Here is some news from the 'real world' where counties across the nation face the same issues...
Original post from The Joplin Globe here
June 13, 2010
Cherokee County commissioners pondering employee furloughs
By Roger McKinney Globe Staff Writer
COLUMBUS, Kan. — At the end of 2009, the Cherokee County Commission used an advance on January 2010 tax revenues to pay December bills.
Now, with county finances lagging, two commissioners want elected county department heads to impose furloughs, or unpaid time off, on county employees. A third commissioner said he wants to use that as a last resort.
Commissioner Pat Collins floated the furlough idea at the June 7 commission meeting. He is proposing that employees take off five days without pay each month until the end of the year.
“I’m hoping we’ll take a small action now to avoid a larger action later,” Collins said in an interview. “It’s better than waiting until November and laying people off.”
As of Wednesday, the unencumbered fund balance in the county general fund was $614,545. Though there will be sales tax distributions in the coming months, that has to last until the end of December.
The County Commission, near the end of December 2009, found that the general fund didn’t have a large enough balance to pay the county’s bills. The commission voted to transfer $200,000 from anticipated January tax revenues to the general fund.
County Treasurer Juanita Hodgson said the other options were to not pay bills or to do a no-fund warrant. She said there wasn’t time to do the no-fund warrant, even if the commissioners wanted to.
Commissioner Richard Hilderbrand said a no-fund warrant essentially is a loan. The county would have had to get approval from the state and find a local bank willing to make the loan. It would have required a tax increase to repay the loan and interest.
Hodgson said all three options, including the one the commissioners chose, are perfectly legal and were given the OK by the accountant who performs the annual county audits.
But she said the advance has contributed to the financial difficulty in which the county now finds itself.
“Right off the bat, we were $200,000 less than what we expected to have,” Hodgson said.
She said that action and the fact that revenue from housing out-of-county jail inmates is down dramatically are the main reasons behind the current financial difficulty.
The inmate revenues for January through May total $97,380, while the total for January through May last year was $220,480. The counties that have sent the inmates to Cherokee County in the past also have cut back on spending.
The commissioners said the December action was necessary.
“Our mission is to keep the doors open,” Collins said. “The option of not paying bills wasn’t considered.”
Collins said what is hurting county finances is the state Legislature’s forgiveness of property taxes on business equipment and machinery.
The commissioners would have to sell the idea of furloughs to the elected county department heads. They can’t mandate that the department heads take the action.
Besides Collins, Commissioner Jack Garner said the furloughs would be useful.
“It’s just a suggestion,” Garner said. “We may have to head it off if things get worse. We thought of doing this instead of layoffs.”
Garner said he would like department heads to start the furloughs soon.
“I’d like to see them start as quick as possible,” he said. “I’d hate to have to do layoffs.”
Hilderbrand, the commission chairman, said furloughs may be premature.
“I think it’s probably a last resort,” Hilderbrand said. “As long as department heads are watching spending and what they’re doing on cutbacks, it may do the trick.”
Hilderbrand and Hodgson said the county’s finances may rebound. They noted that the May sales tax distribution to the county was $40,000 more than that of May 2009.
Some department heads weren’t happy about the talk of furloughs.
Sheriff David Groves said it wouldn’t really work for his department if the department is to maintain its current coverage of the county. He said that if someone were to take time off for a furlough, he would have to pay someone overtime to cover the deputy who is off work.
“We have some support staff where we may be able to do that with,” Groves said. “I definitely don’t want to compromise the security of the county. We’re going to look at any and all options available.”
Hodgson said she isn’t sure if the furloughs are needed, especially with the increased sales tax revenues and the voluntary spending cuts by departments.
County Attorney John Bullard said that if employees take unpaid leave, they could file for unemployment, which could increase the county’s unemployment insurance premiums.
Bullard said his office’s spending has been cut. He said his workers are prepared for what may come, but he would like to see the auditor more involved.
“I’m opposed if it’s not shown to be necessary and if it costs the county more in the long run,” Bullard said of the proposed furloughs and the expected unemployment claims.