It’s not exactly Christmas in July at the Spokane County courthouse, where commissioners are gearing up for the 2012 budget.
Department heads can expect an extra stocking on their mantels for capital expenses, but they’ll have to help fill it.
In addition to frugal spending, tax increases might help establish a new capital expenditures fund.
Commissioners hope a formal capital budget will prevent last-minute crises and curtail the annual parade of department heads seeking special consideration for big-ticket items.
“What I’m anticipating is that we are going to create a realistic expectation about what our capital needs are,” Chairman Al French said.
In some cases, he said, day-to-day spending may need to be curtailed to accommodate long-term needs.
“There will be some difficult conversations,” French said.
The county already faces an estimated $4 million shortfall next year in the general fund.
Use of “banked capacity” in general fund and road fund property taxes is one of several possibilities for building a capital fund.
Local governments may hike their property tax levies 1 percent a year or – as Spokane County has sometimes done – save some of the taxing authority for later use.
The county has nearly $9.1 million worth of banked capacity in the road fund and $338,053 in the general fund.
Road-tax money can’t be used for other purposes in most cases, but real estate excise tax receipts could be diverted from the road fund to the new countywide capital fund.
Banked capacity could offset the real estate tax, which would have freed about $1.3 million this year. However, state law narrowly limits real estate tax uses.
Cashing out banked property taxes could be a challenge for commissioners, such as French, who campaigned on a “no new taxes” platform.
“This isn’t a new tax,” French said. “It’s accessing a tax that’s already there.”
He said using banked capacity for capital needs would be cheaper than borrowing money.
Other possibilities include setting aside some of the money county departments don’t spend in their regular budgets.
“That would be a possibility, a very realistic one,” Budget Director Bob Wrigley said.
However, commissioners traditionally rely on that money to keep their unallocated reserves at approximately 10 percent of the general fund budget. Shrinking revenues are making that difficult, and reserves have slipped to about 9.3 percent, or $13.8 million.
Aside from serving as a rainy day fund that helps the county maintain its interest-reducing AA bond rating, unallocated reserves provide cash flow. Payroll costs and regular bills can be paid without borrowing money if reserves are adequate.
Sheriff Ozzie Knezovich wanted to establish his own capital fund with regular budget money he doesn’t spend. Still, he welcomed the countywide capital fund.
Even though the Sheriff’s Office will have to compete with other departments, “it will give us, for the first time, a reliable source of funding for our needs,” he said.
Knezovich said he is developing an internal capital budget that will show commissioners “the entire cost of running the Sheriff’s Office.” He’ll have a list of projects ready for a new committee that will prioritize capital needs throughout the county.
French thinks roads and public safety will be top priorities for the panel of county and business officials.
One of the committee’s challenges will be to draw the line between day-to-day expenses and capital projects.
“Normally, it’s going to be something that’s got a useful life of more than one year and a unit cost of more than $5,000,” Wrigley said.
But there will always be some ambiguity, he said.
Ten personal computers probably wouldn’t be a capital expenditure, but 20 would, Wrigley said.