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Sunday April 20th 2014

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Balancing Act

Escambia County Budget Crisis
By Jeremy Morrison

Heading south, with hands in his pockets and a steady stride, Escambia County Administrator Randy Oliver kept his head down. He had only recently begun to digest the bad news.

Oliver walked away from the county complex and into the afternoon. Who knows where he was going, maybe to lunch or a meeting – or, more probable, somewhere private to sob uncontrollably as he pondered Escambia County’s nearly $10 million budget deficit.

“I’m a realist,” Oliver said a few weeks later, in late April. “You can’t cut $9.6 million and keep the same level of service. And the question becomes: what do you want to cut?”

Escambia County was already feeling the squeeze of a chilly economy. Although officials had trimmed some fat a few years back, this year’s budget was having to absorb a more than $3 million shortfall.

But then it got really scary.

“We started hearing this rumbling of this Medicaid situation,” said Escambia County Commissioner Grover Robinson.

In March, state lawmakers presented Gov. Rick Scott with a bill seeking to collect a 10-year backlog of disputed Medicaid claims from Florida’s counties. According to the state, Escambia County owes more than $6 million.

“Randy said, ‘We can’t do this Medicaid thing,’” Robinson recalled. “‘It’s going to sink everything. It’s going to make everything fall apart.’”

County officials must now decide how to deal with the projected deficit. There is no question that there will be cuts. The question is: what will Escambia County look like on the other side of the budget?

“I’ll quote you what Randy said—‘it’ll be ugly,’” relayed Escambia County Commission Chairman Wilson Robertson. “He calls it ‘tremendous.’”

The Hungry Hole
An initial attempt to deal with the county budget crisis did not go well. The possibility of pulling the county’s $3.7 million of funding from the West Florida Public Library System filled the commission chambers with hundreds of irate library supporters sporting red attire in a show of solidarity. Chairman Robertson said he thought Oliver had “jumped the gun” by suggesting such dramatic measures and recounted a recent public gathering which had turned mean over the issue.

“Man, the crowd was ‘booing’ and ‘ahhhing,’” he said. “And I was sitting there thinking, ‘man, we look like five bad guys.’”

The board eventually sided with the pubic and spared the libraries. Commissioners sent Oliver back to the drawing board.

A couple of weeks later, the board was presented with the possibility of closing a building inspections office in Molino. The move would have cut two jobs, thus saving the county about $100,000.

“We’re cherry-picking things haphazardly,” Commissioner Gene Valentino said.

How did Oliver find himself in this position? Everything seemed fine in February. He had figured out how to survive a $3.2 million shortfall and pretty much put the budget to bed.

“It wasn’t going to be easy and clean, but we could deal with it,” Oliver remembered.

To deal with that initial shortfall, Escambia County’s elected officials and boards had planned to reduce their budgets by 3.1 percent. The Escambia County Sheriff’s Office is also planning to absorb the cost—$1.2 million—of an expiring federal Community Oriented Policing Services (COPS) grant.

“What we didn’t anticipate was that the state was going to pick our pocket for $6.3 million in the 11th hour of the legislative session,” Oliver said.

As per the state of Florida, counties are now responsible for paying disputed Medicaid charges dating back to 2001. This hasn’t settled well as it’s traveled down the jurisdictional chain.

“I find it amazing how these jackasses from Tallahassee can use local governments to balance their budgets,” said Commissioner Kevin White. “It just blows my mind.”

The only local lawmaker to vote against the Medicaid bill was state Sen. Greg Evers (R-Baker). He said local officials from his district had gotten across the message.

“There was no sense in pushing it back down on the counties,” Evers said, adding that he believed there were cases of counties being charged when they should not have been. “It’s like family sitting around the table with their budget, you don’t pay bills you don’t owe.”

In an attempt to offer the commissioners some perspective, Oliver recently compared their new $6-million problem to aspects of the county budget. The new Medicaid costs, for example, amount to twice the county’s library budget. It’s also twice the entire general fund portion of the Escambia County Area Transit budget. The Medicaid total would fund 60 percent of the road department’s budget for a year, or the parks’ department for more than three years.

“So, we’re talking a large amount of money,” Oliver said.

