By Cheryl Splain, KnoxPages.com Reporter
MOUNT VERNON — A recent report from State Auditor Dave Yost's office shows Knox County is in good health financially. Ironically, the good news means county residents will probably see a hike in the county sales tax in the near future.
Yost's office rated Ohio's 88 counties on 17 financial health indicators for 2015. Knox County received positive outlooks on 16 indicators and a cautionary outlook on the indicator relating to the unassigned fund balance in the county's general fund.
Commissioner Thom Collier told KnoxPages.com that the idea behind the ratings “is to show where counties were in fiscal health overall.” The problem, however, is that counties can be penalized for being fiscally prudent. “Something we're required to do to keep our bond rating up, you can be penalized for,” he said.
The unassigned fund balance is the amount of money the county has not allocated to anything. “When we carry over what we don't appropriate, it helps us pay our bills the first of the year,” explained Bemiller.
“I think people confuse carryover with a rainy day fund,” said Collier. “It's not a rainy day fund. We carry over because our tax collections come in February, and we don't see that money until March or April. We have to [have carryover] to meet payroll and pay bills until then.”
“And you have to have money for emergencies,” said Commissioner Roger Reed. “If we have a roof blow off or need a new chiller, we have to have the money to fix it.” Both of these scenarios occurred.
The bad news doesn't stop with the caution flag on the unassigned fund balance.
“As part of this report, it appears that the governor's office is looking at how they fund local government,” said Collier. “It's based on what they call capacity: Do you have a carryover? Have you given raises to people? Have you assessed all of the tax you can locally? If the answers to those questions are yes, yes and no, which ours are, we're not going to be getting any relief from the state.”
It is because of the cuts in funding that Reed believes the motive behind the financial health indicators is that Gov. John Kasich's administration is deliberately looking for ways to cut its budget.
Bemiller said the county will lose $500,000 a year due to the discontinuance of a tax on Medicaid managed care organizations. To make up for that money, the state is giving counties a one-time reimbursement. Knox County will get less than one year's reimbursement. Morrow County, which assesses the full amount of sales tax allotted to it, will get between 3.5 and four years of reimbursement. Vinton County will receive 25 years worth of reimbursement.
“For being efficient and being prudent, we get penalized because we don't have a 'need,'” said Collier.
“Ordinary citizens were hit by the recession. We made 20 percent cuts in 2009 and 2010; we tightened our belt,” said Bemiller. “We came through, but we keep getting our funds cut. We have a lot of capital and infrastructure expenses we neglected during the recession; we want to get back on track.”
Bemiller said that in addition to capital and infrastructure expenses, there are other needs. The increasing use of opiates and heroin has required the hiring of an additional prosecutor and sheriff's deputy, the county jail is completing computer/security upgrades and the county just purchased a body scanner for the jail to control drugs and other contraband.
The public defender's office is another area where costs are rising but reimbursement is lower. A new state mandate requires the public defender's office to have parity with the county prosecutor's office in terms of salary, supplies and space, among other considerations. The state previously reimbursed the county 50 percent of expenses; that was cut to 45 percent, and for 2018, the rate will be 41 percent.
“We have a lot of these mandates, but they don't come with funding, or with enough funding, and yet services have to be rendered,” said Bemiller.
“We have $90 million worth of buildings we're responsible for,” said County Administrator Jason Booth. “During [the recession] capital expenditures were on hold, and now it just snowballs.”
Collier said the county is “bursting at the seams” in terms of space for the Court of Common Pleas, public defender's office and probation office. “We're constantly having a need for more space, which means having to get more parking, more offices and more upkeep,” he said.
The cuts in funding, increasing expenses and being penalized for good financial health have brought the commissioners to the point of considering an increase in the county sales tax.
The last increase was in 1994 and raised the rate to 6.75 percent; one-fourth of that is dedicated to 9-1-1. All of the counties adjacent to Knox have a 7 percent or higher tax rate with the exception of Holmes County, which is at 6.75 percent. The commissioners have to make a decision soon.
“We've held the line and are approaching the point of no return,” said Collier. “Increasing the sales tax has to be a factor in our decision. We only have so many ways to collect funds.”
“The attitude of the state is going toward self-sustaining counties,” said Bemiller, adding that she views it more as a partnership in terms of collecting state money and enforcing state legislation. “We are doing the state's work, but the attitude is changing toward local government and they don't want to fund us.”
“The state's forcing us to put the sales tax on, and that's a doggone shame,” said Reed.
Booth said he has been doing a lot of strategic planning with county department heads trying to forecast budget needs for additional staffing, elevators, concrete, parking lot and roof improvements for the Knox County Jail, and other infrastructure and capital projects.
“We want to have a lot of information behind us before we make a decision, because we want to be able to explain to the citizens [why we're raising the rate],” said Bemiller.