Fearing shortfall, NCCo nips at spending

New Castle County government is taking steps to reduce spending with the new administration projecting a budget deficit in the coming year.

On Tuesday, New Castle County Executive Matt Meyer announced his administration will partially freeze hiring, limit overtime, suspend out-of-state travel for government employees, reduce executive office expenses and end the practice of allowing government employees to "cash out" unused vacation time.

Meyer said his newly installed finance experts anticipate a $5 million revenue shortfall for the remainder of this fiscal year, which runs through June. In an interview Tuesday, he said his administration projects that shortfall will grow to $25 million in the coming three years.

"My argument during the campaign was we could do more with less and there are various areas of the county government that are bloated," Meyer said. "This is our first attempt to do more with less."

Meyer said the measures announced Tuesday could save somewhere between $1 million and $3 million annually, though he described that as a "ballpark" figure and said the final savings will depend on attrition rates in the government ranks.

He added that the changes will not cover the anticipated deficit and that further cost reductions are being considered.

STORY: Gordon, Meyer spar on county finances

STORY: All New Castle County workers to receive pay increases

New Castle County budgeted $183 million in general fund spending for this year with most of that being paid through property taxes and fees assessed when properties are sold. The general fund covers most of the government's regular operating expenses, but not annual upgrades to local sewer, police, parks and government facilities.

Personnel costs are the county's largest expense. Increases in that area are driving costs, Meyer said.

The county's budget funds about 1,500 positions annually. About 131 of those are vacant. Meyer said one of the changes is "effectively" a hiring freeze, though the county's chief administrative officer will have the discretion to hire positions that are immediately needed.

Local government spending has steadily increased largely due to rising personnel costs. This year, the county budgeted about $5 million more for salaries and $4 million more for benefits compared to last year's approved budget. That number is expected to continue to climb as the county last year agreed to pay increases for most of its workers over the coming years.

Another change, reductions to the executive office budget, has seen some personnel costs reduced and termination of contracts for services like an outside grant writer, Meyer said.

Most of the changes are administrative, dealing with employee pay plans so residents are unlikely to notice anything different in county services, though Meyer said that may not be the case in the future.

"This is the first step just trying to tighten our belts in a way that will not be recognized by taxpayers," Meyer said. "I'm not promising we will be able to keep it this way."

Aside from replacing most of the former Executive Thomas P. Gordon's administration, the move is one of Meyer's first substantial steps directing the state's largest municipal government.

Meyer ran as a reform candidate against fellow Democrat Gordon. The two frequently sparred about the health of county finances with Meyer hitting Gordon for spending for county reserve accounts, which total more than $100 million.

While Meyer emphasized that the moves were aimed at what he considers a "structural deficit" in the county's budget, it's likely those finances are going to be further pressured by state lawmakers this spring.

As state lawmakers look to close a projected $350 million budget deficit in state spending, there has been a new focus on how the state's three counties spend money. In former Gov. Jack Markell's proposed state operation budget for the next year, the counties would see less revenue from the state.

The proposals, which include a reallocation of revenues from property transfers as well as a reduction in state government's subsidy for local paramedic operations, could exacerbate whatever deficit the county might contend with as the County Council debates local governments budget for the coming year.

That process begins with Meyer presenting a preliminary budget in March. The County Council will then hold hearings discussing each facet of county spending before augmenting and ultimately approving a final spending plan by June 1.

County Councilman George Smiley, who co-chairs the council's Finance Committee, said it is "no surprise" the county is facing a shortfall given the slow uptick in property revenue balanced against increasing costs for employees. He said Meyer is acting "responsibly" and warned further cuts may be necessary especially given the potential for the state to add pressure on the counties.

"Sooner or later the well might run dry," Smiley said. "We don't know what the state is going to do."

Contact Xerxes Wilson at (302) 324-2787 or xwilson@delawareonline.com. Follow @Ber_Xerxes on Twitter.