TRAVERSE CITY — Short- and long-term financial strains could prompt Grand Traverse County officials to consider pay freezes, layoffs, employee benefit changes and reduced services.
County commissioners are preparing to piece together their 2014 budget, and this year repeatedly have evoked images of past boards “kicking the can down the road” when confronted with tough questions about the county’s fiscal health.
Grand Traverse County Administrator Dave Benda said last week the can has been kicked as far as it can go.
“It’s not a good year,” Benda said. “We’ve arrived at the place where the can was kicked. Seriously, we have arrived at the place.”
There’s some dispute among officials about just how deep of a fiscal hole the county faces in 2014.
Benda said expenses will exceed revenues in the county’s general fund by about $1.5 to $2 million if the county continues its current services.
But county Commissioner Dan Lathrop contends the budget deficit is closer to $4.2 million annually, when the county’s total unfunded pension liabilities are considered.
The county paid about $4 million to the Michigan Employee Retirement System in 2013, Benda said. The county will be on the hook to MERS for roughly $4.2 million in 2014 because a freeze on an accelerated payment schedule expires this year.
The county’s annual payments will increase incrementally every year after that. The accelerated payments, when flattened out over the payment schedule, mean the county’s structural deficit is much worse than it seems, Lathrop said.
“To say that elephant in the room doesn’t exist is unfair,” Lathrop said.
County employee health care costs also could substantially grow this year. Blue Cross Blue Shield of Michigan estimated a cost increase of more than 20 percent if the county stays with its current plan, Benda said.
Officials are collecting bids from other insurance providers and quotes on the cost of switching to a self-insured plan. Benda said he should have that information soon.
Commissioner Christine Maxbauer said board members are “champing at the bit” to get some budget numbers from Benda.
Benda said he will present the commission with a “big picture” budget estimate during a committee meeting tonight.
Commissioner Larry Inman said the county board exhausted its “one-time money resources,” including spending the county’s fund balance to about 18 percent. The board has a standing resolution to not let it slip below that percentage.
“There isn’t much left to cherry-pick out of the budget to give us these large sums of money,” Inman said.
County officials are looking at possible layoffs, changes to employee benefit packages and a freeze on salary increases, Inman said.
That came as news to Paul Johnson, a county grounds maintenance coordinator.
“There’s been no discussion of layoffs or anything like that in our department,” Johnson said as he painted a speed bump outside the county’s public works building Tuesday morning.
Johnson said he was aware the county faces a sizable budget shortfall in 2014, and added his department is “working pretty diligently” to keep costs under control.
County staffers will present the commission with a preliminary budget this month.