Forecast Shows Cobb with $28 Million Shortfall by Fall

Finance officials are predicting Cobb County could end the fiscal year in September with a $28 million shortfall if nothing changes.

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 ship is running out of gas,” said Jim Pehrson, finance director. “Challenges are ahead of us.”

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

Revenues are simply not keeping up with the expenditures, Pehrson said. The continued decline in property values has hurt property tax revenues.

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

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

Pehrson said that there are many pieces of the budget that could still change. It's possible that revenue streams could be better than projected. The county could offer early retirement incentives, as they 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 doesn’t see that, or dipping into reserves as the answer to coming up with the $28 million.

“You just have to prioritize,” Ott said, and see what there is that can be cut.

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 when it comes to everything, Lee said. He also mentioned turning the county's healthcare plan "upside down" to look for savings. It's an area that increases 12 percent every year, he said.

He mentioned looking at having health clinics and other wellness plan ideas.

"As a team, we've done it before," County Manager David Hankerson said at the end of the retreat, "and we'll do it again."