Franklin County considers drastic plans

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August 20, 2010

By DENISE A. RAYMO Staff Writer The Press Republican Fri Aug 20, 2010, 12:07 PM EDT

MALONE — Franklin County will likely freeze its 2011 budget at its 2010 level then ask department heads to cut another 5 percent to establish their annual funding ceiling.

The drastic measures informally outlined by Board Chairman Guy "Tim" Smith this week were in response to hearing again that Albany owes more than $5 million in late reimbursement payments for services and programs the county already provided.

That was coupled with a reminder that the county's available cash-on-hand is down to a little more than $1.5 million because the delayed money is not available for investment accounts and not accruing badly needed interest.

The county used $13 million in reserve and fund balance during the last three years to keep taxes down, but there is not that kind of money available for 2011 and beyond, officials say.

The dire situation was shared with legislators again by County Treasurer Bryon Varin, who has recommended freezing any 2011 budget created at its current funding level.

He also obtained board permission to seek a $2 million line of credit to help pay the county's bills if the state-reimbursement delays continue much longer.

Word came Thursday that just $1,800 of the $5 million owed was being disbursed by the state today.

"I don't like to borrow money, but this is being proactive," Varin told legislators.

He said he has negotiated with three financial institutions about the possible line of credit and said that, because of the county's strong credit rating, it would likely have an interest rate of between 4 percent and 4.25 percent.

"If it's over 5 percent, we won't do it," the treasurer said amid questions from Legislator Paul Maroun (R-Tupper Lake), who wanted to know the obligation taxpayers would be under if the line of credit were needed.

Varin said 70 percent of the county's revenue is from state and federal sources, 18 percent is from sales-tax revenue and the other 12 percent is the county tax levy passed on to property owners.

The county's 2010 adopted budget was $111,011,341, and legislators used $4.4 million from reserves and fund-balance accounts to keep taxes down.

For its $107,334,788 budget in 2009, the county used $5.8 million, and in 2008, the $104,753,702 budget included $2.8 million from the reserves and fund balance.

But Varin warned that will not be the case in 2011 because there is little money from which to draw or invest.

"The reserves and fund balance have supported the government for the last three years," he said. "And because of that, I have been telling them we need to be very careful we maintain a balance for future years."

He said tax bills will go out soon and that about $8 million in county, town and school taxes will be paid into the county.

Chairman Smith agreed caution is needed as legislators look at 2011 spending.

"We're very bleak in our reserves," he said. "We're at rock bottom, and we've spent more money because the state is not reimbursing us."

The Fort Covington Democrat said he wants a bare-bones budget from everyone submitting spending plans for their departments and then, as state reimbursements come in, some funding may be restored if it is properly justified as necessary.

E-mail Denise A. Raymo at: draymo@pressrepublican.com