The budget before you reflects the following seven-pronged strategy to manage today’s fiscal realities:  

• Reduce workforce costs
• Spread the pain
• Reduce or eliminate programs
• Reduce duplication and overlap
• Use technology to cut overhead
• Create “Cost Cutting Brigades”
• Increase revenue  

Reduce Workforce Costs 

I am pleased to say I have avoided the need to fire or terminate any county staff--there are no layoffs in the 2003 Tentative Budget!  This was an option I rejected as a means of finding new monies to pay for the Albany Medicaid increases.   

The Executive and Budget Office, in cooperation with agency heads, have for many years reviewed the classification and need to fill each position that became vacant before authorizing recruitment to fill the vacancy.  This was done in order to achieve the savings target included in each annual budget.  This year, however, as the Medicaid deficit became apparent, I took a more aggressive step and directed staff to suspend all existing hiring approvals and to authorize the filling of only the most mission critical positions. 

In addition, we negotiated with two of our employee unions an increase in the physician and prescription co-pay amounts as a means of stabilizing health insurance premium increases.  This change is lowering the cost of health insurance coverage for both the county and our employees.  The jail union leadership has refused to accept this mutually beneficial offer. 

While we avoided layoffs, we have deleted thirty-one vacant positions in the tentative budget for a net to county savings of $569,000.  The need to create new positions, primarily to address the growing demand for child and adult protective services, reduced that net savings to approximately $227,000.  However, the tentative budget also includes a net to county salary offset of $1.5 million to be realized through retirements. 

At its August meeting, the Legislature approved legislation to enable eligible county employees to obtain additional benefits if they retire before the end of this year.  Preliminary indications suggest a number of employees will take advantage of this offer.  While some have already made their intentions known, others continue to weigh the impacts before deciding.  The early retirement program will need to be managed to achieve the desired financial target.  However, doing so will not be invisible to our residents and clients.  Rather it will be seen and felt as services, programs and administrative support systems suffer staffing shortages.  This is also true with the thirty-one vacant positions which we eliminated.

It is important to emphasize, Dutchess County Government employs fewer people today than it did a decade ago.  Ours is a very lean government which depends greatly on the ingenuity and hard work of its managers and employees.  To assume that our workforce can be slashed without impact is foolish and irresponsible.  Once a clearer picture is available in December of which employees will leave and which will stay, senior staff and I will reassign remaining staff as needed to continue high priority programs, will analyze position classifications vis-à-vis redefined duties, and will authorize promotions and recruitments to satisfy critical needs.  Again, I restate--There is little question that programs and services will be negatively impacted.  Our objective will be to minimize those impacts to the greatest extent possible.  

 Spread the Pain 

There is no miracle cure or simple solution to ease the pain in this budget or the destabilizing impact that will inevitably result from the simultaneous retirement of so many employees.  The executive office and department heads will have a daunting challenge to maintain operational stability due to the early retirement program.   

I do not believe “across the board” cuts to budgets is a wise choice because doing so ignores program priorities and the effectiveness of service delivery.  Accordingly, the 2003 Tentative Budget does not take this approach.  However, Executive and Budget staff worked closely with commissioners and department heads to determine the impacts of holding spending at current levels or less.  These impacts were analyzed and proposed growth above those levels was generally rejected. 

Reduce or Eliminate Programs 

The role of government is to provide services to the public.  The debate often centers on which services and at what level they are to be provided. 

At the outset of development of the 2003 budget, we faced the very real possibility of having to propose a property tax increase of over 50%.  Through the efforts of many, however, we were able to identify strategies and efficiencies to significantly reduce that property tax shock. 

As a result of these efforts, we have saved a number of programs that otherwise would have been reduced or eliminated entirely.  Included in this “saved category” are Sheriff’s road patrols at current levels and the School Resource Officer Program; highway paving and maintenance; flu clinics and programs for the elderly; criminal prosecution services at current levels; water quality testing and West Nile Virus initiatives; availability of parks facilities at current levels; community planning and economic development programs; our very important Domestic Abuse and Forensic Nursing Programs at current levels; grant funding of the Bardavon and other community partners and more.  Of particular note, my Tentative Budget provides for the restructuring and strengthening of our county Medical Examiner’s Office as was approved overwhelmingly by the Legislature earlier this year.  

