Counties push back against state threat to shift its budget burdensWritten by Quintin Ellison
Budget concerns that the state will dump responsibilities on local governments, and anecdotal assessments of the current economic climate, dominated a meeting last week of Macon County’s elected local leaders.
The informal, relatively freewheeling discussion took place over plates of steak and potatoes in a conference room at the county’s airport. Elected leaders from Franklin, Highlands and Macon County took part, joined by the towns’ and county’s top administrators.
Describing Highlands as the “bellwether” economic indicator for Macon County, Commissioner Ronnie Beale queried Mayor David Wilkes about the spending mood in his better-heeled-than-most town.
Wilkes, who owns and operates three outfitting stores in the Highlands and Cashiers areas, responded the retail sector seems to be emerging normally from the winter doldrums.
“Business is picking up as it usually does, and people seem to have a comfort level,” Wilkes said.
He added that the huge second-home population of Highlands has helped some to insulate the town. Though more-regular folks might forgo the expense of traveling to the area, those who have invested in a real house have proved more likely to continue spending part of the year there regardless of the depressed economy, Wilkes said.
Macon County Manager Jack Horton told elected leaders that Macon County had eight housing starts last month, one of which was in Highlands. Though not outstanding when compared with the housing-boom days, Horton said that number does represent an uptick for the county.
Highlands Commissioner Larry Rogers, who owns a construction company in Highlands, said business is still very slow, as did Beale, who runs a construction company in Franklin.
State eyes county savings
Looming ominously over the discussion were fears the state’s $2.4 billion or so shortfall will result in future hard times for local governments. Gov. Beverly Perdue earlier this month sent unhappy shockwaves through the leadership of the state’s 100 counties with her suggestion counties pick up the tab for some state functions by tapping into the $2.1 billion they collectively hold in reserve through fund balances.
Macon County’s fund balance is healthy, representing about 25 percent of its budget. The state requires counties to keep a reserve of at least 8 percent. The state pointed to these robust fund balances as proof that counties aren’t hurting as much as the state and can afford to take on more responsibilities.
“We don’t feel like we should be punished for being prudent with our money,” Brian McClellan, chairman of the commission board and a financial advisor in Highlands, said of Perdue’s plan. “We don’t think it’s a good idea for them to eyeball our county fund balance.”
In an interesting reversal of fortunes and a now-the-shoe-is-on-the-other-foot kind of way, county commissioners in February sparked a very similar reaction from local education leaders, when, during a budget work session, commissioners discussed the need for school administrators to give up some of their own $3 million fund balance for the good of the county.
“Their fund balance is our fund balance,” Commissioner Bobby Kuppers said then.
The irony, such as it was, went un-remarked upon at last week’s meeting.
County Commissioner Kevin Corbin, who previously served 20 years on the board of education, said he believes the state will impose a cut of about 8 percent for schools.
“We’re all going to have to live within our means,” Corbin said, adding there’s no way for the county to pick up the tab for state education cuts.
Also of concern to local leaders in Macon County is that Perdue’s proposed budget would force counties to pay for workers’ compensation for public school and community college employees. The state may also cut the county’s share of corporate income taxes.
Jackson and Haywood county commissioners held similar discussions last week. The N.C. Association of County Commissioners had sounded the alarm the week before, calling on counties to voice their concerns.
David Thompson, director of the N.C. Association of County Commissioners, said it was “very disconcerting” that counties could be asked to tap their fund balances — saved up over the years often with an eye toward school construction or future building projects — as “the silver bullet to manage the state’s budget crisis.”
Haywood County commissioners passed a resolution last week opposing the state shift of funding duties, particularly for schools. Among proposals on the table: the state would take 75 percent of the county’s share of lottery money intended for schools and make counties pay for new school buses.
“The state said they aren’t going to have any new tax increase but they haven’t said anything about pushing the costs on to us and us having to do tax increases,” Haywood Commissioner Bill Upton said.