Washoe County Commissioners today voted to amend the county’s 2011-12 budget which had been approved on May 16, 2011. The amended budget reflects the impacts of the 2011 Legislative Session which enacted a number of laws that will shift revenues to the state, shift costs to the county, and reduce or eliminate state funding of county programs. The estimated fiscal impact of these legislative actions is approximately $11 million in 2011-12 and $12 million in 2012-13.
Today’s action amends the county’s total budget to reflect those additional impacts as allowed by state law. Immediately following the close of the legislative session, county staff had estimated the fiscal impact to the general fund alone would be approximately $5 million. However, based on further details received on these bills as well as the ability to have non-general funds absorb some of the impact, the legislative impact to the general fund has been reduced to $2.5 million. This revised impact also includes the cost of a Special Election tentatively scheduled for September 13th.
Deficit Reduced. County staff had originally forecast that the Governor’s proposed budget could impact the county’s budget by as much as $27 million per year over the next biennium. To prepare for the potential impact of that and to address the long-term financial sustainability of the county, Commissioners had directed Department Heads to prepare “worse case” scenarios of 10% and 25% operating budget reductions. These reductions would have been in addition to as wage and benefit reductions from all employee groups and the 1.7 to 3.7% reductions department budgets had already been reduced to meet the original general fund deficit. At today’s meeting, the Board directed that only the 10% reduction scenarios should be developed and moved the due date of those plans to July 29, 2011. While an overall 10% reduction is not necessary to meet the estimated additional $2.5 million legislative impact on the $311 million general fund budget, this planning is necessary due to the use of $9.75 million in one-time fund balances to make up for the economic deficit. In addition, departmental plans will provide options for the County Commissioners as they deliberate on where additional reductions shall occur.
Work Still To Be Done. When the original 2011-12 general fund budget was adopted in May, County Commissioners approved a four-point plan to address the $31.3 million deficit identified at that time: 1) $5 million in operating budget reductions (actually achieved $5.7 million in savings); 2) $5 million in on-going savings achieved through a fundamental review of all county operations (expected to be completed and presented to the Board on August 9th); $9.75 million one-time use of fund balances (done) and 4) $11.6 million in permanent employee wage and benefit reductions (currently under negotiations). The $2.5 million legislative impact to the general fund budget has now increased the 2011-12 deficit to $33.8 million. The 10% budget reduction plans will help identify where additional savings might be achieved .
Looking Ahead. Commissioners also heard from finance staff today that the 2012-13 fiscal year will have a minimum $17.25 million ongoing savings which need to be identified and implemented through the fundamental review of county operations. As Commissioners grapple with ways to address the 2011-12 budget deficit, they are mindful of the need for sustainable reductions given the fiscal outlook for 2012-13.