Steuben County 2022 Budget Message

Jack K. Wheeler, MPA

County Manager / Budget Officer

The development of the county budget is an annual effort of a very talented and dedicated team, and many individuals deserve recognition for their roles:


  • All Legislators, Specifically the Finance Committee:

Gary Swackhamer, Finance Chairman

Kelly Fitzpatrick, Vice Chairman

John V. Malter

Robert V. Nichols

Jeffrey P. Horton

  • Scott J. Van Etten, Legislative Chairman
  • Robin K. Lattimer, Legislative Vice Chair
  • Finance Department:

Tammy Hurd-Harvey, Commissioner

Mitch Alger, Deputy Commissioner

  • Chris Brewer, Deputy County Manager
  • All Department Heads

In addition to these elected and appointed officials, it is always important to highlight the tremendous work of our Steuben County staff members that are responsible for implementing these spending plans. They remain committed to providing critical services in a cost-effective manner for our taxpayers.

2022 Budget Message to the Steuben County Legislature



EXECUTIVE SUMMARY

Steuben County has faced extremely challenging times in 2021, with the continued response to the COVID-19 pandemic, historically devastating flooding, and heightened demand for services from residents and stakeholders. However, during this year, avenues of fiscal relief have materialized. At this time last year, the County was faced with steep declines in sales tax and room tax revenue, coupled with the projected reduction of 20% in state aid. Thankfully, once the COVID shutdown of the winter and spring of 2020 ended, our sales tax revenue quickly bounced back, and earlier this year, the federal government enacted the American Rescue Plan Act (ARPA), which provided state and local governments with funding to supplant loses from the pandemic. With these factors in mind, we have been able to develop a fiscally responsible 2022 county budget that maintains programs and service levels.


We are able to forecast a decrease in our NYS Retirement System contribution rates due to strength and earnings of these plans, as administered by the NYS Comptroller, which provides needed relief to this budget. In addition, our sales tax collections remain very strong, exceeding year-to-date figures even prior to the pandemic. The early retirement incentive program this Legislature enacted continues to provide savings to the organization, and while some needed positions have been added back into this budget, our overall savings of the program continue. Finally, ARPA have provided this Legislature with the ability to fund critical capital projects that would otherwise would have to be built into this and future year budgets. Taken together, these major changes allow the proposed budget to absorb escalating costs in other areas for 2022.


This proposed budget also includes notable necessary cost increases. First, the cost of employee health insurance has risen dramatically in the past year. Being self-funded for employee health insurance, Steuben County pays the actual cost of claims, plus fees for administration of this program by Excellus. Over the past decade, we have been successful in keeping our plans very fiscally stable, a benefit to both the county and our staff. However, in the past year and a half, we have experienced well over double the average number of high-cost claims (those in excess of $50,000 each), in addition to ever-increasing costs of specialty pharmaceuticals. As a result, this budget includes an 11% increase in health insurance expense, which coincides with a like increase in the employees’ premium share. In addition, two of our three bargaining units have contracts that either have expired or will expire by the end of this year. As a result, the 2022 budget also anticipates an increased cost of wages for staff.


In all, this Legislature, our department heads, and staff members have done a tremendous job developing a fair and responsible county budget for 2022. With a tax levy increase of 0.97% and a tax rate decrease of -1.89%, we believe this budget to be an effective spending plan for the coming year.


TOTAL BUDGET

The total proposed expense for 2022 is $221,043,320, representing an increase of $27,197,420 or 14.03%. Projected revenues have also increased for 2022, totaling $169,520,891, an increase of $26,701,726 or 18.69%.


At first glance, these figures seem like striking increases; however, it is important to note that $13,171,274 of both the change in expense and revenue are attributed to the Landfill Enterprise Fund activities, specifically the construction of a new cell at the Bath Landfill.


If these Enterprise Fund projects were excluded, total expenses for 2022 would be $207,872,046, or an increase of 7.24% from 2021. Similarly, total revenue would be $156,349,617, or an increase of 9.47%.


