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A $400,000 transfer from its reserve fund will enable Union County to balance its proposed 2012-2013 budget, provide the sheriff’s office with new patrol cars, make improvements at the airport, and give county employees a 3 percent of cost-of-living increase without raising taxes.

Supervisor Tommy Sinclair said Thursday that while the budget process is continuing, the consensus that has emerged from Union County Council’s budget work sessions over the past several weeks is that the proposed 2012-2013 budget include more than $300,000 for new patrol vehicles for the Union County Sheriff’s Office and a one-time match of $50,000 for improvements at the Union County Airport.The proposed budget would also include an across-the board 3 percent cost-of-living increase for county employees which Sinclair said is consistent with similar increases proposed and/or approved by other governmental agencies including the City of Union and the Union County School District.

Even with these added expenditures, Sinclair said council has no plans to raise taxes. Instead, $400,000 would be transferred from the county’s reserve fund to the general fund to cover the additional expenditures and balance the budget without a tax increase.

The county’s reserve fund currently totals $4,139,089 and is expected to grow during the remainder of fiscal 2011-2012. Sinclair said that at its current level, the reserve balance amounts to nearly 40 percent of the county’s annual operating budget. He said this will allow the county to transfer the funds to balance the proposed budget while maintaining a more than sufficient reserve.

“Governmental entities which cannot operate with a deficit like the federal government does, generally consider 20 percent of the annual budget amount to be a very safe operating reserve,” Sinclair said. “We have built our reserve back to $4.1 million, which is 38 percent of annual budget or almost twice the standard safe operating reserve. The use of $400,000 from the general reserve fund of $4.1 million is less than a 10 percent reduction in the general reserve fund.”

Sinclair pointed out that a reserve fund is built up and kept on hand for those times when the county needs additional funds for special projects and/or to balance the budget in years when expenditures are projected to exceed revenues. He pointed out that between 2008 and 2010 more than $2 million in the reserve fund was used for non-budgeted construction at the Timken Sports Complex. Reserve funds were also used to repay losses in the Clerk of Court’s Office and to replace misappropriated funds used in the up fit of the county annex. Those transfers caused the reserve fund to decrease until 2011 when it grew by $332,934 and has since continued to grow until it now exceeds $4.1 million.

“While no one advocates continued use of general fund reserves, the actual purpose of it is for use on occasion when expense is greater than revenue,” Sinclair said. “Remember that $2 million of the general fund reserve was used to complete construction at Timken Park. This proposed transfer will be used primarily to purchase new patrol cars for the sheriff’s office.”

Sinclair added that increased county revenue resulting from the expansion of the Gestamp LLC manufacturing facility and the arrival of new industries such as ESAB Welding & Cutting Products and the Belk eCommerce distribution and fulfillment center raises the possibility that the proposed transfer could soon be replaced.

“While the future is not predictable, recent increased and new industrial expansions tax revenue indicate that the reserve can be replaced to current levels next year,” Sinclair said.

In addition to the transfer from the general fund, Sinclair said the proposed budget would also include the allocation of unused building project funds to cover the cost of the renovation of the old Chrysler building. The building is being renovated to serve as the new location of the Union County Vehicle Maintenance Department which has been operating out of the Union County Airport since its previous facility on SC 18 was declared unsafe last year. The county is also looking at using part of the building for storage space and to house some offices.

Also, the proposed budget includes an equipment upgrade at the Public Works Department that would be paid for with some recycling funds.

Revenues and Expenditures

Sinclair pointed out that county revenues have remained essentially unchanged in recent years despite a slight increase in tax revenues and a moderate increase in landfill fees. He said the increase in these revenue streams have been offset by what he described as “severe reductions” in state funding.

“Four years ago we got $1.7 million from the state,” Sinclair said. “Last year we got $934,000. I have been trying to deal with that since I assumed office. This year, there is a plus-up from the state of about $100,000. That’s been approved by the Senate, but it still must be approved by the House.”

The county’s basic expenses have also remained the same in recent years since there have been no pay raises or increases in funds allocated to county departments and offices. Sinclair said the only increase in spending in recent years has been for the installation of systems that will enable the county to provides services online and more internal accountability.

Costs have increased in the areas of insurance, retirement, fuel, utility and other non-department items. Sinclair said these increases are beyond the county’s ability to control, some of them the result of state mandates and others, such as the price of fuel and utilities, due to to the economy.

In addition, Sinclair said the county has had several large, unexpected expenses such as the replacement of the courthouse roof to stop leaks; the replacement of the jail roof to also stop leaks; the rebuilding of a cell block in the jail for security purposes; and the condemnation of the old maintenance shop and the purchase of the Chrysler building.