Poughkeepsie… Dutchess County Executive William R. Steinhaus announced today county government’s final 2007 audited fund balance of $39.4 million. PriceWaterhouse Coopers LLP, (PWC) the national firm who audited the county’s financial statements reported the $39.4 million fund balance to Dutchess County’s Audit Committee on Tuesday. PWC’s final report will be officially released to the County Legislature, County Executive and County Comptroller by September 30th.
County Executive Steinhaus said, “It is through our fiscal stewardship and planning on a multi-year basis that we ended 2007 with a solid fund balance. This pre-positioning will be key in helping to offset some of the negative impacts from declining government revenue, reduced state aid to counties, and the overall economic downturn. Our goal has always been to keep an adequate fund balance so county government can better weather economic uncertainty and fiscal challenges such as what we are currently facing as a result of the turmoil on Wall Street, the slump in the housing market, and a decline in consumer spending.
“Unlike the 2007 fiscal year close out, Steinhaus said, we believe the 2008 fiscal year fund balance closeout will be negatively impacted by State aid cuts, declining sales tax and mortgage tax revenues, increased costs for state mandates and other unavoidable inflationary cost increases. Other indicators of the continuing negative impact of the economy include declining interest earnings for county funds as the financial markets remain unstable as well as declining fee revenues from land related filings and permits. We are actively working to conserve this year’s spending to protect as many dollars as possible to offset shrinkage of fund balance at year end 2008.”
There is also concern about the possibility of even further state aid cuts to the county budget as the Governor is considering calling lawmakers back to Albany again next month for another special budget-cutting session to address the state’s fiscal woes.
“Just like county residents, county government is also challenged with rising energy costs for gasoline and heating oil. Expected increases for health insurance, Medicaid and other state mandated programs, increased labor costs and other annual inflationary costs will need to be absorbed by the county budget at the same time revenue is shrinking. For this reason, we must continue our strategic and carefully planned application of fund balance on a multi-year basis,” County Executive Steinhaus said.
Moody’s Investors Service recommends a county carry a fund balance of between 5 and 10 percent of its annual operating budget. Dutchess County’s current balance is 10% of its 2008 budget, which totals $394 million. The fund balance plays an important role in the county’s bond rating which is used to determine interest rates paid by the county when issuing long term bonds. The higher the county bond rating, the lower the interest rates and the less taxpayers pay when the county government borrows money to fund capital projects such as road and bridge repairs, building renovations and parks improvements. Dutchess County has earned one of the highest bond ratings in the state from Moody’s Investors Service at Aa2.
County Executive Steinhaus said, “While our fund balance was solid when we closed out the 2007 fiscal year, it’s more vulnerable now and we know how quickly it can change. We will continue to evaluate circumstances at the national, state and local level and take corrective budget measures as necessary. We also continue to be proactive in governing and planning as we respond to the economic and budgetary situation in front of us today and for the next several years.