While the commissioners will explore the budget dilemma in full during upcoming workshops, each have already offered up their own preferred approaches. The bottom line remains the same regardless—it’s gonna hurt.

Diets From All Directions
There are two ways to deal with any budget issue—cut costs or increase revenues. Commissioners have studied these two options and arrived at several different conclusions.

Commissioner Kevin White told his fellow board members that the best way to address the current financial concerns was through a millage increase. He suggested increasing the millage rate by a half mill.

“A point-five millage increase will generate $6.6 million a year,” White said. “That wipes out our Medicaid problem.”

A mil is equal to a $1 for every $1,000 of a property’s taxable value. Commissioner Marie Young was also in favor of raising the millage rate.

“At this time, I’m not afraid to bite the bullet and say, ‘I agree with Kevin White,’” said Commissioner Marie Young.

Other commissioners were adamant that a property tax increase was not the way to solve problems.

“I’ll tell you right now, I am not voting for a half-point millage increase,” said Grover Robinson. “I don’t care what happens.”

Young has urged the board to consider the millage increase, asking them to set aside any no-new-tax mentality in light of the extreme scenario.

“What’s the big deal about raising taxes?” Young pressed. “Go on, vote that five-tenths and let’s move forward.”

A few days later in his office, Robinson explained that he feels property taxes target a specific portion of society instead of spreading the burden out evenly.

“Property tax is perhaps the least fair way to deal with anything,” Robinson said. “Especially when you’re talking about going up a half-mil, that’s significant.”

Instead, Robinson has proposed a sales tax. He argues that a sales-based tax would more evenly and fairly distribute the cost according to a person’s consumption habits.

“If the tax is too great for you to pay, then don’t buy it,” he said.

Chairman Robertson is against both the millage rate increase and sales tax. He said that tax increases, in general, are “not in my vocabulary.”

“This economy is too bad to go up on taxes of any kind,” Robertson said.

The chairman seemed more focused on cutting costs than increasing revenue. He said the county might be top heavy.

“We’ve got some higher level management people that have been here a long time and don’t have the responsibility they used to have,” Robertson said. “We’ve got one department head that has three employees under them—that person ought to have another dozen employees under them in order to justify being a department head.”

In addition to lopping off a few of the higher salaries, the chairman also has other ideas. One of them is to dip into the county’s reserves, which total just more than $15 million.

“I told Randy the other day, if we’ve ever had an emergency—hurricane or otherwise—this is an emergency,” Robertson said.

This notion finds little support on the board and tends to drive Oliver into cold sweats, sending him plunging into wide-eyed rants about cautionary tales like Harrisburg, Pa., and Stockton, Calif.

“Jefferson County, Alabama has filed bankruptcy,” Oliver warns. “For the first time last week, Los Angeles was mentioned.”

Commissioner Gene Valentino has pushed for a three-cent gas tax, which would serve to finance ECAT’s departure from the county’s budget. The commissioner estimates this would free up about $4 million in the general fund.

Although Valentino often champions the concept of a gas tax, the measure isn’t his first-choice solution for the budget shortfall. He believes other resources are available if you know where to look.

“Before we can even look at the gas tax, we look at other agencies of government,” the commissioner said. “Such as the housing authority, such as the health authority, such as the SRIA—how about the reserve account no one’s talking about at the Santa Rosa Island Authority?”

Escambia County funds various outside agencies, to the tune of $1.6 million. Among the recipients are the United Way ($95,500), Escambia Community Clinics ($431,880) and Escambia County School Readiness Coalition ($230,000). Commissioners have discussed reassessing funding and raiding the agencies’ reserves in an effort to deal with the budget problems.

“There’s some accounts and reserves and cash in some places and we need to dig it out,” Chairman Robertson said at a recent meeting.

Valentino has contended that the commission created some of the entities, and can also dissolve them or take over their funds. Escambia County Attorney Alison Rogers has cautioned that the accounts may be bound.

As the chairman ushered Rogers into his office, he asked if she had looked into the matter further. She restated her previous opinion, “These monies are earmarked for these funds”—but noted that the agencies had donated money to the county previously.

“What if they don’t make a donation?” Robertson asked. “What if we just take it?”

“I’m looking into that,” Rogers replied, the office door closing behind her. “In fact, you must be reading my mind.”

