Venango commissioners approve budget; taxes to rise sharply
The Derrick, 12/20/01 By LISA THOMPSON

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PHOTO BY JERRY SOWDEN Commissioner Bob Murray makes a point during Wednesday's meeting.

Seeking to stave off service cuts and layoffs, Venango County commissioners reluctantly adopted a $7.1 million budget Wednesday that calls for a more than 30 percent tax hike.

The 1.37 mill increase will raise the real estate tax rate from 3.75 to 5.12 mills and generate an additional $1.8 million to help balance the county budget. The average taxpayer's bill will increase by about $55, Commissioner Bob Murray has estimated.

The commissioners hope the tax hike will help cover an anticipated revenue shortfall of as much as $490,000 this year, increased expenses next year, and help them avoid a similar revenue shortfall at the end of next year.

Expenditure cuts would not have resolved the problem, they said.

"In looking at the budget issues before us, one must first realize that our projected 2001 deficit is caused not by excess spending but by insufficient revenue. We will actually under spend the 2001 budget by nearly $400,000. Revenues, however, are now projected to come in more than half a million dollars short of budgeted projections. Revenues are comprised of taxes, departmental charges, intergovernmental transfers and investment income. Each and every one of those elements is now projected to be short," Murray said in an address delivered after the budget adoption vote.

"The argument has been advanced that county government is just like a household in that when expenses exceed income, spending must be cut. I agree. That is what we've been doing for six years. Venango County government is like a household in which one spouse has lost a job and the other has not had a raise in six years. And just like a household, that situation cannot be sustained indefinitely," he said.

He and Commissioners Deb Lutz and Larry Horn each expressed regret about the vote but said that the only alternative would be to cut jobs and services in the areas that deliver services to county residents such as the courts, human services, 911 and voter registration. Murray noted that while he has been in office the commissioners have overcome a number of "significant financial issues" with no real estate tax increase.

He termed this experience "gut wrenching and heartbreaking."

"I know that a tax increase will be a burden on every taxpayer, and sadly, it will be more than some can bear," he said.

"Today brings to a conclusion one of my most personally difficult times as a commissioner," he said.

"The bottom line is that expense reductions that would result in a no tax increase budget are not possible without significant corresponding reductions in personnel and services," he said.

Horn noted that counties, including Mercer, Crawford and Erie, are all facing tax increases this year.

"Everyone is in the same boat. It is not easy, but it has to be done," he said.

Lutz assured taxpayers that commissioners would continue to "work as hard as we can to monitor the budget."

What caused that shortfall remains under investigation. The commissioners and financial director Tammy Varsek have said a number of unique circumstances in this first post-reassessment tax year combined this year to make an accurate revenue projection difficult.

Part of the drop in collections is due to the fact that the tax base dropped about $14 million from the time that base was certified in November and February when tax bills went out. That drop would account for about $50,000 to $60,000 in tax revenue, Murray said.

But the source of the remaining shortfall is less clear. The commissioners say they expected growth in the tax base during the year that did not occur. In addition, they believed at the time they adopted the budget last year that the assessment office would institute interim pro rata tax billing for property improvements completed between tax billings.

That project fell behind schedule and did not occur as expected. Now under way, it should generate revenue for next year.

Varsek has noted that the revenue problem did not surface overnight. She said she issued a memo over the summer once signs began to surface that there would likely be a problem. But Murray noted the overall picture could not be discerned until the year's end.

The two said that it now appears that tax revenues will fall somewhere between $300,000 to $490,000 short of projected collections.

The $300,000 figure is based on monthly expense and revenue reports compiled so far this year. The second number is based on information on the actual state of each department's budget gleaned in meetings with row officers and department heads.

Murray said they set the 2002 tax rate based on the deficit "worst case scenario." Varsek noted that although the 1.37 mill increase should generate about $1.8 million, the county traditionally only collects about 86 or 87 percent of the amount of tax billed during the tax year.

Murray outlined the expenses pressuring the 2002 budget.

About $500,000 of the money generated by the tax hike will go to cover the anticipated deficit, he said. An additional $500,000 will be spent on budgeted raises and a handful of new positions.

Murray said most county workers, including salaried, union and non-union hourly employees, will receive raises of 3.5 percent. The commissioners weighed a wage freeze but felt it was important to continue their ongoing effort to bring county wages in line with those of the local market and other sixth class counties.

When dealing with what he referred to as a "lean" workforce, Murray said it is important the workers be "properly rewarded and compensated for the services they do deliver."

In addition to raises, the county expects to hire a few new people next year, mainly in the public defender's office, Murray said. As a part of the ongoing negotiations with the American Civil Liberties Union, the county has agreed to hire a full-time chief and two full-time assistant public defenders next year, as well as add a prisoner advocate and paralegal clerk to the office staff.

Two full-time attorneys, a paralegal investigator and an administrative assistant now staff the office.

Those changes made it necessary to budget pay raises for the assistant district attorneys as well, Murray said. Traditionally, those attorneys have earned more than the public defenders, but with changes made in the office this year, the assistant district attorneys were making less than the assistant public defender. To even things out between the two offices next year, Murray said each office would pay assistant attorneys between $36,500 and $38,500.

In other personnel matters the commissioners found it necessary to adjust a few other positions to more accurately reflect the skills and education required for the jobs. For example, in one such case, three second deputy row officer positions were bumped up a pay grade, Murray said. Adjustments also were made to a number of positions in the human resource office and for the jail warden.

The county also expects to incur additional expenses the commissioners have no control over, such as a ballooning court caseload.

"Although the perception is that the commissioners are able to control all of county government, it just isn't true," he said.

"We don't have control of the courts (workload) or the prison population. We have a number of state mandates we do have to fulfill, the most expensive of which is the placement of delinquent and dependent children," he said.

Due to changes in federal policy, the county now will have to help support the domestic relations office. That change accounted for a swing of 163 percent, he said.

The court supervision services budget increased by 82 percent, he noted. Staff and resources have been increased dramatically in that department over the last several years.

As with many other local governments, the county this year also had to contend with rising employee benefits and insurance costs. After much negotiation, the county still faced a 19 percent increase, the commissioners noted.

The tax hike approved Wednesday came as no surprise. Reports surfaced last month that the county was facing a shortfall of close to $750,000 this year and $2 million next year.

On Nov. 19, the commissioners circulated a memo to the row officers and department heads warning them of an impending shortfall that could reach $750,000 by the end of the year. It asked them to endorse a tax hike in writing or else silently endorse budget and personnel cuts.

In a follow-up interview, the commissioners, Varsek and Chief Clerk Denise Jones outlined the causes of the budget crisis. They noted that a handful of departments had experienced significant budget shortfalls due to things such as budgeting errors, invoicing errors, changes in federal reimbursement policies and skyrocketing utility bills.

But those items, which total about $300,000, likely would have been covered by contingencies built into the 2001 budget.

The main factor catapulting the budget into the red was a tax revenue shortfall, they said.