Baker Tilly - Fiscal Sustainability Plan

Scott Finley of Baker Tilly presented the draft Fiscal Sustainability Plan covering 2023 through 2030. The plan combines historical financial information, Policy Analytics projections, and assumptions regarding revenues, expenditures, legislative changes, and fund balances to evaluate whether the County's major operating funds are sustainable over the planning period.

Baker Tilly reviewed changes to the local income tax structure and noted that the County's current total LIT rate is 1.5%. Under the new structure, the County will have flexibility to adopt a County Services LIT and may also participate in Fire/EMS and other permitted LIT components. The presentation emphasized that future LIT decisions will require coordination with municipalities and other local units.

For County General, Baker Tilly projected relatively flat operating receipts between 2026 and 2027 while expenditures could continue to grow. If the current 2026 budget and assumed annual expenditure growth are carried forward without adjustment, the General Fund could begin experiencing negative cash balances as early as 2028. Baker Tilly recommended that the 2027 budget be brought closer to recurring revenues and identified a balanced General Fund operating target of approximately $40.4 million based on the current model.

The presentation also reviewed CEDIT County Share, Cumulative Bridge, Health, Local Road and Street, LIT Public Safety, MVH and MVH Restricted, Statewide 911, Reassessment, and Wheel Tax/Surtax funds. Particular concerns included declining or uncertain LIT estimates, reduced gas-tax distributions during the gas-tax holiday, future Health Fund deficits, and the need to align appropriations with realistic recurring revenues. Baker Tilly recommended continued capital planning, efficiency analysis, and regular updates to the fiscal sustainability model as new data becomes available.

Auditor's Staff - Miscellaneous Revenue and 2027 Budget Information

Auditor's Office staff reviewed the Form 2 revenue information and Form 4B budget worksheet for the 2027 budget process. The revenue estimates include information supplied by department heads and DLGF estimates for property tax, CEDIT, LIT, and other revenue sources.

Staff explained that preliminary 2027 expenditure and ending cash figures were overstated because all employees had temporarily been budgeted at maximum health-benefit levels for purposes of the DLGF meeting. Those amounts were already being adjusted to each employee's actual plan. Staff also noted that many departments included proposed raises despite prior guidance, while a gross amount for raises was also included in the Council budget, creating overlap that will be corrected before budget hearings.

The Auditor's Office used the DLGF circuit breaker estimate of approximately $7.6 million for current planning. Council requested that the Auditor's Office compare its revenue estimates with the Policy Analytics and Baker Tilly projections and reconcile any material differences before the budget hearings. Staff indicated that updated budget books were expected to be available by approximately August 25 and that OpenGov data would be updated as the revenue assumptions were reconciled.

COUNCIL DISCUSSION

Councilmembers discussed the need for conservative budgeting and noted that significant work remains before the 2027 budget is adopted. Members emphasized that departments may need to limit spending growth and work within available recurring revenues. Council also expressed appreciation for the work completed by the strategic financial planning committee, Policy Analytics, Baker Tilly, and County staff.