Lehigh County Executive
2011 Budget Message
August 31, 2010
The 2011 Lehigh County budget that I present today is a document that reflects the current economic times that we live in as well as the responsibility of county governments in Pennsylvania, and the larger purpose of all governments in a democratic society.
The 2011 budget will be smaller than this year’s $412 million budget by more than $20 million, a reduction of more than 5 percent. The total proposed budget is $390.8 million.
The $22 million less in spending comes from a combination of more than $7 million in employment and program cuts announced during the last few weeks, a $17 million drop in capital projects spending and less money for the Office of Aging in state funds.
The budget will eliminate 49 jobs and hold another 10 unfilled, dropping total full time employment in the county to 2,122 positions, which is lower than staffing levels in the county more than 20 years ago. There are three new positions proposed in the budget, two in the Sheriff’s Department for serving warrants and one in the District Attorney’s Office for the Central Booking operation. The redeployment of some positions into public safety to meet changing needs and priorities is consistent with what’s been done for the last five years. Since 2006, 51 positions have been redeployed to public safety while 150 have been cut, never adding a position without cutting at least two.
The 2011 budget continues the county’s focus on law and order and public safety. Nearly 63 cents of every county tax dollar will be spent on law and order, which includes court operations, the district attorney, the sheriff, corrections, probation operations, the coroner and the public defender’s office. The budget will spend $1.3 million per week on law and order operations, by far the largest part of the budget.
The remaining breakdown of 2011 county tax dollar spending is: 6 cents for the county match in human services, 2 cents for the Cedarbrook nursing homes, 14 cents for debt service and 15 cents for everything else.
The 2011 budget contains $671,992 in grant money to launch a Regional Crime Data Center, which will link information from all 17 police departments in the county, along with other agencies, to provide real time crime analysis and regionalized data to all law enforcement personnel. This center builds upon the successful joint initiatives with the District Attorney to centralize all bookings in the county, purchase and upgrade information systems for local police departments and the Safe Streets initiative that funds 10 new community police officers in the county.
Also in the budget is $2.7 million in unspent capital funds for a new coroner and emergency management facility in partnership with Cetronia Ambulance Corps. The center would be built on county-owned property in South Whitehall Township and would move coroner operations out of cramped space in the Old Courthouse and create new garage space for emergency response vehicles and equipment. The county’s share of the facility cost would be paid for with capital dollars saved on the recent under-budget completion of the renovation and expansion of the County Courthouse.
Although the total county budget is $390.8 million, more than half of the budget is not local revenue. For example, state and federal pass through funds pay for more than 95 percent of the human services programs and Medicare or a patient’s insurance or personal funds pays for stays at the Cedarbrook Nursing Home.
The county general fund spending for 2011 is $173.5 million. The general fund spending essentially has not moved from last year despite increased labor, health care and operating costs because they are offset by job eliminations and program cuts. The budget will rise only .001 percent, resulting in a general fund that is lower than it was in 2008.
The general wage increase for non-union employees who are not eligible for step increases will be just two percent. Employees eligible for a step increase will receive the 3 percent step increase but not the two percent. This is offset by our non-union employees paying 20 percent of the cost of their health care, an amount that is more in line with the private sector than most governments. We have started to meet our goal of achieving parity with our union employees through ratification this month of the new Deputy Sheriffs Association contract.
During the last round of contracts with our unions we were able to consolidate all of our employees into the same health care plan. Leverage with our insurance carrier increased dramatically and we realized millions of dollars in savings during the last four years. It’s vital in this round of contracts to achieve parity on employee contribution for health care, which is vital to future cost control.
The budget eliminates the Organics Recycling Center operation, which is not a requirement of county government and was a $666,691 line item in last year’s budget. The 2011 budget also eliminates the hotel tax-supported More for Children program, cuts the Quality of Life fund by 13 percent, freezes new funding for the Green Future Fund and cuts or holds level funding support to all outside entities, such as LANTA, the LV Planning Commission, LVEDC and community and cultural arts organizations.
These reductions – which, combined with workforce reductions, eliminates $7 million in spending -- are critical because revenues have declined significantly due to the national economic recession. The county will lose $5 million in revenue in 2011.
- Hotel tax revenue to county coffers is down 19 percent since 2007.
- The first four months of this year, hotel tax revenue to Lehigh County was 29 percent less than the same period in 2007.
- Investment earnings have slid from almost $7 million to only $1 million.
- Revenue from deeds is down 27 percent since 2008, almost half a million dollars.
- Losses in the stock market have more than tripled pension fund contributions in recent years, skyrocketing to $10.7 million in 2011.
