Cobb Forecasted To Have $28M Shortfall

Finance officials are predicting Cobb County could end the fiscal year in September with a $28 million shortfall if current trends don't improve.

The challenging news—delivered just five months into FY 2011—was presented to county department heads and elected officials Thursday during a retreat in Kennesaw.

The $28 million shortfall is a combined look at the general fund, fire district fund and the county's debt service.

There are many pieces of the budget that could still change and it's possible that revenue streams could be better than projected. The county could offer early retirement incentives, as it did last year.

Cost-cutting measures could, obviously, also affect the bottom line. The county ended last year without having to dip into its general fund reserves of $29 million. And historically, that has been the case.

Cobb County has also not raised property taxes since 1990. And Commissioner Bob Ott, whose District 2 covers East Cobb, Cumberland/Vinings and most of Smyrna, doesn’t see that—or dipping into reserves—as the answer.

“You just have to prioritize” when trimming the budget, he said.

There are many challenges ahead according to Jim Pehrson, Cobb’s finance director.

“The ship is running out of gas,” Pehrson said.

It is a sentiment shared throughout the metro Atlanta area in large and small counties alike. Cherokee County is looking at a $7 million shortfall for both the general and fire district funds in 2012.

Simply put: Revenues are not keeping up with expenditures, Pehrson said. The continued decline in property values have hurt property tax revenues, he added.

The projected revenue for Cobb's general fund this year is $302.9 million, while expenditures are projected to be $322.4 million, leaving a $20 million shortfall in that fund alone. About 54.5 percent of the general fund comes from property taxes.

"The challenges we have moving forward are real," said Commission Chairman Tim Lee.

Commissioners had to cut several million from the current budget to balance it, Pehrson said.

Departments need to look at what is mandated, what is obligated, what is a priority and what is preferred, Lee said. He also mentioned turning the county's health care plan upside down to look for savings. It's an area that increases 12 percent every year, he said.

Looking at having health clinics and other wellness plan ideas are also options, Lee said.

Cobb County has "done it before," County Manager David Hankerson said of overcoming budget shortfalls. "And we'll do it again."