While the word ‘forecast’ is bringing a fair amount of ire to the area right now, the concept has made Robert Patrizio’s job as Berks County chief financial officer a lot easier.
Several times a year, Patrizio puts together a five-year budget forecast, which helps the county plan ahead financially. In his latest long-term assessment, Patrizio is eying two variables that could cause headaches for the county between 2017 and 2018.
“You don’t know what’s coming in terms of legislation. When you forecast, you base it on what you know today,” Patrizio said.
In the latest forecast, a planned excise tax for employers that is part of Obamacare is one concern for the coming years. Another is the growing cost of maintaining the county’s emergency radio system.
The excise tax, which will impact employers and health care providers, set to take effect in 2018, could cost the county more than $11 million over the first five years, according to a study by the National Association of Counties. Berks County participated in the study.
With three years to go before the tax begins, Patrizio and Berks commissioners hope that legislation changes before the county will have to shoulder the additional costs. The forecasts, however, do not take hopes into consideration.
“The law, as it is today, says this is going to be the case,” Patrizio said.
The county is also looking for legislation to change on a more local level to help cover the costs of maintaining the new countywide emergency radio system.
The county used capital funds to pay for the $67 million in upgrades to the system, Patrizio said. However the new technology will cost more to maintain. A small hike in 911 fees on phone lines would cover those costs, but those fees are set on a state level.
“We need it to be about $2 a line to solve the radio deficit. Right now it’s about $1,” he said.
Dozens of other factors come into play when evaluating the future of the county’s budget. Patrizio looks at the consumer price index, which impacts inflation. Fuel costs have an impact as well. Investments and other sources of revenue can also change over the five year forecast. But having the scenarios outlined well into the future can help the county prepare.
“In 1995, we were still on cash accounting,” said Commissioner Mark Scott. “No one knew where we were. If we were short on money, the bills were stuck in a middle drawer. Since then we’ve had a very steady improvement in fiscal management.”
One of the ways a forecast can help is in contract negotiations. Knowing what the fiscal state of the county is at the moment is fine, Patrizio said, but knowing what it will be is key when negotiating with unions.
Knowing that a possible tax hike is on the horizon helps county departments understand what can be offered in terms of staffing and contract negotiations.
Because the county spent nearly a decade making the government more efficient and cutting costs wherever possible, there are not a lot of places left to trim the fat and avoid tax increases. Each year, costs go up and revenues remain mostly flat, Patrizio explained.
“There aren’t any silver bullets in the gun that we can use to offset those costs,” Patrizio said. “We’ve used them all.”