Sick System
It’s no doubt that most counties around the state of Florida are sweating out the ramifications of the retroactive Medicaid bills. Budgets and nerves will be scrambled throughout the spring.

“The fact now is we’ve got a gun to our head and are pushed up against the wall,” Commissioner Valentino said.

Upon Gov. Scott’s signing of H.B. 5301, the Florida Association of Counties issued a statement calling the legislation a “body blow to taxpayers.” The association criticized the state’s Medicaid billing system and said the bill “represents the very worst in bureaucratic inefficiency and serves as a splendid example of what taxpayers resent about government.”

“To say that we’re disappointed would be an understatement,” said FACP President Doug Smith in the statement. “Rather than correcting Tallahassee’s error-ridden Medicaid billing system, H.B. 5301 codifies it and leaves local taxpayers with the bill.”

The concerns of the FACP—and county officials around the state—center around the billing methods of the Agency for Health Care Administration (AHCA).

In a resolution signed by the Escambia County Commission shortly after the H.B. 5301‘s passage, officials charge that the agency has “repeatedly and continuously billed counties for charges without supporting documentation, with duplicative costs, and for incorrect charges…”

Specifically, commissioners are concerned that the county is being required to pay for people who received medical care in the area, but don’t live in the county. Recently, AHCA representatives visited with county officials throughout Florida to discuss the law’s impacts.

“What we found out the other day from AHCA is that pretty much anybody can get a Florida card,” said Commissioner Robinson. “All you have to do is give an address. No one checks the address. All that matters is that it’s a legitimate Florida address. That’s shocking to me.”

Commissioners have complained of Medicaid recipients listing their address as a post office, a gas station, Cordova Mall and “the woods.” Robinson said that the care of individuals who are not actual Escambia County residents should fall to the state.

“It is going to require an overhaul of the system,” the commissioner said. “But I think that’s where we are. The system is broken.”

State Takes What It Wants
Local county officials repeatedly liken the Medicaid law to a misrouted bill. They desperately want to toss it in the trash and stiff the state for charges deemed unfair.

“My philosophy would be just don’t pay it,” said Chairman Robertson. “But we don’t have that option. They’ll take it.”

But Florida counties do have some recourse from the state’s new Medicaid law. Forty-seven counties have signed on to a lawsuit being brought by the Florida Association of Counties against the state.

Specifically, the counties have filed suit against the Florida Department of Revenue and AHCA. They are challenging the billing system’s validity, as well as the state’s ability to withhold tax revenues from local governments.

“Forty counties representing 73 percent of the state’s population ask this court to enforce their state constitution and to require the legislature to play by the rules before attempting to reduce the amount of tax revenues returned to the people,” the organization said in a statement.

The suit seeks to stop the state from withholding funds from counties. Escambia commissioners are hoping for an injunction before that process begins in May.

“I’m hoping the lawsuit will do what most lawsuits do and that’s to delay any action,” said Robertson. “Most of these things are appealed and take years.”

No Easy Decisions

And while county officials hold out hope that their lawsuit will offer some relief, or at least stall the pain, administrators move ahead with the grim designs to gut their respective municipalities of millions of dollars.

“You can’t just bet that you’re going to wake up tomorrow morning and it’s going to go away because it’s not,” said Oliver.

Escambia County commissioners have requested that Oliver present them with various options for cuts during their upcoming May 10 meeting. If it’s not a service the county is required by law to provide, it has the potential to be on the chopping block.

“I’m going to be candid,” Oliver told commissioners. “You can’t responsibly take anything off the table.”

The county administrator is expecting a string of workshops—what commissioners have referred to as “making sausage”—will be needed to tackle the budget. Tough decisions will be made. Funding will be pulled and people will lose their jobs.

The commissioners could also decide to increase revenue. The board could increase the millage rate by a majority vote (three commissioners) or impose a gas tax by a super majority (four commissioners). The commissioners could also put the issues of a millage increase, gas tax or sales tax before the voters, though time is running out on the referendum options.

However the commissioners decide to deal with the deficit, it will be an interesting budget season.

“There are no easy answers,” Oliver said shortly after Florida’s Medicaid law was passed. “No easy decisions.”