Drowning in slush
It is a policy debate that should get a vigorous public airing. Until a couple of weeks ago, it was a little secret of an elite group of county officials. Now that it's out in the open, Jefferson County residents should be weighing in on a budgeting practice that takes money from today's taxpayers to benefit tomorrow's.
Jefferson County Legislator Scott Gray is forcing a debate in the Legislature over the county's practice of putting away millions of dollars in contingency funds in budgets that have increased spending and the tax levy without relief. Mr. Gray looks at the whopping 20 percent fund balance that the county is carrying, and asks "Why so much?" County administrator Robert Hagemann III pooh-poohs the question, saying that carrying $30 million in unallocated reserves for a budget of, essentially, $150 million, is just what the county should be doing.
Mr. Gray's point is that taxpayers are being hammered on all sides and that as such, taxing them more just to put money away for a "rainy day" that has no real spot on the horizon is a disservice to the people who pay for county operations.
And what Mr. Gray has not pointed out, at least to any Watertown Daily Times reporter, is that carrying these enormous fund balances forces today's taxpayers to pay for benefits that tomorrow's taxpayers will reap. This is eminently unfair.
Mr. Hagemann has managed to put away $20 million in undedicated funds in his rainy day fund. That is in addition to the $10 million the county is carrying in its stated fund balance. All of this money can be directed to any expense the Legislature deems necessary. And the Legislature largely follows Mr. Hagemann's lead when it comes to spending.
In Mr. Hagemann's largely hidden $20 million stash, he has put away a prudent amount of money – $8 million – to cover future costs of retirees' health insurance. This fund has been forced on the county by accounting rules put forth by the state, and for the county to maintain a decent bond rating, this probably needs to be done. But it is also reasonable to point out that the county budgets an expenditure each year to cover that year's cost of retirees' health insurance premiums. So this fund exists solely to cover a future county bankruptcy. Such a contingency appears, even in awful financial conditions, so remote as to be largely laughable.
Mr. Hagemann also has put aside $2 million for "compensated absences" – payments to people who leave county employment that have accrued vacation time. Interestingly, the largest percentage of county employees, those working under CSEA contract, cannot accrue vacation time. They are allocated a certain amount of vacation each year, and any that remains at the end of the year is lost. So if the entire CSEA staff left employment next Thursday, their accrued vacation time would already be in this year's budget under the payroll category; there would be no "compensated absences" that were not budgeted.
So you have to wonder – how does the county manager really justify this account? How much, for example, has the county paid out in unbudgeted "compensated absences" over the past 10 years? It's a question that skeptical legislators ought to be asking.
Other categories are equally questionable. Setting aside $1.5 million for "future software acquisition" is, frankly, absurd. It is this kind of squirreled-away money that allows the Legislature to turn a blind eye to purchases such as the proposed new $1 million telephone system – a system that more than one legislator has said might be had for much less. Because the county has a slush fund, expenditures like this are not given the proper scrutiny. The unbid 911 emergency dispatch system is another example of the county spending without thinking, or finding out whether they could get it for less.
Mr. Hagemann and Legislature Chairman Ken Blankenbush say that it's just prudent practice to "save" for that rainy day. The intimation has been that businesses do it, and the county should too. There is one important difference, however; businesses derive their revenues from willing customers who are seeking certain goods and services, can shop around for the best deals and then select the vendor of their choice – or decide not to buy at all. County government is paid for with compulsory revenue. Property owners have no choices whatever in the matter; they cannot shop for a better government, nor decide not to "buy" based on a cost-benefit analysis, nor decline to pay the government's cost of doing business. So the county cannot now, nor ever, consider itself a purveyor of "prudent business practices.'
In reality, Mr. Hagemann has built himself a little cone of financial power, one that you have to wonder whether it most benefits county taxpayers, or his own job security. And the Legislature, with only one or two real voices in the wilderness, has acquiesced sheep-like to the practice of steadily rising spending accompanied by rising tax levies. Mr. Blankenbush, in a display of political double-speak worthy of an Assembly candidate, trumpets decreasing tax rates. But tax rates aren't the measure of fiscal prudence because increases in the tax base, from revaluations and from new construction, can make poor budgeting look not so bad. The tax levy and the total expenditures tell us how well the county is managing its money, and both the levy and the expenditures continue to rise without relief. Slush fund building is a significant contributor to that.
It's September, so it's municipal budget season. It's time for Mr. Gray and any allies he may have on the Legislature to light a fire under Mr. Hagemann and those who blindly follow his lead over the proclivity for hiding money in the budget so that it can later be used to cultivate favor, wield power and spend off the budget. The county's taxpayers are near the breaking point, and any public official that ignores that should do so at his or her own peril.