While we were fortunate to be in the position to maintain many highly valued services, the Tentative Budget does include casualties.  With a sense of great personal loss, I am forced to reduce funding of my Children’s Health Initiative by $400,000, a program which has accomplished so much in the past three years (just a temporary pause, I hope).  I was also forced to eliminate county grants to libraries with the sincere hope they are able to replace this loss with local municipal or library district revenues or grants from other institutions.  Let’s remember, local libraries are not part of county government.  They are local and when trying to be sure we have money for necessities like the 911 Dispatch Center or for sand and salt to keep our roads safe, it is difficult to say we also can be so altruistic to non-county government organizations who have other revenue sources.  Other casualties include the grant we have provided to the Civic Center in past years, as well as reductions in grant amounts for the Arts, Cooperative Extension and other environmental services, mediation services, and others. 

Understandably, legislators, the media, interest groups, and residents will focus much attention on what county government cannot afford to do.  That must be balanced, however, with an understanding of the numerous very important programs and services that will continue to be provided for our residents.  After all, we will still be spending over $300 million.  It is also important to understand that none of the casualties of this budget would have occurred had it not been for the Albany-imposed Medicaid mandate siphoning dollars away from these high priority local programs. 

Reduce Duplication and Overlap 

Throughout my tenure I have sought opportunities to restructure service delivery systems to achieve greater efficiency while also improving program effectiveness.  I have included $100,000 in the 2003 Tentative Budget for the purpose of an organizational review of Dutchess County’s health, social and human service delivery system.  This study will include the departments of Aging, Health, Mental Hygiene, Social Services, Veteran’s Affairs, and the Youth Bureau. 

Changing conditions call us to an even higher level of action.  When organizations are most challenged by economic downturns, increased costs, and higher demands for services, a comprehensive internal look must be made of the organization. 

Business and industry re-engineer all the time and we want to continue to do that in county government.  My goal is to find more opportunities to identify promising innovative solutions. Improved, more cost-effective and integrated service delivery must be explored under the existing environment.  What was up to standard just a few years ago may not be good enough for county government today and tomorrow. 

The study will identify possible overlap, duplication, and mandated versus optional services.  The objective will be to identify recommendations for operational improvements and realignments, including consolidations as well as alliances with community partners.  The goal is to continue to improve services, service delivery and, very importantly, save taxpayers money. 

A similar organizational review is also envisioned in the 2003 Budget for criminal justice agencies for just as changing conditions require us to review existing human service delivery systems so, too, do they require us to analyze criminal justice services. 

Use Technology To Cut Overhead 

One reason Dutchess County government employs fewer people today than a decade ago is my ongoing commitment to using technology wisely.  Included in the 2003 budget is funding to bring the Mental Hygiene Department’s management system into compliance with the federally mandated Health Insurance Portability and Accountability Act, hardware and software efficiencies for public safety systems in the Sheriff’s Office and Probation Department, enhanced fiber optics to improve data sharing with the Department of Social Services and others and hardware and software to improve Web based services.  These “no frills” investments are critical if we have hope in achieving service targets with a reduced workforce. 

Create “Cost Cutting Brigades” 

Earlier this year I formed a task force consisting of representatives from the Executive and Budget Offices, Personnel, Finance and the Comptroller’s Office to analyze workflow and internal control procedures in a county department and to recommend methods to improve each.  That very successful “pilot project” has encouraged me to continue the approach in 2003, particularly as it becomes necessary to sustain service delivery objectives with reduced staff. 

Increase Revenue 

It is obvious from the above discussion that the Albany-imposed Medicaid burden together with other state mandated costs have had a serious detrimental impact on county government programs and services and our relationship with our community-based not-for-profit partners.  The 2003 Tentative Budget totals $314.3 million, $10.6 million (3.5%) greater than the current budget as modified by the legislature. As demonstrated on the chart at left, if you subtract out Albany-imposed mandated payments for Medicaid, pension and other human service programs, we have squeezed down the remaining appropriations to $4.6 million LESS THAN THE CURRENT YEAR 2002 MODIFIED BUDGET.  However, the full impact of these Albany-imposed burdens cannot be absorbed without totally undermining county government’s ability to serve the public.  We are forced, therefore, to consider revenue increases to preserve essential programs and services. 

The Tentative Budget includes numerous small increases in existing fees.  These increases range from aircraft tie-down fees at the airport, to environmental engineering fees in our Health Department to the fees charged for services provided by the Sheriff and more.  Of particular note, however, is the Budget includes anticipated revenue of $300,000 to be derived from an increase in the Hotel/B&B Room Tax.  This tax, which is paid by out-of-town visitors, would increase from three percent to four percent effective in April.  The proposed rate is consistent with those of other New York State tourism destinations.  Albany County has proposed an increase from 3% to 6% in their tax; Niagara and Warren Counties (Lake George) have each proposed new “bed taxes” at 4%.  Please also be mindful my budget includes new tourism promotion funds for Internet Web marketing. 

