“We’re in territory we don’t know what’s going to happen, stock markets are falling 1,000, 1,500 points in one day, we’ve had the worst April since the Depression, think about that, to me that is terrifying,” he said. “Maybe they can put some things back in place but there is so much being unraveled we need to pay attention. I think we need to put some policy in place to restrict any new hiring, only replacements. We’re going to put a freeze across the board on everything, this could get very, very serious and we need to be in front of it, not behind it.”
Credit: Nick Graham
Credit: Nick Graham
The county’s budgeted general fund expenses have risen 15.4% since the pandemic hit in 2020 from $109.4 million to $126.3 million this year. Budgeted revenues are projected to reach $133 million this year, a 21.5% increase.
Commissioner T.C. Rogers said he isn’t ready to pull the trigger on a hiring freeze at this juncture but “maybe we should have some criteria or measurements to see when we’re getting close to the edge.”
“I’m not ready at this desk to vote for a hiring freeze,” Rogers said during their board meeting on Tuesday, but agreed they need a contingency plan. “Maybe it’s like to be ahead of the game that you say if this happens we’re going to cut here, here and here. Maybe we should verbalize what those first cuts are going to be.”
Both Dixon and Rogers said they want a financial game plan with cost cutting options. County Administrator Judi Boyko reminded them they just gave her the authority to develop a fiscal policy at the end of December and they have been working on it, however it isn’t as easy as it sounds given their accounting system’s limitations.
Boyko told the Journal-News she is doing a deep dive into the various county budgets principally to identify statutory duties and discretionary expenses in order to craft a contingency plan.
“Your contingency plan is reducing and focusing first on what you can release from a discretionary perspective,” Boyko told the commissioners. “Statutorily, unless you can change the law you’re not going to be able to reduce those line items.”
They have already asked everyone to hold to 2025 staffing levels in their tax budgets.
Commissioner Cindy Carpenter said she’d agree to the freeze with some conditions.
“It is always a good thing to keep a close eye on expanding the number of employees that you have, are we expanding in the proper positions or is the way we do business changing,” Carpenter said. “As long as we are filling our existing funded positions I’m okay with it (a freeze) and I think if an office has a legitimate need to expand they’ll be able to explain that in the budget process.”
University of Cincinnati Associate Professor of Economics Michael Jones told the Journal-News “Hiring freezes can be prudent with so much uncertainty in the economy. It’s often better for an organization to be temporarily strained by resources than to hire and then fire in a short period of time.”
Bill Even, professor emeritus from Miami University, said economists can’t agree whether the country is headed for a recession — chances range from 30% to 60% — so the county should “try not to make spending decisions that couldn’t be reversed.”
“Personnel is about two-thirds of their budget so as far trying to be prepared for a rainy day that might be coming, I think they might be wise to look at a hiring freeze,” he said. “Who knows, next week we could have all this tariff stuff undone and the chances of a recession could go way down, but it could go the reverse direction as well. The point is you put it in now you can unfreeze it next month.”
Staffing levels have remained fairly consistent in the mid-1,600s over the past several years. The highest level was 1,708 employees in 2019 before the pandemic descended and the commissioners ordered deep budget cuts. The number of employees the following year dropped to 1,642 and at the moment 1,654 full-time employees are receiving paychecks.
According to the commissioners’ monthly financial dashboard, actual personnel expenses have increased 23.6% since 2019. They amounted to $62.7 million in 2019, after the pandemic cuts they dropped to $55.2 million, took a leap to $62.9 million in 2021, $70.6 million in 2022, $74 million in 2023 and $77.6 million last year. The commissioners budgeted $84.3 million this year and spent $21 million in the first quarter.
The bigger impact has been pay hikes. The commissioners — at the request of department heads and other elected officials — have agreed to several out-of-the-ordinary pay raises to retain and attract staff.
