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County looks at financial past, present, future

ESCANABA — The Delta County Board of Commissioners heard County Administrator Ryan Bergman’s annual mid-year financial report during its regular meeting Tuesday. The report included information on the county’s financial past, present, and future.

“It’s a little bit early, but we’re about six months into the new fiscal year,” Bergman said. The official midpoint of the 2017-2018 fiscal year will be April 1.

Bergman’s report began with a look at year-end general fund results for the county’s 2016-2017 fiscal year. Delta County’s revenues for this year were listed as $10,537,489 and expenditures were $9,425,892. Bergman said the county had a surplus of $1,579,868.

According to Bergman, the surplus was largely made possible by reimbursements by the state to offset personal property tax exemptions for manufacturing businesses. The county’s losses as a result of these exemptions have been reimbursed at 265 percent in the past two years.

“More than half of that surplus is tied up in the manufacturing personal property tax dollars that we received that might reoccur this year and under no circumstances will reoccur next year,” he said. Delta County is encouraging legislators to lobby for the preservation of some of this funding in response to these anticipated changes.

Other revenue drivers in the county during the 2016-2017 fiscal year included property taxes and Register of Deeds services.

Bergman said that, for the past two years, the county has used its budget surpluses to mitigate the effects of rising pension costs.

“What we’ve done each year is put it into pension stabilization,” he said. However, the county will not be able to continue this practice with this year’s surplus. The state caps local governments’ pension stabilization funds at 20 percent of its general fund budgets — a cap the county has hit.

As an alternative, Bergman recommended the county use about $1 million of its surplus to make a direct payment to the Michigan Municipal Employees Retirement System to increase its funded status. He also recommended using the $255,000 to pay back its loan on an energy project early and $245,000 to potentially purchase solar panels from Escanaba, both of which would reduce future operating costs.

Later in the presentation, Bergman reviewed changes in governmental fund balances for the county over the 2016-2017 fiscal year. Many of Delta County’s fund balances increased during this time — including the general fund, which grew by $1,579,868 during this fiscal year. However, the residual equity fund, airport fund, service center fund, and building and zoning fund decreased by $819,705, $1,448, $30,826, and $21,524, respectively.

Bergman noted the residual equity fund loss was due to a timing issue in which reimbursements were received after the start of the current fiscal year, the airport fund loss was small enough to be negligible, the service center fund loss was due to money spent on the jail project, and the building and zoning fund loss was planned so the county could keep user fees low by spending fund balance.

In a section of the report dealing with the 2017-2018 fiscal year, budget performance during the current fiscal year was highlighted. Bergman noted the county is projected to have $9,980,000 in revenues and $9,700,000 in expenditures by the end of this fiscal year.

During this part of his report, Bergman said target spending for each of the county’s departments at this point in the fiscal year is 45 percent or less of their budgets. He noted almost all of the county’s departments have hit this target, except for Administration (which has spent 49 percent of its budget), Medical Examiner (which has spent 63 percent), Airport (which has spent 53 percent), and Building and Zoning (which has spent 46 percent).

Bergman continued his presentation with a look at the county’s financial future, including expenses which will be introduced for the 2018-2019 fiscal year. These include the addition of $40,000 for contractual salary increases, $110,000 for retirement cost increases, $90,000 for healthcare cost increases, $160,000 for the hiring of three full-time corrections officers, $70,000 for the costs of additional inmates at the Delta County Correctional Facility, and $20,000 for public defender cost increases. He also noted the county can expect to see $265,000 in courthouse debt payment savings.

Bergman spoke about projected pension increases, as well. In the current fiscal year, pension costs are expected to be $894,114; by 2024 (which is expected to be the high point for these costs), they may hit $1,683,951.

However, thanks primarily to payments into the county’s pension stabilization fund, Bergman said this fund could handle these increases through at least the 2022-23 fiscal year.

“It’s (going to) be tough sledding, but we’ve planned well, and the next four or five years are going to be manageable,” he said.

Bergman also provided a five-year budget forecast for the county. By the 2022-2023 fiscal year, the county could see a budget gap of $480,000 if there are no changes to their revenues. It is typical for estimates this far out to be high, Bergman said.

Finally, Bergman took a look at the county’s overall financial state. Thanks to several factors, including healthy fund balances, healthy real estate growth projections, and a healthy debt profile, he said the county’s financial picture is looking very strong.

In other business, the board:

– was updated on two legal cases challenging the recent decision made by the Delta County Planning Commission to allow Heritage Sustainable Energy to expand its wind farm on the Garden Peninsula. Civil Counsel Philip Strom said one of these cases will be dismissed by stipulation of all parties. The other case, which is considered an appeal of the planning commission’s decision, will be heard in circuit court. As the clerk’s office filed the certified record from the planning commission for this case, the parties involved will be able to file legal arguments in support of their positions before this hearing.

– heard a request from Delta County Road Commission Managing Director Jody Norman that the county contribute funds to assist with road repairs in the Hiawatha National Forest.

– approved an adjustment to an agreement between Pinecrest Medical Care Facility and Spalding Township. As a result of this adjustment, Pinecrest will deed an acre of property over to the township instead of selling it to them for a dollar.

– authorized the U.S. Forest Service to build a climate-controlled building for electronic communications equipment on county-owned land in Masonville Township on the condition that the county be allowed to use the building.

– informally agreed to run requests for Hannahville two-percent grants through the administrative office.

– voted to approve Zoning Case No. 2-18-PC.

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