Swain County should finally have a budget by early August, nearly six weeks after the start of the new fiscal year.
Commissioners passed an interim budget to keep the county running over the summer, one of only two counties in the state that didn’t pass a full budget by the July 1 deadline.
That, said County Manager Kevin King, was because he was waiting on the state to adjust what the county is due under a new formula for Medicaid reimbursement. The formula was tweaked recently, and the state and county had to work through exactly how much Swain should get.
After the adjustments, which should be in by mid-August, King expects the county to get a few hundred thousand extra dollars.
Because the deficit would be too great to make up out of the county’s savings, King said he was forced either to wait and hope for the Medicaid money or propose county layoffs or a tax hike.
He chose to wait.
With the numbers now in, commissioners this week got their first look at the proposed 2011-12 budget, which will take effect in September.
If commissioners approve the budget on August 8, the county will have $14.9 million to work with, up $2.5 million from last year’s budget.
The increase is going to two building projects on the county’s to-do list this year: new classrooms at West Elementary School and the construction of the Swain County Business Education and Training Center on Buckner Branch.
The property tax rate will stay the same, despite the additional spending. The school project is being paid for out of a capital reserve fund where savings had been set aside for school construction.
The training center, a joint effort by Southwestern Community College, the Fontana Regional Library, Swain County Schools and the county, is being underwritten by a $1.1 million grant from Duke Energy.
The elementary school upgrade is coming from a capital reserve fund set aside for school improvements suggested by a committee last year.
Otherwise, the budget is nearly identical to last year’s numbers, but the county will have to take a $158,000 dip into its fund balance to come out with a balanced budget.
That, said King, is because the county has suddenly lost around $300,000 in revenue it has counted on for years from the Tennessee Valley Authority.
As a government entity, TVA doesn’t pay property taxes, but does make “payments in lieu of taxes” for Fontana Dam and its generators. A new formula for the payments has drastically reduced what Swain historically got and diverted the money to Graham County instead.
That’s affected their fund balance too. The county was chastised in 2009 by the Local Government Commission for letting the fund balance, essentially the county’s savings account, dip too low. State law mandates that the account be at a minimum of 8 percent of the county’s annual budget, equivalent to one month’s expenses.
“Last year it was at about 13 percent,” said King. “But we’ve had decreases in our TVA [revenue], so it’s somewhere in the neighborhood of about 10 percent.”
He said he’s not yet certain of the exact numbers, since he is expecting some payments to the county’s accounts soon that will change the account’s balance.
The bottom line, though, is that revenues are down. And unless expenditures start dropping with them, the county must keep returning to the prospect of raiding its savings.
Currently, Swain is taking Graham County to court over the lost TVA monies. King said they hope to have their money back within a year. But Graham has filed a suit of its own, so the legal entanglements might not be so easy to sort out.
The proposed budget will be available at the Swain County Administration Building until Aug. 8, when commissioners will host a budget hearing and then vote on the document.