Pulaski County could see annual funding shortfalls of $2.7 million within the next few years, if it remains on its current financial path. Consultant Jeffrey Peters presented the first part of a fiscal plan to the county council and commissioners Monday.
He said that while the county has good cash reserves, the current trend is not sustainable going forward. “You’ve consumed about a million dollars in cash in the last four years in the General Fund, and when I look at 2019, you are upside-down considerably,” Peters said. “So if I average, going forward, out of ’19, the amount that you’re under is about $815,000 a year.”
But it isn’t just the General Fund that’s struggling. Peters said the Special LIT Fund had $2.3 million in 2015, but expenses began to exceed revenues in 2017, and the fund started this year with less than $750,000. Similarly, the public safety income tax is bringing in about $510,000 a year for the county, but $736,000 was budgeted to be spent this year.
Making matters worse is the fact that the special income tax that was implemented for the construction of the Justice Center is set to end next year. “That’s not typically a problem if you’re only paying for the jail infrastructure because the debt service payments also fall off in 2020,” Peters explained. “The problem is you are using a considerable amount of that for the operations of the jail. There is no mechanism to replace that. There is no appeal to the state Department of Local Government Finance to ask for more money in order to do that.”
Peters outlined a few options going forward, including cutting costs, raising income taxes, or asking state law makers to approve more special legislation for income or property taxes. Another idea when it comes to property taxes is to raise the Cumulative Capital Development Fund to its maximum rate. “That gets you money above and beyond your maximum levy, but the expenditures are restricted to capital outlays,” Peters explained. “Maximum rate for that for a county is 0.0333, and you’re at 0.0167.” But that would only raise the county’s income by about $165,000, according to Peters.
No decisions were made Monday, but most of the county officials in attendance Monday didn’t like the idea of raising income taxes, since they’re already the highest in the state. Peters said that any changes to the county’s income taxes would have to be made by the end of October, to take effect in 2020. The council and commissioners agreed to hold an extra joint session next month, to continue discussions.
