contract in 2008 with Affinity Healthcare of Indiana, Pa., for management of Valley View Home.
n Wages were frozen for a year for union and non-union county employees.
n The county cut health care expenses at the Blair County Prison by designating PrimeCare Medical Inc. of Harrisburg as health care provider for the inmates.
n Blair County sold its juvenile detention home in 2009 and now uses Cambria County's juvenile detention facility services.
n The county trimmed health insurance costs by creating a self-funded medical reimbursement account. In exchange for lower health insurance premiums, the county agreed to fund the reimbursement account that would cover higher deductibles.
Some other changes
When Tomassetti and Meling ran for re-election in 2011, both offered campaign materials pointing to their success with cost-cutting and operational changes that improved the county's bottom line. They pledged efforts to avoid future tax increases, but offered no pledge of voting against an increase.
Ted Beam Jr., who was elected last year, said in August that he was pleased with the results of the 2011 audit and its fund balance. He said he doesn't like the idea of raising taxes but that will depend on budget estimates.
Kuntz said he remembers telling commissioners in late 2011 that a tax increase may be needed for 2013.
"We're at the point now where we're running so lean that I don't know what more our departments could cut out," Kuntz said. "For instance, you can't tell CYF (Children, Youth & Families) that they can only investigate 90 percent of the complaints they receive."
Three yet-to-be-resolved employee union contracts have the potential to affect the 2013 budget numbers, especially in light of some county employees receiving atypical raises.
In August 2010, commissioners announced results of a study addressing the county's lower-than-average salaries and curb turnover. They approved raises for 61 employees, mostly non-union administrators and their deputies. Individual increments ranged from $1,000 to $7,500 annually, much higher than an employee's typical 3 percent raise, which amounts to $600 on a $20,000 salary.
Then in July 2011, the county salary board agreed to $2,500 raises for 20 staffers in the magisterial district justice offices, after Magisterial District Judge Paula Aigner offered a plea on their behalf.
And in late 2011, the county salary board granted raises of $9,000 to $10,000 for 911 department employees as part of a new work schedule designed to cut overtime, sick time and turnover.
Meanwhile, CYF employees have been working this year without a new contract. Each received a 2 percent raise in both 2010 and 2011.
Union contracts also need to be negotiated for 2013 with courthouse employees represented by the United Mine Workers of America and with the corrections officers represented by the American Federation of State, County and Municipal Employees. Both unions secured 3 percent annual raises for their members in 2011 and again in 2012.
Mirror Staff Writer Kay Stephens is at 946-7456.