Also included in the budget is a twenty-five cent bus fare increase to help offset lost federal transit aid.  The $1 proposed rate mirrors the rate adopted by the Mayor and City Council for the City of Poughkeepsie transit system. 

It is important for the residents and businesses of Dutchess County to be assured that the Executive and Legislative branches of this government have been united in our effort to reduce the property tax burden.  In fact, the property tax burden has been reduced seven times during my ten-year tenure as County Executive.  As a result of an exhaustive amount of work and some very unpleasant, difficult choices, this budget includes an average county property tax increase of 9.6%.  County property taxes only represent approximately 13% of the average tax bill for all land taxes.  The increase will cost the hypothetical “average” owner of a home assessed at $150,000 an extra $46 per year.  Even with the additional amount to be raised by property taxes, however, I am proud to say because of the seven tax cuts in my past ten budgets, the property tax levy for the Dutchess County share of the property tax bill will still be below the 1989 level!

To quote perhaps one of the most often quoted individuals of the twentieth century…Yogi Berra, “The future ain’t what it used to be.” 

This is not a year of business as usual.  The Albany-imposed Medicaid mandate has changed tomorrow’s fiscal realities.  Despite the casualties and program and service impacts included in this budget and despite its call for increased fees and taxes, it also calls for a significant appropriation of fund balance. 

I have been unyielding in protecting the County’s fund balance from those who, if they had their way, would have squandered it on pet projects, new recurring county obligations and new entitlements.  A journalist recently confided to me that he too was guilty of advocating spending down county reserves.  It was my belief that the good times enjoyed at the top of the economic cycle would inevitably be followed by the harsh reality of economic decline.  While I would certainly have preferred a strong economy, unfortunately, I have been proven correct. 

I have proposed the prudent use of $4 million of the remaining fund balance in 2003 to maintain essential services and minimize the impact of Albany-imposed mandates on our local property taxpayers.  Doing so does not solve our dilemma, however, it merely provides more time to develop long-term strategies to address tomorrow’s fiscal realities.  It must be clear to everyone by now, the solution rests in Albany.  Dutchess County and counties across New York State must have their collective voice heard that a fundamental restructuring of the Medicaid financing relationship is needed.  The regressive property tax simply cannot support what is very quickly becoming universal health care for New Yorkers.

Always the realist, I know such fundamental restructuring will not occur overnight.  Therefore, one objective of this budget, and a key policy recommendation to the county legislature, is to set a course to rebuild and replenish our fund balance through a combination of revenue enhancements, program discipline and continued fiscal control.  It is essential these reserves be reestablished to their prior levels in order to preserve our enviable bond rating. If we do not, we will pay more to borrow money and with no rainy day fund, county government will face a fiscal storm of huge proportion. 

Rebuilding our reserves will be a particularly difficult undertaking because not only will 2003 be a difficult year, but 2004 and 2005 are sure to be as well!  Why?  Because the Albany-imposed mandates have created a structural deficit in our county’s finances that will be extremely difficult to overcome.  I feel as if we are looking into a long dark tunnel searching for the light at the other end.  I know it is there and I know we will find it, but the journey will be a difficult one.  There are no simple answers, no quick fixes, and no way to avoid the difficult journey. 

We face these trying times ahead with the knowledge that difficult decisions will need to be made requiring a few pounds of political courage in both the Executive and Legislative chambers. I have tried to submit a plan which is both sound and fair given the difficulties we face.  Just as we did in the mid 1990’s, we need to take decisive action now in order to ensure the strength of our community and our service delivery system in the future. The people of Dutchess County expect nothing less from us.  I look forward to working with you in the weeks ahead as you review, and act on this plan for Dutchess County in 2003.  

In closing, I wish to express my thanks to my entire Executive Office and Budget Staff, to all my Executive Department Heads and to the independently elected officials for their assistance, understanding, cooperation and support throughout the difficult process of developing the Year 2003 Executive Budget. 

Sincerely,

WILLIAM R. STEINHAUS
Dutchess County Executive

The 2003 Budget includes appropriations of $314.3 million, a $10.6 million or 3.5% increase over the 2002 budget as modified by the County Legislature.  Note the modified budget includes multi-year retroactive salary and employees benefit increases for most union-represented employees.  When Albany-imposed mandate costs are factored out, 2003 non-mandated spending is actually $4.6 million less than the current 2002 modified budget.

2002 Press Releases