Introduction
The 2020-2021 Cuyahoga County budget passed at the December 10 meeting of Cuyahoga County Council. At the same meeting, the new health and human service (HHS) levy was also placed on the March 2020 ballot.
Going into the new biennium budget, Cuyahoga County faced a number of questions about the state of the health and human services levy fund, as well as the overall budget.
Going into the new biennium budget, Cuyahoga County faced a number of questions about the state of the health and human services levy fund, as well as the overall budget. In this piece, we will review some of the environmental conditions the county faced going into the budget process. We will also examine some of the questions that remain despite its passage, and we will take a look at the county executive and council’s fiscal decisions.
Setting the stage
The last county budget relied heavily on one-time funds that were carried over from the previous year. Those one-time funds were vital to the budget’s passage, as they played a key role helping to keep a positive balance in the general fund. The county is required by county code to keep a certain amount of cash in reserve in both the general fund and the health and human services levy fund.
In addition to the county’s general and health and human services levy funds, the county has a sales tax fund, which is funded by a .25 percent sales tax that was passed by the then-county commissioners in 2007. (The sales tax in Cuyahoga County is currently 8 percent, this is made up of 5.75 percent that goes to the State of Ohio, 1 percent that goes to the GCRTA and 1.25 percent that goes to Cuyahoga County. The above referenced .25 percent sales tax represents 1/4 of one percent of the sales tax the county collects.) This fund, which collects more than $52 million per year, flows into a dedicated “sales tax fund,” which supports the Cleveland Convention Center and the Global Center for Health Innovation. Of the three funds, the health and human services levy fund, the general fund and the sales tax fund, the sales tax fund was the healthiest by far with the amount of cash unspent in the fund.
The sales tax expires in 2027.
According to quarterly reports generated by the Office of Budget and Management, the general fund level decreased and the fund was at risk of falling below the cash reserve levels legally required by county code. This year, the county decided to combine the sales tax fund with the general fund, so the overall fiscal health of the general fund is improved. This is very important, as the general fund is the fiscal backstop for the health and human services levy fund (more on that later). The .25 percent sales tax expires in 2027, so if the sales tax is extended by a vote of County Council, there will be a lot of discussion about what the county should do with those dollars.
The state of the health and human services levy fund is more dire.
The state of the health and human services levy fund is more dire. Health and human services agency spending is depleting the HHS levy fund too quickly, and if not for a last-minute infusion of cash from the general fund, the county was at-risk of not being compliant with its own code by not having enough of a cash reserve, or running a deficit. Since the general fund is the fiscal backstop to the HHS levy fund, the county decided to transfer $15 million earlier this year from the general fund to the HHS levy fund.
There can be no doubt that these facts heavily influenced the county’s approach on what to do with the expiring 3.9 mill health and human services levy. The county decided to ask voters for a .8 mill increase in that levy, which is projected to bring in an additional $35 million per year. Property tax rates are stated in mills and one mill equals $1 of tax for every $1,000 in assessed value. It is not clear how those new dollars will be spent if the levy passes. However, the current state of both the general fund and the health and human service levy fund requires that something relieves the fiscal pressure.
Help from the state
The State of Ohio’s most recent biennial budget included significant increases to health and human services funding, including increased spending for child and family services, mental health services, as well as drug addiction programs. The state dollars, when coupled with HHS levy dollars, can assist to address local HHS issues. The Alcohol, Drug Addiction and Mental Health Services (ADAMHS) board will see increases in its funding as a result of the state budget, though it is unclear exactly how much that will be, as the state has made decisions on how much each county will receive.
Cuyahoga County received $23 million…and will receive more than $100 million in a second part of the settlement that will be placed in an opiate settlement fund
Opioid settlement funding
Cuyahoga and Summit counties have both received money from several pharmaceutical manufacturers and distributors as a result of multi-million dollar settlement related to the opiate crisis. Cuyahoga County received $23 million initially, and will receive more than $100 million in a second part of the settlement that will be placed in an opiate settlement fund. The county has listed a number of ways the money will be spent, but it will be kept separate from overall budget spending.
Recommended budget and budget amendments
The county executive proposed a spending increase for the Department of Senior and Adult Services, however, there were no increases to the ADAMHS Board or MetroHealth. County council listened to agency directors’ testimony to council on their recommended budgets, and released their budget amendments after only two weeks of deliberation. This was much different than the previous budget, which required four weeks of council deliberation before council amendments were unveiled. In this year’s budget amendments, county council amended the recommended budget from the county executive, by adding additional dollars to senior services, Closing the Achievement Gap (CTAG) and Job and Family Services (JFS). JFS received additional funds to add workers to the county call center to reduce wait times for callers.
The Cuyahoga County Office of Budget and Management acknowledges that economic forecasts indicate that the economy could slow down and that the county should be prepared.
Outstanding decisions
The county faces several decisions that will affect budgets moving forward. Some of these factors are within the county’s control, others are not. For example, many government budgets across the country are the beneficiaries of strong revenue from sales taxes due to a strong economy. That being said, even the Cuyahoga County Office of Budget and Management acknowledges that economic forecasts indicate that the economy could slow down and that the county should be prepared. Additionally, the county is currently facing lawsuits related to deaths of children in county custody, as well as the conditions inside the Justice Center. The county is also in the middle of plans to create a new county diversion center, to reduce the inmate population in the county jail, as well as possibly renovating or replacing the Justice Center building. Finally, the county will ask voters in March to approve an increase to one of the two HHS levies. The outcome of that election will affect funding levels for the county for at least the next eight years. Some council members who are against the .8 mill increase have stated that, should the levy increase fail in spring, that they would support a 3.9 mill replacement levy in fall 2020. If the county plans to increase the levy at any point in the next eight years, the time would be now, because any changes in the 4.8 mill HHS levy in 2024, would result in the loss of a 12.5 percent tax credit for county homeowners. This is because, according to the Cuyahoga County Office of Budget and Management, homeowners currently receive a 12.5 percent state tax credit on that levy and should it be increased county homeowners would not only pay the increase, they would also lose the state tax credit. Note that this does not apply if the levy is renewed at the same rate.
2020 promises to be one filled with intrigue, with the election of the President of the United States, half of the Ohio Senate, all of the Ohio House, as well as half of Cuyahoga County Council (even a number council races).
Conclusion
The 2020-2021 budget is technically not complete, as the director of the Office of Budget and Management has to prepare a budget memo to send to County Council on behalf of the County Executive with any line-item vetoes. To date, that has not happened in the history of the new government. Looking forward, 2020 promises to be one filled with intrigue, with the election of the President of the United States, half of the Ohio Senate, all of the Ohio House, as well as half of Cuyahoga County Council (even a number council races). After the dust settles, it will be time to prepare for the 2021 state budget and the 2021 county budget processes. But it was important to note that this budget process was heavily influenced by external fiscal factors and hopefully by 2021, some of the outstanding county spending questions will have been answered. The Center for Community Solutions will continue to track these issues and inform community agencies, as well as the people who are served by them, on the progress of the Cuyahoga County government budget process.
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