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County budget pickle: Bad luck or bad management?

Mecklenburg County is facing a budget crisis on two fronts. Short-term, the county must close a funding gap of nearly $35 million dollars, which it will do through cuts that include closing 12 libraries in the next few weeks. But for the fiscal year that starts July 1st, the projected gap is now $85 million and some county departments, such as the library system, could be forced to cut their budgets in half. The following includes two reports on Mecklenburg County's budget. WFAE Lisa Miller will tell us about two areas of county government that are being spared the budget ax. The segment starts with a story produced by Julie Rose. She takes a look at what got the county in its financial mess. This question is going to sound kind of harsh, but let's ask it anyway: Is Mecklenburg County in this budget pickle because of bad luck or bad management? "That's a very simplistic way to put it," says Democratic County Commissioner Dumont Clarke. "It's hard to say either bad luck or bad management. I think it's a case of a boomtown that went bust." On paper, there's a lot of truth to that - especially on the revenue side of the equation. "There's nothing we could have done on the revenue situation," says County Finance director Hyong Yi. He says for the first time in recent memory, property tax collections for the county are flat. And the commission has no plans to raise the rate. They also haven't adjusted property values in the county's tax system in seven years. A year ago there was some hot debate about revaluation and the commission opted to put it off until next year. Technically speaking, Yi says going ahead with it may have helped the bottom line. "If your goal is simply to raise as much money as possible through the property tax then yes, in hindsight you would have revalued when the market was at its peak," says Yi. However, he adds property revaluations are usually budget neutral because while some property values go up, others go down The other big revenue stream is sales tax which is expected to be down a whopping $17 million for the coming year. And Yi says there's not much we can do about that: "We can't make people go out and buy stuff." The county can't raise the sales tax either, without state approval. So that leaves us with the spending side of the budget. And this is where Republican Commissioner Bill James thinks bad management comes into play. "For a whole number of years - in the late 90s and 00s, there was always some tax increase and during that time we increased the budget for a lot of stuff frankly we should never be doing," says James. Not all of the county commissioners agree with James on that, but there is one thing they can't deny: the county has been on a building spree for many, many years. Democratic Commission Chairwoman Jennifer Roberts says, "The only thing that could have given us more of a cushion would be if we had slowed our spending on school construction. But you know that's an essential service." There was also a slew of new government buildings like the courthouse and park improvements, among other things. Today 20 percent of Mecklenburg County's operating budget goes toward paying the mortgage, so-to-speak, on all of that. So, bad luck or bad management? It depends on who you ask. But county finance director Yi does say this: "If it was bad management, we would be the only one going through this. Everyone else would be fine." County Manager Harry Jones has given commissioners a road map of possible ways to plug a projected $85 million shortfall next year. Departmental cuts could range from 0.5 percent to 50 percent. Libraries and Park and Recreation could take the biggest hits. Director of Libraries Charles Brown is still trying to get his mind around what losing nearly half his budget next year could mean. That's $17 million. "We are one, modestly speaking, or maybe I should now use the past tense," began Brown. "We were, past tense, one of the leading urban libraries in the country and that distinction is rapidly dissipating. With a 50 reduction I don't know what library system this would be. I just don't know." But there aren't cuts all around. Budgets could actually go up in two areas. That's the auditing department and the money the county spends on business incentives. "And don't forget we didn't cut the morgue," points out Commissioner Bill James. "Government doesn't, even in an economic downturn, doesn't just say everything gets cut, especially if something's been screwed up," says James. "So we're trying to beef up the audit department so we don't have a Giving Tree coming up again." Up until this year, county departments were audited sporadically. Then the DSS Giving Tree scandal broke and the county couldn't figure out if all $162,000 meant for gifts for foster children were spent correctly. The response was to add more auditors. That's a hike of $250,000. Then there are business incentives which will get a boost of $1.9 million for a total of just over $6 million next year. That spending is basically a guarantee because the county already promised it to businesses moving into the area. Commissioner James thinks they're a waste of county money. But Commissioner Clarke, like many other commissioners, say it's unfair to see these tax breaks as lost money. "These were wise investments for the future of this county. Short-term it's going to cost us some money, but without those incentives.who knows?" In neighboring Gaston County, the budget outlook isn't so bad. County Manger Jan Winters says Gaston County has a nearly $8 million surplus for the year. So far, expenses are well over $5 million dollars less than what was budgeted, and revenue has exceeded projections by about $2 million. Winters says cuts in past years have braced the county for 2010. He also says that, unlike Mecklenburg County, Gaston County's government isn't dealing with a drastic falloff in sales taxes because it doesn't expect much. While residents tend to buy essentials in Gaston County, Winters says they spend most discretionary income somewhere else - particularly Charlotte. He figures residents of Gaston and other counties have scaled back their discretionary spending, and Mecklenburg County is paying the biggest price.