Tag Archives: Financial Management

Lean and Nimble

SEABROOK SAYS: Gaston County is extremely fortunate to have Earl Mathers as our county manager.  Our commissioners have just finished the budget for the upcoming year.  Earl shares lots of information about the financial issues we face in our new fiscal year.  Financially, we are doing pretty good! Now  that you know, what will you do?

Gaston County Approves the FY 2017 Budget

During the last two years Gaston County has adopted leading edge budget practices in an effort to ensure that community and county commission priorities are as closely aligned with expenditures as possible. In fact, the implementation of the leading edge Priority Based Budgeting (PBB) methods have further streamlined an already award winning budgetary process in Gaston County.  We also take pride in the fact that the foremost authority on governmental budgeting, the Government Finance Officers Association (GFOA), has recognized Gaston County for excellence in its budget process for the last several years.  In addition, strong financial management practices was a major factor in a recent bond rating upgrade by Standard and Poor’s for Gaston County which enables the county to obtain more favorable interest rates in the financing of school debt. This bond rating upgrade will save the county tens of thousands of dollars.

Gaston County’s general fund budget for FY 17 is approximately $202 million. Although this may seem like a great deal of money to most people, most of what Gaston County does is mandated.   In other words, Gaston County has limited discretion in the activities it performs.  Despite the mandates, the county does have the ability and the responsibility to ensure that all activities are performed in an efficient manner.  PBB enables Gaston County’s managers to be more intentional and results oriented in their deployment of scarce resources, regardless of whether a particular program is mandated or discretionary.

Producing Gaston County’s annual budget is an arduous process involving months of intensive work. Typically, budget requests exceed available funds by a substantial margin and this year a total of over $25 million was trimmed from departmental and external requests in order to produce a budget that is balanced.  The FY 17 budget would be flat except for the fact that $3 million in additional debt service for two new schools and $1.5 million in teacher supplements are included.  These are expenditures that have considerable merit. Overall, Gaston County departmental budgets are flat for FY 17.  There are several significant expense items on the horizon, however.  These include the need to make a variety of infrastructure improvements which have been deferred for several years and upgrade the public safety radio communication system.  Leading expense categories for FY 17 in Gaston County are illustrated below:

Mathers pie chartFortunately, Gaston County anticipates revenue growth in coming years. Both property and sales tax revenues are expected to continue to grow and this will ease the financial strain that Gaston County has felt since the beginning of the recession.  In addition, the increase in debt service over the next two fiscal years will decline as older debt is retired.  Continued fiscal restraint on the part of county departments will also be necessary and desirable but, in general, Gaston County’s financial outlook is favorable.  Anticipated revenue growth for FY 17 is shown below.

Mathers graphLooking to the Future

There is a widespread belief that Gaston County is poised to achieve the kind of progress that will lead to greater economic parity with several of our regional neighbors. Some lament the fact that Gaston has fallen behind more affluent parts of the metro area and yet there are specific reasons that growth has been more gradual here.  Actually, considering the persistent generational poverty and other challenges confronting Gaston County, our performance has been quite strong in recent years.  Unemployment has fallen to around the state average and many of the jobs lost during the decline of the textile industry have been replaced.  Indeed, we now need to develop more industrial property which fits the needs of prospective industries and the FY 17 budget sets aside money for that purpose.

There is most assuredly room for continued advancement and if genuine collaboration in the public interest occurs there is reason for considerable optimism. Gaston County recognizes these needs and has made a variety of investments that we hope will yield excellent returns.  Colin Powell once said “Perpetual optimism is a force multiplier.”  In order to achieve the success we all desire for Gaston County, we must allow our collective optimism to brush aside minor differences in a manner that promotes the common good.  Although every individual and all the organizational entities in Gaston County have a natural tendency to protect their own interests, lets’ focus on mutual efforts that will yield universal benefits as we design an even brighter future.

Earl Mathers
Gaston County Manager

 

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Reviving the American Dream

By Earl Mathers, Gaston County Manager

The following is strictly my personal opinion. Working in Washington, DC more than a decade ago, I had the opportunity to engage David Walker, former Comptroller General of the United States, as a speaker for a conference I was hosting.  Mr. Walker had the bully pulpit In DC because he held a position in which he had ready access to economic and fiscal information at the highest levels, a first rate team of professionals and could not be fired by anyone for speaking out for the duration of his fifteen-year term.  At one point I asked Mr. Walker if people on the Hill were listening to him and his response was something like “very rarely”.

During that time and for some years before, he and others were devoted to educating Congress on the perils of maintaining our questionable financial management practices as a nation.  This miscarriage of fiduciary responsibility is well known to most observers of the American political process and generally involves the avoidance of fiscal discipline.  Specifically, Congress and the President have ignored looming problems with Social Security, Medicare and the need for both entitlement reform and fiscal restraint to deal with our national debt which exceeds $17 trillion.  In addition, we have failed to make the kinds of strategic investments that will promote economic vitality and American competitiveness. All of these problems were set forth more recently by the Boyles-Simpson Commission which was authorized by President Obama.  Like Mr. Walker’s earlier recommendations, the work by Boyles Simpson was disregarded despite the fact that the remedies for our fiscal problems have been known for many years.

This recalcitrance is troubling locally for a number of reasons. In coming decades, servicing the national debt and covering the costs of Social Security and Medicare will consume ever larger portions of the federal budget.  Local governments deliver a broad array of services that are essential for our citizens.  Everyone in local government has seen a recent decline in both intergovernmental transfers and grants.  These forms of revenue support many types of locally delivered services and may be irreplaceable considering the limitations of local revenue generation capacity.  Secondly, we are informed that succeeding generations of Americans will not be able to sustain the same levels of economic prosperity their parents have enjoyed.  Finally, our weakened financial condition makes us more vulnerable to all sorts of calamities and inhibits our nation’s ability to make the kinds of strategic investments that will promote future economic vibrancy and quality of life.  In short, abdication of fiduciary responsibility at the federal level will have a trickle-down effect on local government and citizens.

Although the remedies to these problems are far from painless, the solutions are well known.  The real obstacles seem to be the lack of political will to address these challenges and an operating environment in Washington which is scandalously polarized.  Ultimately, the repercussions of this inaction on the part of Congress and the President will be borne by American taxpayers.  Various groups, including the Peter G. Peterson Foundation, have pointed out that correcting our fiscal imbalance can be accomplished in a gradual manner that supports economic growth and protects the most vulnerable in society. Delaying action, however, simply exacerbates the problem and extends the pain further into the future.  Instead of politics as usual and lame attempts to deflect blame, America desperately needs strong bipartisan leadership at the national level that is willing to take decisive action.  Climbing out of the hole we have dug for ourselves may require a generation of belt tightening.  The alternatives of continued brinksmanship, a gradual decline in American influence and the inability to address strategic priorities is even less appealing.  It is time for Congress and the President to revive the American Dream.