The McCracken County Fiscal Court knew its budgetary belt would have to be tight coming into the May 29 meeting, but the news of a nearly $900,000 shortfall for the coming fiscal year proved shocking.

"We knew it was a rather dismal picture, but I guess it's frankly worse than what we thought," Judge-Executive Craig Clymer told the Sun. "For years the county has dipped into savings to reconcile the debts and the cost of providing services rather than raising any revenue to cover that. We're talking about a rather dire situation with the budget as far as meeting expenses and operating the daily government in-and-out."

Deputy Judge-Executive Steve Doolittle, who -- along with Pamela Thompson, the county's treasurer-- has been tasked with tackling the issue of McCracken's financial status, delivered the news.

"The last couple fiscal courts have taken the approach of be frugal, nibble away at the edges, cut what you can cut and use the fund balance to fix the budget," Doolittle said Thursday. "It's a fine strategy and I'm not actually critical of it, but it has run its course. It's not sustainable."

The fund balance, essentially the county's unspent money from years past, is important to the operation of local government. It plays a key role in the county's ability to borrow money and in allowing for adequate cash flow through its agencies. The past seven years of deficit spending have seen the fund balance dwindle from over $7.2 million in 2012 to just under $3 million in 2018, with the fiscal court expecting it to fall to around $500,000 in the next budget cycle.

"I had no idea that the county reserve funds were so low," Commissioner Jeff Parker said Wednesday. "We absolutely have to get back to where we are financially in a good spot. Right now we're not. We're going to have to come up with ways to pay our bills and, at the same time, put a little bit back in reserve each year."

Commissioner Bill Bartleman echoed Parker's sentiments later that day.

"The county really has a tight, bare bones budget at this point. We don't really have a lot of fluff in there where we can cut funds," he explained. "I'm not sure that in the last four years we were adequately informed on how deep we were getting into those things."

With the decisions of past fiscal courts weighing on the present one, each of the members feels the need to end the cycle.

"We are where we are," Commissioner Eddie Jones said. "It's something that somebody was going to deal with eventually, and it just kind of falls on our time to have to do it. I feel like we've got a good team to manage this problem. We're not going to kick it down the road any longer."

This decline has been caused mostly by three things, the "spiraling Kentucky problem of pensions," the rise in health insurance costs and debt incurred by the county -- McCracken has borrowed around $40 million since 2011 and paid off a little less than half that.

Doolittle is inclined to think the past three fiscal courts have been, perhaps, too optimistic in trying to wait out the state's pension crisis.

"I think we'd been hoping that something would change with the pensions, and we've been hoping that for 15 or more years at this point," he said. "Hope turns out to be a bad strategy."

In terms of ways to cut spending or raise revenue, there've been several small changes to the budget proposed. Clymer suggested reducing the amount of paving done by the county, delaying unnecessary capital improvements and implementing a hiring freeze in some departments.

Bartleman discussed the possibility of reinstating the inventory tax -- a revenue stream that McCracken County is one of only three in the state to forgo -- as well as reexamining the money the court gives to nongovernmental agencies and working with the city on 911 system reform.

Another suggestion, from Jones, was to look at how the jail processes state felony inmates.

Several members, Doolittle included, spoke of taking the maximum property tax increase, a 4% increase to the total collected by the county, as McCracken County currently has the 16th-lowest total in Kentucky.

Two options the court seems unlikely to consider are laying off employees, per Clymer, and raising taxes across the board.

"I don't think anyone's in favor of any kind of broad base tax increase at this time," Bartleman said. "We just have to look at everything we do and find a way to cut some money out."

The change for the county, Doolittle believes, is going to be "something we're not going to like. There's just not a lot of good options at this point.

"Overall, McCracken County is a frugal place. There's not a lot of fat on this bone. Now we have to decide what we have to do to be responsible and to provide the services that we need to provide and how we're going to do that moving forward," he said. "How we're going to do that is something that remains to be seen at this point."

While Clymer has described the situation as "bleak" and "dire," he feels that it's possible for the county to get going in the right direction.

"It's time to turn this around," he said. "It's nothing we won't work our way out of, but it took a while getting here and it's going to take a little while getting back out."

The commissioners will meet with Doolittle and Thompson again on Monday for a budget workshop to continue discussing the county's strategy.

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