This year, based on the periodic wage survey of the market, the commissioners deviated from the traditional two-part merit pay plan, increasing the minimum pay ranges for all non-union employees and a 5% raise for those who are below the maximum for their pay range. The cost was roughly $650,000 for non-union employees. The unions that renegotiated their deals this year also got the 5% boost.
“That made everybody whole, everybody was saying our wages are too low, we can’t keep people, we can’t do this, we fixed it,” Dixon said and later added, “We are 75% driven on our expenditures by how many people work here, we don’t make anything, we don’t sell anything, it’s what we have and the more people we hire the worse it gets, the more raises we give the worse it gets... there’s no reason to hire anybody else. I’m not saying go in and and change what we approved, but it has to stop.”
Aside from operating expenses and revenues — the commissioners always insisted on a structurally balanced budget meaning reserves aren’t used for operations — and have had healthy reserves for years. The dashboards show the general fund in 2020 contained $78.8 million in unencumbered cash. The county had $149.5 million in cash at the end of March, $105.2 million is earmarked as reserves and $13 million is unencumbered.
Dixon said people should not look to those cash balances as a reason not to cut corners, “that carryover is dedicated to make up for the deficits that could be coming fairly soon down the road.”
He recalled the painful position the county was in during the Great Recession, when that and years of free-wheeling spending nearly catapulted the county off the fiscal cliff. The commissioners had to slash millions — by ordering mass layoffs — from their budget or contemplate raising taxes.
“We were six months away from the state coming down here and taking over the county if we didn’t increase the sales tax,” Dixon said. “I said hell no we’re not going to increase the sales tax, that just makes it worse. We fought our way out of it and I’m not going back there.”
County Auditor Nancy Nix, the county’s chief financial officer, told the Journal-News she also recalls those bleak times and feels the county has weathered financial road blocks well, largely because they have been hyper vigilant, as Dixon is suggesting now.
“Butler County performed its own DOGE operation following the financial crisis and, as far as I’m concerned, has been in a strong financial position for at least the last decade. Butler County maintains healthy cash reserves and holds low levels of debt. We’ve achieved the highest bond rating, while having among the lowest sales tax rates in the state,” she said. “Commissioner Dixon has been the main driver of those efficiency efforts, and if he believes a hiring freeze is necessary to weather a potential storm, he has my support.”
This particular storm is hard to predict at this early stage of President Donald Trump’s global trade war — which began Feb. 1 with executive orders imposing tariffs on Canada, Mexico and China — since the impact on the county’s largest revenue source can’t yet be calculated. The county’s $4.6 million April installment of sales tax reflects purchases made in January.
Credit: AP
Credit: AP
“Sales tax collections are reflective of economic activity three months ago,” Boyko said. “The collections presently are not indicative of current confidence in the economy, economic circumstances, conditions.”
Sales tax collections have increased 60.5% over the past decade. To this point they remain strong with first quarter collections totaling $20.6 million which is 34% of the $50.4 million collected last year.
Another major revenue source that relies on activities at the federal level is income on investments. Nix, who is the former county treasurer said previously when she took office in 2007 interest income was $11 million, dropped to $1 million in 2013, then jumped to $7 million in 2019. That revenue source more than doubled to $15.4 million last year. The county investments earned $3.9 million in the first quarter, which is 40% higher than a year ago.
Current Treasurer Mike McNamara said the county’s investment strategy allowed them to capitalize when interest rates started increasing but the future is a bit hazy since Trump is at loggerheads with Federal Reserve chairman over where they should go now. But their investment strategy is solid
“I think as far as Butler County is concerned we’re in a very good position because all of our elected office holders, specifically the treasurer and commissioners have planned this out for years,” McNamara said. “We’ve improved our investment position in comparison to many of our peers but also on our economic development side because we have so many areas where we have sales tax receipts coming in that has also improved our position and allowed us to function at a higher level.”
Dixon told the Journal-News he is still deciding whether he’ll put the hiring freeze to a vote on Tuesday. But everyone should be clear on thing, tighter budgets are coming.
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