McHenry Co. OKs budget for roadwork

A $271.6 million budget for 2008 that calls for a 36 percent hike in spending next year -- almost all of it coming from a $50 million loan to fund a massive road construction program -- won approval Tuesday from the McHenry County Board.

County officials say the loan, which officials plan to repay using future motor-fuel tax revenues, will allow them to build much-needed road improvements years earlier than otherwise possible, and probably at a lower cost because of rising construction costs.

Without the $50 million for roads, the budget stands at about $207.9 million, a 4.8 percent increase over the current year's budget.

"I think that's about right for a county growing the way we are," County Administrator Peter Austin said.

The budget overall paints a picture of a county in a strong financial position, with revenues exceeding expenditures a third consecutive year, funding to hire 32 additional full-time workers and a reserve fund large enough to pay for five months of county expenses.

However, administrators warned Tuesday that next year's outlook might not be so rosy.

"There are some ominous economic signs out there we need to keep an eye on," Austin said. "We're in good shape and we want to stay there, so we have to be cautious."

Those ominous signs include a 40 percent increase in foreclosures, the number of land owners unable to pay their property tax bills doubling from 2,500 to 5,000 and revenue drops from sales taxes, recording fees and building permits.

The county already is feeling the effects of that downturn, having to slash about $1 million in discretionary spending in next year's budget.

If current economic trends continue, the county could even face a 4 percent dip in property tax revenues within three or four years, said Ralph Sarbaugh, the county's associate administrator for finance. Currently, property taxes account for about 48 percent of all county revenues.

"We could start seeing a devaluation of our property," he said.

With those worrying trends, county officials say they probably will have to hold the line on spending increases in 2009 budget and not plan any new facilities or major facilities upgrades. However, officials said they do not expect a repeat of the county's 1997 financial crisis in which board members needed to cut $3.5 million -- and 21 full-time jobs -- to make ends meet.

As for less drastic measures, such as a hiring freeze, administrators say the county needs to take a wait-and-see approach.

"I don't think we're there yet," he said. "Where we're going to be with hiring next year, I can't tell you."