The following table details the five-year history of total budget figures:

BUDGET COMPARISON BY CATEGORY

For 2022, we are projecting changes in the net (county) cost by operational category. The following chart displays the anticipated cost differentials in comparison to 2021, in descending order by change in net cost. One note on the interactive graph below - the total expense figure in OpenGov is approximately $2.7 million higher than in budget books. This is due to our Workers Compensation Plan budget being included in OpenGov for tracking purposes with offsetting revenue, which does not impact the bottom line of the county budget.


A more detailed narrative of significant changes is provided here:


Transportation is the largest discretionary category of Steuben County's budget. As such, due to dire forecasts of sales tax collections and state aid, the 2021 budget reduced the Transportation category by -$1,407,149 or -5.52%. The Department of Public Works, which represents nearly all of this cost category, has done a fantastic job maintaining our public infrastructure during this year of reduction.


Thankfully, with improving financial conditions, the proposed 2022 budget increases the Transportation category by $1,659,209 or 6.90%, which is in line with pre-pandemic levels. During budget development, the Finance Committee has supported a draft budget that fills eight vacancies in the department that were zero-based last year, along with an investment of $2 million for major equipment, which will significantly benefit the department's efforts.


The Public Works Committee, this Legislature, and the entire Public Works staff deserve credit for proactively managing our roads, bridges, and solid waste facilities. The fact that we remain ahead of our five-year road lifecycle analysis translates into some of the best public infrastructure in the state of New York. It's obvious that credit must also be given to Commissioner Spagnoletti, who has recently retired. He will be sorely missed, but his knowledge and dedication has left the department on excellent footing.

For 2022, the Public Safety category continues to be an area where additional investment is made by the county, increasing by $423,235 or 2.07%. In the four most recent county budgets, this has been the largest growing cost category when measured by percent change, only topped by Transportation in this proposed budget. This cost category has grown on average $845,930 or 4.81% per year since 2017, as demonstrated in the graph below.

2022 projects to be a much more fiscally stable year, due to assurances from the state that drastic reductions in aid for Social Services programs will not take place. As a result, the 2022 budget shows the Economic Assistance category with only a slight increase of $160,523 or 0.46% in county cost. The largest drivers of this growth are Medicaid, as we are now budgeting the approximate cost of our statutory cap payment, representing an increase of $375,000 or 1.90%, and the Detention Center, with a $165,152 or 122.18% county cost increase. The Human Services, Health, and Eduction Committee has recently authorized the Department of Social Services to issue an RFP for operational services for the Detention Center, and these additional funds have been budgeted to account for what we anticipate to be higher cost of staffing for vendors.

MAJOR BUDGET CHANGES FOR 2022

Health Insurance

As previously mentioned, with a self-funded health insurance plan, actual claims of our members directly drives costs. We've been fortunate to have been able to maintain a health insurance budget that remained relatively flat over the previous five years. However, with our high-cost claims doubling in 2021, along with the rising costs of specialty pharmaceuticals, this budget line necessitates an increase of approximately 11% for 2022.


The adjoining graph displays the five year budget history of health insurance costs. Even with the increased projected cost in 2022, the average budgeted increase of this span is $452,908.40 or 3.78%, which is drastically lower than fully-insured plans.

Retirement Costs

The NYS Comptroller has recently released the updated cost for each retirement plan. The vast majority of our staff are in the Employee Retirement System (ERS), and the rates have dropped from 16.2% of payroll in 2021 to 11.6% for the coming year. This reduction creates a savings of approximately $1,880,760 for 2022.


As our Finance Committee has mentioned, it is critical that the Comptroller manage the plan with a long-term strategy in mind. We are thankful that the plans are well-funded and investments are performing at a high level. However, we have seen in past decades when former Comptrollers have reduced the employer share to zero in strong markets, only to then implement massive increases when a downturn occurs. Stability in this plan is crucial for all and very important to our annual budget.


Staffing Levels

It is always important to note that county staff remains our most vital asset. Their creativity, flexibility, and hard work may not always be known to each member of the public, but it is recognized by this Legislature and greatly appreciated.


The early retirement incentive implemented last year reduced the overall headcount, providing us with needed savings, while avoiding layoffs. For 2022, we have increased a limited number of staff, specifically in areas where service demands dictate. Eight positions have been added back in Public Works to ensure the Bridge Crew and other shops can effectively operate. In addition, five positions have been added under Social Services for Raise the Age activities, but these are fully offset by state revenue.