- Real estate tax revenues have remained close to flat with any minor gains from slight growth offset by an explosion of assessment appeals that have stripped away nearly $1 million in real estate tax earnings in the past year alone.
- Employee health care costs will rise 5.5 percent to a total of $20.9 million in 2011, which includes $5 million in health care costs for county retirees.
The end result of the recession and the dramatic loss of revenues is that even with the deep cuts we’ve made we cannot sustain the full tax cuts that property owners were given in 2004 and 2006. Fiscal responsibility does not just mean cutting taxes, it means maintaining a financially sound operation at the lowest possible tax rate. As much as we don’t like it, the majority of the previous property tax cuts need to be restored and the millage rate set at 11.9 mills for 2011. This is a millage rate that is still less than what property owners paid in 2003 (12.39 mills) during booming economic times in the country and the county. While we don’t like the idea of eliminating the tax cuts we have worked hard cutting our government and making it smaller so that our tax rate can remain lower than it was eight years ago despite the worst national economic recession since the Great Depression.
Eliminating most of the tax cuts will generate $14.6 million of needed new revenue to the 2011 budget. The average property owner who now pays $615 in county real estate tax would pay $714, a $99 annual increase or $8.25 per month.
In addition, it is time that we restore fairness and accuracy to the way our real estate parcels are assessed. The 2011 budget contains funding to begin the reassessment of all real estate, which hasn’t happened in 20 years. Today, it’s estimated that only 18 percent of county real estate is correctly assessed due to the dramatic fluctuations in real estate values during the last two decades. Property owners are well aware of this problem. This year alone, more than 700 tax appeals have been filed. We lost more than $1 million on just last year’s appeals, which were half the amount of this year’s appeals. This is a two-year process that we propose to begin next year.
This is a difficult budget year. The pain of cuts and increases is spread across all groups from employees, to entities that rely on the county to taxpayers. What is critical in this process is that we strike the right balance to ensure that the county is operated in a fiscally responsible way that continues to protect and serve the public.
I remain committed to avoid short-term and short-sighted actions like spending down reserves or selling assets for one-time quick fixes to balance the budget. Controlling spending in previous years has left $4.4 million untouched in the much talked-about Tax Relief Fund, which was scheduled to have run out in 2008, but remains alive and well this year. We have taken a fiscally responsible approach to running Lehigh County and are on solid ground because of it. We remain fiscally sound and prepared to come out of this recession stronger than before. It is because of that approach that:
· We have a full time work force that is smaller today (2,122 employees) than it was in 1990 (2,200 employees).
· Along with fewer employees, we will have a 2011 budget ($390 million) smaller than the 2010 budget ($412 million) and a tax rate that will remain lower (11.9 mills) than it was eight years ago in 2003 (12.39 mills).
· We will retain a $20 million cash reserve (Tax Stabilization Fund). We are not eating up savings or going without a savings account and rainy day fund to accomplish this.
· Our pension fund is fully funded. Despite payments that have tripled, we are the rare government that is fully funded.
· The rating agencies have rewarded our approach. The county’s bond rating was upgraded twice by Moody’s Investment Service to Aa1 rating.
· Our debt burden is very low, about 14 percent of our budget payments. And, most of it goes out only twelve years, unlike many governments that extend debt as much as 40 years, increasing interest rates and payments.
· And, now our buildings and infrastructure are new and sound. We are in the final stages of the most productive capital project and maintenance program in the county’s history.
During the last four years, we built Coca-Cola Park, renovated and expanded our Courthouse, relocated and upgraded our 9-1-1 Emergency Communications Center to a state of the art operation, re-built or repaired more than 20 bridges, upgraded and improved our IT infrastructure, developed a Central Booking operation to help local police departments an expedite bookings, relocated and improved our Domestic Relations Office, and overhauled our Cedarbrook Nursing Homes for energy savings efficiency, reducing energy consumption by 20 percent, a move that we will repeat this year in all our government buildings. We built the Trexler Environmental Center and the Autism Resource Center, two one of their kind facilities. In addition, we invested tens of millions of dollars toward the preservation of open space, building nature trails and improving municipal parks.
The final phase of this aggressive capital campaign will be done in 2011. It includes the installation of solar panels on the government center and the new courthouse, which will provide 10 percent of the electricity for those buildings, the coroner and emergency management partnership with Cetronia, the Crime Data Center, a renovated and expanded community corrections facility that is currently underway, a detox and rehabilitation center for alcohol and drug abuse and continued investment in nature trails and the repair of bridges across the county. The money for all these new projects is already in place. We need not borrow any money to finish this work.