Tribal budget looks to shrink spending
As the 2019 fiscal year begins for the Eastern Band of Cherokee Indians, the tribe is operating under a recently passed budget that trims $40.4 million off the $604.7 million budget passed last year.
“My commitment to this Tribal Council and to this tribe is to continue to make fiscally responsible decisions moving forward so the same rights, opportunities and privileges we experience now will be there in perpetuity for our children, grandchildren and for the seven generations going forward,” said Principal Chief Richard Sneed when presenting the proposed budget to Tribal Council Sept. 4.
Growth from the tribe’s gaming enterprises has been “unprecedented,” Sneed said, growing by about 4 percent each year. However, labor costs have been rising by about 10 percent annually with overall operational spending increasing by about 6 percent. If those trends were to continue, the tribal budget could exceed gaming revenues as soon as 2023, according to a press release from Sneed’s office.
“We’ve taken very good care of our people over the years,” he said. “What has happened is the size and scope of what we’re doing is outpacing the revenue stream. It’s just the harsh reality of where we’re at right now.”
While the overall budget of $564.3 million is 7.2 percent less than last year’s, the operating budget itself decreased only modestly, falling 0.6 percent from $180.5 million in fiscal year 2018 to $179.4 million in fiscal year 2019, which began Oct. 1.
Much of the $40 million budget reduction was related to how capital projects are financed. Currently, said EBCI Secretary of the Treasury Cory Blankenship, interest rates are low and EBCI investment yields are high. That means that “the most prudent financial philosophy is to use other sources of funds to finance projects and reserve the tribe’s cash for a greater return on investment through a diversified portfolio,” Blankenship said. As a result, the tribe’s current budget reduces the use of tribal funds in capital projects by $20 million.
Related Items
Haywood schools face repair work, shifting student enrollment
Jackson increases occupancy tax rate
Cherokee Indian Fair
Clingmans Dome receives a name change
The savings is also partially the result of a decision to cut funding for any positions that had been left vacant since the first quarter of 2018. There were 72 such positions, and eliminating them resulted in a $4 million savings. Sneed also reported a $1.1 million savings in operations as the result of the financial analyst’s team’s trending and analysis work.
According to Secretary of Treasury Cory Blankenship, a typical step in creating a balanced budget is to analyze top expenditures for “necessity and alignment with its goals and objectives.” In the EBCI budget, six of the top 10 expenditures were related to the tribal workforce and consumed more than 80 percent of the budget.
“Our objective here is to gain better control of labor costs, preserve employment, and to reduce the number of positions we budget for but cannot or do not fill,” Blankenship said.
Actual expenses for fiscal year 2017, which ended Sept. 30, show that the tribe’s top expense was pension payments, at $41.6 million, trailed by wages at $39.3 million. Totals in the top 10 expenses fell sharply after that, with contract services at $17.5 million, health insurance claims at $17.2 million, fees and services and capital projects both around $10.6 million, health insurance coverage at $7.9 million, college education for tribal members at $6.9 million, pension contributions at $4.3 million and annual leave at $4.9 million.
In his comments Sept. 4, Sneed congratulated Tribal Council on its recent act to change the vesting period for tribal employees from five to 15 years and said the tribe needs to do more to decrease expenses from its benefit package.
“That’s very responsible,” he said of the vesting schedule change. “We’ve got to look at our benefit package. It’s extremely expensive.”
Fiscal responsibility is important not only to keep expense growth from outstripping gaming growth but also to recognize the fact that gaming revenue is not a given. The tribe has long been discussing ways to diversify its revenue stream to ensure the tribe’s ability to be financially stable should gaming ever take a hit.
“We are all aware of the fact we have needed to diversify for some time now,” Sneed said.
All budget information was reported using information provided by Sneed’s office, as the tribe does not release copies of the budget itself.
Editor’s note: Meeting quotes in this story were reported using online video of the meeting, as Tribal Council’s April decision to ban non-Cherokee media from its chambers prevents The Smoky Mountain News from attending in person.
