Brunswick County's sales tax revenues plunged in December and January, dipping so low that officials fear layoffs may be the only way to get through the next fiscal year.
For this year, sales tax revenues are off about $3.3 million, about $2 million of which is unexpected even with the conservative projections made at the beginning of this fiscal year, said Ann Hardy, the county's finance chief.
Hardy doesn't yet know how this might affect next fiscal year's budget, which must be in place by July 1. She's working on projections now and will present them to commissioners in budget work sessions next week. Commissioners already are preparing themselves for the possibility of having to lay off staff.
"You don't just cut for the sake of cutting," Commissioner Marty Cooke said, "because you could lose your best assets."
On the other hand, he said, the county must be run as a business. Cooke has laid off about half the staff at his Ocean Isle Beach Realty in the past three years, and family members have stepped in to fill some of the gaps. It's been tough, he said.
But, he said, "When the business isn't there, you've got to keep the company alive."
Hardy said she'll know better whether the two down months were an aberration or a trend. December collections were off 62 percent from a year earlier, and January showed a 36 percent drop from January 2009.
Sales tax revenues have the been the county's second-leading source of income after property taxes, Hardy said. The county expected sales tax revenues to be short $1.4 million this year from the previous year because the state took over the county's Medicaid share payments and took away a portion of one sales tax to compensate. Additionally, Hardy said the county budgeted an approximately $3 million drop in overall sales tax revenue.
To balance the budget, commissioners took about $3 million from planned capital reserve spending and $3.7 million from the county fund balance. Hardy said she thinks the actual numbers will be better than the budget, but saying anything definite with a changing situation is hard to do.
"It is extremely difficult to [forecast] because this has happened in the last two months," she said.
Commissioners' Chairman Bill Sue said the county had hoped that attrition among county employees would cut government to affordable levels, but now he's not so sure.
He said it's possible the county could use some of its reserve money to keep employees next year, particularly if it doesn't have to spend all of the nearly $7 million that is slated to be used this year.
Cooke said if layoffs become a reality, he would advocate looking at each county department as its own individual business. Perhaps it will be possible to transfer some positions from departments with a slowed workload to others that haven't seen a downturn, he said. Perhaps it will be possible to put some employees on part-time rather than full-time schedules.
"You have to weigh everything," Cooke said.