Sheriff / Jail

The 2022 budget continues the trend of investment in Public Safety, specifically in the Sheriff’s Department and the Jail. The budget for the Road Patrol has slightly decreased -$42,386 or -1.30%. This budget keeps staffing in this department flat, with 1.5 FTE remaining zero-based. The Sheriff was successful in contracting with Hornell and Arkport schools for School Resource Officer services, which increases revenue in this budget by $110,000. There are discussions of contracts with other schools for these services, which may necessitate the funding of an additional Sheriff Deputy position, with corresponding revenue during 2022.


For the Jail, costs have again increased, driven by inmate population and the medical needs of these individuals. To meet state staffing requirements and specialized circumstances that occur (such as the need for constant watch of an inmate), overtime is routinely required. To budget appropriately, the Finance Committee has increased the overtime budget by $100,000. In addition, the medical needs of inmates have markedly risen in 2021, whether it is for treatment at a hospital or the need for specialty pharmaceutical drugs. Also, we anticipate Medication-Assisted Treatment for substance use disorders to be implemented in the Jail in 2022. With these factors, the medical cost has been increased by $300,000. In all, the county cost of the Jail has increased $492,263 or 5.45%.




Public Works

The 2022 proposed budget returns Public Works funding to pre-pandemic levels. As previously mentioned, eight positions have been added back to this budget to ensure quality operations, while budgeted cost of materials and maintenance have also be restored.


Notable changes are restoration to prior year funding levels for Maintenance of Bridges, an increase of $647,500. Contractual costs within the General Repairs budget have also been increased by $235,442, with adjustments in a number of line items, including pavement striping, which was largely deferred in 2021.


In recommendation of the Commissioner of Public Works, the Finance Committee agreed to utilize $800,000 of Consolidated Local Street and Highway Improvement Program (CHIPS) funding to aid in the purchase of addition major equipment, raising this funding level to $2 million for 2022. While this is the first year in recent memory CHIPS funds have been partially used for equipment, the county still retains $3,629,818 of these funds for county road repairs and improvements.

Capital Projects and Equipment

To ensure that critical equipment is maintained and replaced on a reasonable schedule, the 2022 budget continues the sizeable allocation to capital expenditures. The draft budget includes a County cost of $262,627 for Minor/Small Equipment (less than $3,000) per item, with significant portions allocated to the Sheriff’s Department ($132,586), the Jail ($52,448), and Public Works ($22,073). 


With improving fiscal conditions, Major Equipment funding has been increased in comparison to previous years. Total county cost for Major Equipment in 2022 is $1,588,645, with the majority of funds going to Public Works ($1,200,000 net county cost after $800,000 of CHIPS funding is applied), the Sheriff’s Department ($102,700), and the Jail ($100,370). 


The 2022 budget also includes $598,096 in general fund capital projects. This is an area where ARPA funding is able to provide budgetary flexibility and assistance, as the Finance Committee has recommended the purchase of $405,000 of IT equipment utilizing these federal funds. Laptops, docking stations, and monitors will be procured to better enable remote work, an allowable expense of restricted ARPA funds. Without this option, this equipment cost would need to be absorbed within the county budget.


This budget also includes $200,000 of capital project costs within Public Works, specifically for fuel system upgrades and the local cost of bridge replacements.


COUNTY REVENUES


Sales Tax

Sales tax remains one of the most critical components of our annual budget, which not only helps fund local services that our residents depend upon, but also assists in limiting the tax burden of those services.


Thankfully, we have seen a dramatic turnaround in economic activity and sales tax collections since the COVID shutdowns of 2020. Specifically, year-to-date sales tax collections through the end of October are up $8,506,922 or 19.88% compared to last year. This picture is further promising considering these year-to-date figures are $6,935,001 or 15.63% higher than the same time period during 2019, prior to the pandemic. While it is uncertain whether this massive increase will be sustained, it does provide the budgetary assurance to reasonably increase our sales tax appropriation estimate by $1.7 million for 2022.


