Budget needs closer look.

Byline: The Register-Guard

Governments are often asked to balance their budgets the way families do. Lane County's proposed budget for 2004-05 employs this treadworn analogy, saying that its "overriding theme" is "living within our means. This may mean painful cuts, such as many a local family has had to make when money gets tight and expenses keep increasing."

If the county were a family, however, it would be exhibiting some peculiar behaviors. Though the family's income is increasing modestly, it's preparing to sell the car, pawn grandmother's silver and kick a few kids out of the house.

Lane County's budget states that "most revenues are stable, with flat or modest growth" of about 3 percent a year - a prospect that most families would welcome. Yet the Lane County Budget Committee asked county departments to cut their spending by 9 percent from next year's projected levels, yielding $3.5 million in savings. That's about $500,000 more than needs to be cut, so that amount could be restored to mitigate the damage to county programs judged to be particularly valuable.

The competition for that half million dollars is brutal, and heartbreaking. The sheriff's office would use the money to maintain 24-hour patrols. The Department of Youth Services would use it to avoid closure of the Pathways program, the county's only residential drug treatment program for boys. The district attorney's office would use the money to prosecute felons who will otherwise face no sanctions for their crimes. The Budget Committee will have the resources to restore the bulk of its funding to only one of these departments - and other claims on the $500,000 may prove equally compelling.

The mismatch is jarring: The county's income is steady and improving, while its spending is being cut in ways so destructive as to jeopardize public safety.

The problem is that expenses are rising at a rate that outstrips income. Further cutting will occur in the years ahead. At the end of the county's five-year budget forecast period, income to the general fund will total $118 million and expenses will be nearly $136 million. Something has to give. This year, it's patrols, Pathways and prosecutors. In later years the cuts will be as hard or harder.

A family would seek to find the cause of this budgetary hemorrhage. The Lane County Budget Committee would not have to look far: The primary problem is the soaring cost of providing employee benefits.

In 2001-02, it cost the county $7,601 to provide health insurance for each worker. In 2004-05, the estimated cost per employee will be $11,365. "This means that Lane County's negotiated benefit costs will be $5.27 million more in [fiscal year] 04-05 than in [fiscal year] 01-02 for the same number of employees," according to the budget document. "The annual increase in this one cost is greater than all revenue growth combined."

The cost of retirement benefits is also squeezing the county budget. For every dollar in payroll, Lane County must set aside 22.37 cents for pensions. The 2003 Legislature altered the Public Employees Retirement System in ways that were intended to reduce state and local governments' pension obligations, but the changes have been challenged in court. Lane County's budget proposes holding two-thirds of the PERS savings - 4.66 percent of payroll costs - in reserve in case the courts strike down parts of the Legislature's reform plan.

Budgeting, whether for a family or a government, is a matter of setting priorities. The Budget Committee should widen the scope of its budgetary review, and confront the fact that the highest priorities in the proposed budget include maintaining employee health benefits regardless of cost and hedging against the possibility of an adverse court ruling on the PERS reforms.

County employees had no salary increase in 2003-04; the financial pressure is coming from the cost of benefits. Cost increases of the current magnitude can't be sustained indefinitely. Maybe they can't even be sustained now, if the consequence is that vital programs are being squeezed out. The Budget Committee needs to look at all its expenses and find ways to bring them under control, just as a family would.