County Budgeting

1. CountyBudgeting

2. Finance a. The science of the management of money and other assets. b. The disposition of public revenues by a government. From the Latin word finis, meaning “end,” as in “to end” or “settle.”1 1American Heritage Dictionary Budget

3. Finance “The proper role of government provides a starting point for the analysis of public finance.”2What is the role of government? Mission: “Why does this organization exist?” Means: “How does this organization performs its mission?” 2Wikipedia Budget

4. Financial Management Treasury: •Tax and revenue collection • Debt issuance & mgmt • Investing and banking Accounting: •Financial Record keeping • Financial Reporting • Financial Auditing • Performance Auditing Budgeting: •Appropriation plan • Expense & Revenue Forecasts • Performance measures • Line item budget Budget

5. Treasury Functions a. The executive department of a government in charge of the collection, management and expenditure of the public revenue. From the Old French word for “treasure.”1 1American Heritage Dictionary Budget

6. County Treasurers1 Receive,disburse,invest,account for revenue • Steward of funds for state and local gov’ts: County, cities, schools, special purpose districts. • Collect property & other taxes, past due amounts. • Bond sales and sales of surplus county property. • Account for and report on the fund they manage but are not counties’ accountant (the Auditor is). • Can be an appointed county financial officer in charter counties. 1Adoped from the Municipal Research and Services Center of Washington Budget

7. Accounting Functions a.thedisciplineofmeasuring,recording,com- municatingandinterpretingfinancialactivity. From the Latin word “to count”1. • Primarily retrospective; looks at the past. • Generally includes: • financial record keeping, • financial reporting, • financial auditing, • performance auditing. 1American Heritage Dictionary Budget

8. County Auditors Perform most of the accounting for ‘code’1 counties, mainly tracking expenses: Auditors have many other statutory duties: By statue, auditors prepare the preliminary budget, but the BOCC or county council also may do this. 1Counties constituted under Title 36 of the Revised Code of Washington (RCW) 2Board of County Commissioners Budget

9. Budget Functions a. An itemized summary of probable revenues and expenditures... embodying a systematic plan for meeting expenses1. b. An organization plan stated in monetary terms2. c. A forecast of expected resources and the purposeful distribution of those scarce resources3. From the French word bougette, meaning “purse.” 1American Heritage Dictionary 2Wikipedia 3Washington State Budget and Accounting Reporting System (BARS) manual Budget

10. Budget Officer Auditor’s office or BOCC appointee (statute allows either). Responsible for the recommended budget and the budget process, which include: These tasks all must be completed, but often they are done implicitly and without deliberation. Budget

11. Summary: Finance vs. Budget Treasury and accounting are the bulk of finance, but most financial management occurs via the budget. Treasurers track revenues and Auditors track expenses -- budget is what they track against. • Budget is an appropriation -- not cash. • Budget is spending plan, a forecast. You pay for what you budget You do what you pay for Policy is what you do Budget

12. Revenues by Source About a third of revenue is from direct taxes. About 80% of all revenue is restricted Unrestricted Revenue 20% Charges for Service Taxes Restricted Revenue 80% Grants Taxes Transfers Budget

13. Total Revenue General Fund: 30% of Revenue Un-restricted GF Revenue 20% Other Restricted Revenue 70% Restricted GF Revenue 1/3 Unrestricted GF Revenue 2/3 Restricted GF Rev. 10% Restricted $: GF and Other Virtually all unrestricted revenue isin the GF, and a third of that is also restricted. Budget

14. Typical General Fund Expenses The majority of GF expenses are for L&J. While they are funded with discretionary dollars, most GF programs are not discretionary. General Government 9-12% Fiscal Entities 7-10% Internal Support 6-9% Parks 2-3% Law & Justice 2/3 to 3/4 Budget

15. Declining Revenues Overall,countiesareator below2006revenues • 2000-2007 GF growth was 4% per year. • 2007-2010 GF growth was -2% per year. Duemainlytonewconstruction,which drives: • All property tax growth over 1% • Up to a third of sales tax revenues • Real Estate Excise Tax • Development fees The mean grossly understates the extremes. Budget

16. Same Costs Example: Structural Revenue Deficit Budget

17. Structural? The structure of County revenues changed in 2002 with Initiative 747. • 1% limit on levy increases • Counties are designed to be property tax-based • Typically 40 – 50% of GF revenues Masked bynewconstruction,which drives: • All property tax growth over 1% • Up to a third of sales tax revenues • Real Estate Excise Tax • Development fees Budget

18. New Construction Budget

19. The Context County revenues grow with inflation and population, at best. But gov’t costs grow faster than inflation. Budget

20. The Context Yet, our citizens are becoming poorer. • A national, decline in personal income growth. Budget

21. Solutions Not cutting… Budget

22. Solutions Not raising taxes… Budget

23. Solutions Not even cutting AND raising taxes… Budget

24. The New Normal • Structural revenue change • Worst economy in eighty years • Long-term personal income decline • Accelerating costs: Gov’t inflation + benefits • Cuts and tax increases not sustainable • High percentage represented So what works? Budget

25. Efficiencies Not one-time improvements, but an ongoing pursuit of efficiency - a culture change for many organizations. Examples are: Budget