The Times Journal & Russell County News
Wednesday, Apr. 16, 2014 — RUSSELL SPRINGS & JAMESTOWN, KENTUCKY — russellcounty.net
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State advising fiscal court in budget crisis
In Feb. 26 Issue
By John Thompson
News-Register Reporter

This past Tuesday, Russell County Fiscal Court held a special called meeting to deal with a few loose ends and discuss this year's budget deficits as well as expected deficits next year unless action is taken.

The Department for Local Government (DLG) sent representatives to the meeting to hold a budget workshop, to discuss with the court options they hold in balancing the budget. The gist of which came down to three options, ultimately; 1) cut un-mandated services or other expenses not required by law, 2) raise revenue, or 3) a combination of the two.

State Local Finance Officer/Debt Officer Junior Wright was joined by Local Government Advisor Matthew Frohlich and Staff Attorney Andrew Hartley. Wright began by briefly outlining the duties and responsibilities of his office as it applies to the state's counties before addressing our particular needs and problems.

"Let me first say, you all are not in this situation by yourself," Wright said, pointing out that for the last five to 10 years difficulties occurring at a national level are filtering to the state and county levels.

Currently, the county faces a projected budget deficit of $191,000. Frohlich offered a more pessimistic projection, saying that after his office checked the numbers; "$190,000 shortfall end of the year is accurate. I would even say, in most instances, opening a new jail costs a lot of times tend to be more than what you expect, especially early on. That could be a low estimate." Frohlich said, also pointing out that in December the county faces a $280,000 bond. "So there are a lot of financial concerns that you need to, that we need to address."

It will take some time to see what impact operation of the jail will have on the county's finances, but without the jail, the county would have been paying out over $40,000 a month to Casey County and related expenses, it was pointed out.

Stating that the new budget must be approved by July 1 and that it must be balanced, Hartley said "If a county does not have a balanced budget then it effectively cannot operate. And the state has seen it appropriate to essentially appoint the state and local finance officer, which is Mr. Junior Wright, to oversee the process any time a county would get to that point."

The process could eventually lead to initiation of legal action to force the county to balance the budget, the refusal of, or the inability to, has actually led to members of the court being incarcerated in other counties. Hartley did point out that that event occurred under "extraordinary circumstances" and that he would not expect that it would occur here, but that the court needed to know "where it could ultimately end up, if it came to a stalemate."

Judge Executive Gary Robertson, as well as Magistrates Greg Popplewell, Brook Cochran, Ronald Johnson, Jimmy McQueary and Larry Holt asked questions and for clarification on a number of issues.

It was determined that cutting all services, whether essential or not, that are not mandated would likely still not raise the revenue needed. Those services the county enjoys are the volunteer fire departments, 911 services, Sheriff's Offices (who raise much of their own revenue), road crews and more, as well as expenses such as insurance for public employees elected or otherwise and registration fees for training and travel expenses, equipment needs for services among others.

Raising revenue means raising taxes. Three taxes discussed were property, occupational, and insurance. Wright pointed out that the county's property tax of 6.7 percent was one of the absolute lowest in the state, with only one or two counties having a lower rate, and that the occupational tax of .25 percent is exceptionally low also. The county does not collect an insurance premium but that this was also a way counties have helped balance their budget.

Employees within the cities of Russell Springs and Jamestown pay a 1 percent occupational tax. Frolich pointed out that an occupational tax assessed by a county with less than 30,000 residents would apply to all county residents, resulting in a cumulative tax for those citizens working with the city limits.

Frolich also pointed out that if an insurance premium tax is instituted, the city must first be credited with any tax assessed. As an example, Russell Springs currently has an 11.5 percent and Jamestown has a 7.5 percent insurance premium tax. Any rate established by the county would first have these amounts deducted from the counties resource and go to the cities. Wright pointed out that the first thing that will happen with this tax implementation would be that the city with the lower rate will raise it to match the other cities rate. So in essence for an insurance premium tax to benefit the county it would have to be above the 11.5 percent mark with the county getting the difference after that is deducted.

Robertson also said that he had established an employee health insurance committee to look at different options to try to save money.

The DLG representatives remarked a few times that they are in no way making recommendations, but that they were there only to lay out the options the court had. "Let me say we're not here to tell you what you've got to do," Wright said, "now July 1st or 2nd or 3rd we might tell you what you've got to do then but we're not in that business, we're here to help you all, help you all determine; what you all decide is totally up to you."

The option of borrowing money was also discussed, with a major difficulty being that borrowed money cannot be used as a budget balancing tool. Frohlich pointed out that there were two types of borrowing available, short term and through the Governmental Leasing Act. Short term borrowing from a local bank would be required to be paid back before the start of the next fiscal year or the county would face a major audit and write up. Through the Governmental Leasing Act the money must go toward specific projects and is not allowed to be used to balance a budget. Robertson would later suggest that the county may be able to receive a loan through KACO against some of the projects we currently have happening, an option the DLG representatives eventually seemed amenable to working with.

Through much discussion it was determined that there would be no way to get the required revenue to meet the budget shortfall by the fiscal year end. Eventually the representatives did make it clear that they could work with the county on a budget with borrowed money carried over into the next year under the strict condition that demonstrably sufficient plan to balance the budget within the next year were outlined, a task they would also help with. This option would also mean the increased scrutiny of a write up and full audit by the state.

Robertson emphasized that since his coming into office, he and County Treasurer Kathy Tupman have gone and continue to go through the county's books with a complete audit to find any fat to be cut. One result of which being the court having to vote to transfer $16,000 from the general to the payroll fund to make up for errors of prior employee insurance and other payments. As a result Robertson said from here on out when anyone leaves the county government an exit interview will be conducted to insure all procedures are being followed. "It's a shame. It's embarrassing," Robertson said, "but it's happened and it's going to be corrected."

Being a special called meeting the court was limited to deal with only items that were outlined on the publicly available agenda.

One bill was paid to Casey County Fiscal Court for recycle items in the amount of $975.00.

The court voted to pay yearly allocations to the fire departments and rescue squad within the county: Russell Springs, Jamestown, South Russell and Eli Volunteer Fire Departments received $7,500 each; the Russell County Rescue Squad received $4,200 and Faubush Volunteer Fire Department received $3,000.

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The Times Journal is a weekly newspaper issued on Thursdays. It was first published on October 13, 1949, by Andrew J. and Terry Norfleet.
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P.O. Box 190
120 Wilson St.
Russell Springs KY 42642
Phone: 270-866-3191
Fax: 270-866-3198
Russell County News is a weekly newspaper issued on Saturdays, and is mailed free to every address in Russell County, Ky. It was first published on February 1, 1913.
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Phone: 270-343-5700
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JAMESTOWN CITY: 3rd Thursday of month, 6 p.m. in basement meeting room at City Hall
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