The rainy-day fund held by Spokane County government is so dry, the county’s prestigious Wall Street bond rating could be threatened.
But officials said Monday the bond rating can still be salvaged before taxpayers end up paying millions of dollars more in interest on projects paid for with long-term debt.
Financial consultant Jack McLaughlin of D.A. Davidson & Co. will break the bad and good news to county commissioners today.
The bad news is that the county’s reserve fund, or savings account, is down to $517,000. With a general fund of $81 million, the county should have at least $2.5 million and preferably $4 million in the bank.
Healthy government entities set aside 3 percent to 5 percent of their budgets for emergencies, McLaughlin noted.
The good news? County commissioners can send a strong signal of fiscal fitness to investors by continuing to gradually downsize the payroll and by cutting marginal services - in other words, getting lean.
Since 1990, the county’s reserve fund has been on a slide, dropping from $5 million to half a million dollars.
“That’s pitiful,” said McLaughlin, a vice president for D.A. Davidson. “The key is to start going in the other direction.”
The county has depleted its savings through new criminal justice jobs - a response to public fears of crime - and unforeseen emergencies such as a courthouse security system and new programs mandated by the state Legislature.
Moody’s Investor Service and Standard & Poors, the industry benchmarks, give Spokane County a Double-A rating and a Double-A-minus. The Double A is coveted by local governments and tells investors the county is well managed and has the wherewithal to withstand a recession, McLaughlin said.
Only the state of Georgia and a handful of other governments have earned the rare Triple-A rating.
Should Spokane County slip to an A rating, interest rates would climb.
“You’re talking about millions of dollars,” said Marshall Farnell, the county’s director of budget and finance. “You need to present a strong financial case to keep your ratings up.”
County Commissioner Steve Hasson shoulders some of the blame. He has been on the commission seven years and said he helped sanction a boom in the work force. Now he’s putting on the brakes.
“I’m as much at fault as anyone,” Hasson said. “We’ve been living hand to mouth. We’re bloated. Too many people work here. We provide too much service.
“Wall Street needs something from us at this time beyond lip service,” he said. “They need a commitment.”
The commitment will be continuing a steady reduction of county jobs and services, Hasson said. Several mid-management jobs already have been axed. New clerical positions are going unfilled.
“We’re living a very tenuous existence,” Hasson said.
, DataTimes MEMO: This sidebar appeared with the story: AT COUNTY EXPENSE Spokane County government has been hammered recently with emergency expenses: A new courthouse security system, including a metal detector and guards at the front door, $164,000. Union settlement for the prosecutor’s office, $140,000. Gang task force, $80,000. New courtroom, $58,000. Court-mandated dental program for the Sheriff’s Department, $39,000. Alarm system for the juvenile detention center, $25,000. Other unbudgeted costs are overtime for jail employees and pay raises later this year for District and Superior Court judges. J. Todd Foster