Le Sueur County is exploring cutting costs as coronavirus-related expenses remain uncertain.
In a budget discussion at the Board of Commissioners meeting on June 16, Le Sueur County Administrator Darrell Pettis said that 2020 will be “an extremely interesting, difficult year” to put a budget together. COVID-19 and a confluence of other factors have left the county in the dark on just how expensive operations will be next year.
One of the major unknowns is the tax impact of the coronavirus. As the county prepares for next year, there remains real uncertainty on how long the pandemic will continue, how case numbers will change, how long coronavirus-related restrictions will stay in place and how Le Sueur County residents will be financially impacted.
The county will also need to make a decision on whether the board will defer or delay the property tax payment deadline for the second half of the year. Property taxes are the primary source of revenue for counties, municipalities and school districts, which led the county to decline abating property taxes in the first half of the year. However, the issue may come up again in the fall with many business owners seeking economic relief in the wake of COVID-related devastation.
Coronavirus has also driven up county health care costs, between 6-8%. The impact of those costs on the county’s health care premium is still unknown. At the same time, state aid to the county is likely to fall. More than $1 million in state funding to county highway projects could be lost this year because state aid is funded through gas and sales taxes, which were down during the stay at home order.
In the middle of all this, the county is renegotiating labor contracts. All five of the county’s union contracts expire this year and will have to be renegotiated. The county is also in the process of implementing a new Classification and Compensation Plan, which will have to be negotiated with unions.
Because of these changes, the county’s cost of living adjustment (COLA) has not been set, but staff is anticipating a 1% increase. A 1% increase would add more than $170,000 in additional expenses, though some of that would be paid for through state and federal aid.
On top of that, the county needs to account for funds it took from the Road and Bridge Department to balance the 2020 budget last year.
What additional revenues the county could receive is also a mystery. CARES Act funding could be a great boon for the 2020 budget, and potentially 2021 as well, but the county still does not know how much aid they can receive from the legislation at this time.
Another potential source of revenue is the bonding bill to fund infrastructure spending, being considered by the state Legislature. The county has committed $300,000 to expand rural access to broadband internet and a bonding bill could subsidize the county’s efforts.
“If the Legislature passes a bonding bill this year, which is entirely possible … there may be some opportunities for the county to do some additional broadband projects,” said County Administrator Darrell Pettis. “Those will have to be funded and paid for if the county wants to participate in that. It doesn’t have to be a 2021 expense, but those expenses have to be paid.”
With so many questions, Pettis asked the commissioners to consider potential cost saving measures. The county was scheduled to remodel the courthouse, old jail and the highway building. Some of that infrastructure, like the highway building, is aging and in need of repair but the county will need to consider how to balance that with a potentially tighter budget. Pettis said the county could consider bonding for those projects if necessary.
Other options raised by Pettis could include implementing a sales tax for transportation, reducing staff hours and furloughing employees, cutting non-mandated services, keeping unfilled positions open, making no adjustment to COLA or putting equipment purchases on hold.
Commissioner Steve Rohlfing said that the county could explore putting more employees on telecommute and delivering services in a similar manner to how they’ve been managed while county offices were closed. This could also be an avenue to avoid remodeling.
“If you look at the building, they’re remodeling for phases two and three. It’s going to be interesting, because we have 91 employees and all of them are rotating shifts right now, so is brick and mortar really something we need space for anymore?” asked Rohlfing. “As a certain point, I think we need to be progressively cautious … As far as delivering services, I think we should be delivering services we need; we just need to change how we deliver those services. I think they’re doing that now, and we see that it works.”
Budget planning is in its infancy currently, and the county won’t have a preliminary budget finalized until the fall. As the county considers its next steps, Commissioner John King requested that department heads bring in two separate budget plans for their departments — a budget with no increased expenses from last year and a budget with a 3% increase in expenses to account for added health care and salary expenditures.
“Because there are so many unknowns that could negatively impact us … Just for one year, I think we really need to be static in our spending — not really pursuing any expansion or spending,” said King. “Just for a year, until we can get a better handle on what the impact on our income versus our expenses is going to be.”