While discussing sales tax, it is important to note that we must keep our attention focused on Albany, with their recent history of diverting local sales tax to pay for state programs. Whether it be to pay a portion of Aid and Incentives to Municipalities (AIM) payments or to restore cuts the state made for fiscally distressed hospitals, this trend of interception is alarming, and results in $351,825 held from Steuben's sales tax to pay for state programs. It is vital that we continue to work with the New York State Association of Counties and our elected state representatives to push back against further actions that strip us of our sales tax dollars.

Fund Balance

The tentative budget includes a General Fund appropriation of fund balance of $7.1 million for 2022 and a County Road Fund appropriation of $620,000. The sum of fund balance appropriations in the 2021 budget was $7.7 million. There is a Landfill Fund appropriation of fund balance of $13.2M that will be used for the construction of new cells at the Bath Landfill. General Fund appropriated reserves total $178,000 for 2022 compared to $361,000 in the 2021 budget. All of these appropriations are reasonable and assist in the overall management of funds.

Interest Earnings

With lingering financial implications of the COVID-19 pandemic and economic shutdown, interest earnings remain lower than what we experienced in 2019 and prior. As a result, we have left General Fund interest earnings flat at $827,000 for 2022.


Property Tax Levy & Rate

With careful examiniation and keen guidance by the Finance Committee and the Legislature, coupled with excellent work by our department heads and staff, the 2022 budget carries a minimal tax levy increase of $495,694 or 0.97%, which is well within the state-prescribed property tax cap limit.


In addition, for the ninth consecutive year, the proposed budget shows a decrease in the average full value tax rate. The average rate for 2022 is estimated at $7.78 per thousand, representing a decrease of -1.89% from 20210 levels.

The property tax collections and average full value rate for the last five years are as follows:


Room Tax

Like other economic activity, we are thankful that tourism has quickly rebounded in 2021. Our tourism promotion partners, most notably the Steuben County Conference and Visitors Bureau, are funded completely with room tax dollars. With year-to-date room tax collections returning to pre-pandemic levels, these agencies are better-positioned for increased levels of funding compared to 2021.


For 2022, we are projecting $899,700 in room tax collections, an increase of $282,500 or 45.77%.


The adjoining graph displays room tax funding allocations for our partner tourism promotion agencies.

Local Impact of State Mandates

Every year, it is important to highlight the local impact of State mandates. As well documented by the New York State Association of Counties, the nine largest State mandates account for approximately 88% of Steuben County’s property tax levy. When factoring in our costs for Community Colleges, it equates to 95% of the 2022 tax levy.


It is notable that over the past three years, the cost of these largest state mandates has cumulatively decreased, with a 4% drop for 2022 alone. The largest drivers of this relief are decreased pension costs, along with stabilization of Medicaid and Safety Net expenses. While this is clearly welcomed news, we must always be mindful of the potential for new mandates or cost-shifts from Albany, as exemplified by the recent trend of sales tax interception.


New York State relies upon local sources of revenue to fill their budget gap every year; at a massively disproportionate rate in comparison to other States across the country. So when the Governor and Legislature bemoan the property tax burden in New York, it can be directly attributed to their reliance upon local government to help fund state operations through property taxes.

CONCLUSION

With a slight increase in the tax levy and a reduction in the average tax rate, the 2022 Steuben County Budget is compliant with the NYS Tax Cap and is a responsible fiscal blueprint for the coming year. Thankfully, with the influx of federal funds that stabilized the state's financial position, counties do not face the immediate threat of massive reductions in aid. In addition, with millions of dollars in federal funds allocated to local governments through ARPA, we have the flexibility to fund capital expenditures without placing that burden on local taxpayers.


We must always monitor new or changing initiatives from Albany, as the actions of the Governor and State Legislature remain the largest threat to our local spending plans and priorities. We will continue to work closely with our elected state representatives, the NYS Association of Counties, and our contacts in state government to ensure that our voices are heard during the development of the state budget.


With a thoughtful and engaged Legislature, talented and dedicated department heads, and high-quality staff, Steuben County remains positioned to be very successful in 2022.

REQUIRED REPORTS