BROOKSVILLE — As Hernando County commissioners wrestled this week with the details of curing their 2010-11 budget woes, they heard some serious words from the county's chief financial officer.
"I'm very concerned about some of the policies going forward,'' warned Karen Nicolai, clerk of the circuit court.
Nicolai noted that in a recent memo from the county's financial adviser, RBC Capital Markets, there were cautionary words about proceeding on the current course as commissioners attempt to balance the budget for the fiscal year that begins Oct. 1.
According to the firm's director, Julie Santamaria, the county has a very favorable bond rating. But rating agencies have expressed concern about the county's future rating, which helps determine the interest rate the county pays when borrowing money.
According to Santamaria, the rating agencies frown on "hesitation in recognizing the need to increase taxes, use of non-recurring revenues for recurring expenses, changes in and reductions of previously approved reserve policies, … deferring reductions of operating expenses including reductions of staffing levels.''
The commissioners have not raised the property tax rate, have been spending down reserves, have loosened their reserve policy and have avoided some of the original layoffs proposed to balance the budget.
"We're doing four of those,'' Nicolai said, noting that the commission needs to take a hard look and reduce its spending even more dramatically because the budget picture for 2011-12 will be even more bleak.
"You are facing some monumental challenges going into next year,'' Nicolai told commissioners.
In an interview Wednesday, Nicolai went a step further, saying she does not believe the county has a well-thought-out plan to make the cuts that are necessary because of falling tax revenues.
"They never really did the pyramid project,'' she said, referring to the early budget preparation in which county officials prioritized services that were nice to have for the quality of life versus those that are mandated through county ordinance or law.
Nicolai expressed concern about letting natural employee attrition determine where position cuts would take place.
"Just not replacing people is dangerous,'' she said. "Your good people leave, and then what do you have?''
Instead, the county should be analyzing every single position, she said.
Severe cutting has made it difficult for some departments to maintain services, such as human resources and information technology, Nicolai noted.
"I don't think there is a decent plan, a real analysis,'' she said. "There just needs to be better analysis.''
Nicolai said that after a couple of years of cutting back, "all the easy stuff is gone,'' and the board needs to either increase revenue or reduce services — or a combination of both — and "they've actually done neither. They're using up reserves.''
Just Tuesday, Nicolai had to lay off one of her own people, and she said she hates to do that, but knew it had to be done. She said of the county staff: "Somebody has got the make some objective, hard decisions.''
Commissioner Jeff Stabins said that he was a bit taken back by Nicolai's comments at the meeting because she was brought forward by County Administrator David Hamilton to tell commissioners that she had found more money. Instead, she told them that she couldn't save them from their predicament.
He said he didn't understand her dire concern that the county is headed for financial trouble.
"I think we've acted very reasonably so far, given the climate we're in,'' Stabins said. "We don't need a Chicken Little running around telling us that the sky is falling. It isn't.''
Stabins said the commission has raised revenue through new fees and has cut positions and services. But he steadfastly opposes cutting more employees and made that point again at Tuesday's meeting.
While the county was $1.4 million in the hole at the last commission meeting, budget director George Zoettlein explained Tuesday how he had trimmed that down to just $417,291.
Additional money from reserves, a reduction of $200,000 in the fund set aside for cleaning up the contaminated old Department of Public Works site, reductions of five positions — including an assistant county attorney, a budget analyst, an administrative secretary in the county extension office, a code enforcement position and a health and human services specialist — along with other transfers brought down the deficit.
Stabins said he couldn't agree to let any more employees go from the county staff, but he said he would not make a motion to act on any of the job reductions outlined on Tuesday until Hamilton brings a more complete list of position changes to the board on Sept. 14.
Hamilton himself recommended Tuesday, as part of his management reorganization, that three positions he wanted to cut — the supervisor of the county's help desk, the senior planner and the recreation coordinator — stay in place until the county works through the final numbers in the proposed 2010-11 budget.
While Hamilton's reorganizational plan, which was designed to save money, got preliminary approval by the commission, it also brought criticism and questions from the public, as well as from Stabins and Commissioner Rose Rocco, who did not support it.
Commissioner Dave Russell spoke up and reminded commissioners that the entire plan grew out of Hamilton's frustration that his own leadership team couldn't bring forward plans to cut budgets that included eliminating supervisors.
He also agreed that things are only going to get worse if the commission doesn't take action.
"You ain't seen nothing yet in terms of cuts,'' Russell said. "The tough decisions needs to start now. … Mr. Hamilton is on the right course.''
Barbara Behrendt can be reached at [email protected] or (352) 848-1434.