News Photo by Steve Schulwitz County employees, like the ones seen here working in the Alpena County Clerk’s Office on Friday, are facing job cuts as part of massive potential cuts to the county budget.

ALPENA — The state has withheld a portion of the final payment to Alpena County for providing security at the Alpena Combat Readiness Center, pending the outcome of an investigation into former undersheriff Terry King’s handling of the contract.

King, who resigned from the Sheriff’s Office last year in the face of termination over the contract and other issues, is being investigated by the Michigan State Police for improper billing of administrative hours worked at the base.

The withheld funds mean another loss of revenue that could help eat away at a $1.4 million yearly shortfall in the 2021 county budget, the county board’s Finance Committee heard at a budget meeting on Friday that included discussions of layoffs.

The county, which lost the contract last year to a lower bidder, was owed $149,679, but the state has only paid out $107,458 and is sitting on the balance while the investigation into King continues.

While some commissioners said the contract money should go toward the struggling Northern Lights Arena, other commissioners shot that idea down.

Commissioner John Kozlowski said losing the base security contract is directly correlated to the size of the current shortfall, and the $107,458 recently received should go directly toward helping get the county out of the red.

“It 100% needs to go into the general fund to reduce the deficit,” Kozlowski said. “I suspect, at some point during the budget process, the full board will be asked to use the money for the arena, because it isn’t going to get it from (the county’s Youth and Recreation Committee). If that were to happen, I think the (Youth and Rec) millage wouldn’t get renewed, and the committee would be done, because who would want to sit on a committee, do all that work, just to have the county board do what they want, anyway?”

The arena has acquired a $150,000 loan from the federal government and Northern Lights Arena-Community, the firm hired by the county to manage the arena, asked the county to add an additional $150,000 to help pay down arena debt. Some commissioners proposed paying that amount from the Youth and Recreation tax funds, against the wishes of the committee that oversees those funds. That idea was paused and discussions are ongoing about the best way to help the arena.

County board Chairman Bob Adrian, who advocated for Youth and Recreation money to be used to help the arena, said he opposes base contract money helping bail out the arena.

“Neither the Northern Lights Arena or Plaza Pool will be getting that money,” Adrian said, referring to the county-owned pool, which has had its own financial issues. “It needs to go into the general fund and be used for operations.”

County Treasurer Kim Ludlow told the Finance Committee that, at the current rate of spending, the projected unrestricted balance in the county’s savings will drop from about $4.1 million to about $2.5 million by the end of 2020. That account is used to pay bills for cash flow and to cover any gaps between revenue and expenses in the county’s roughly $10 million annual budget.

If projections pan out, the county’s savings account would fall to about 25% of expenses, below the threshold spelled out in county policy, triggering mandatory layoffs for all general fund-funded temporary and part-time employees, Ludlow said.

The county sets a high minimum for its savings account. Nearby Presque Isle County, for example, ended the 2019 budget year with enough to cover about 17% expenses, according to its most recent audit. Alcona County had about 15%.

Montmorency County ended its last fiscal year with enough in the bank to cover 31% of expenses.

If Alpena County would drastically reduce spending for the rest of the year, it is possible less fund balance will be needed and layoffs can be avoided, Ludlow said. She suggested a spending freeze, but commissioners didn’t respond to the suggestion.

County policy says fund balance must equal 30% of budgeted expenses, but, at this point, it appears commissioners’ goal is to get to about 25%. To do so, it will likely have to cut about $800,000 of that $1.4 million 2021 shortfall to meet that goal.

The commissioners used spreadsheets to look at department sizes and employee salaries and had brief discussions Friday on where layoffs, if necessary, could begin. They mentioned Sheriff’s Office road patrol deputies, who are partially funded by grants, as well as commissioners’ staff and possibly the county Clerk’s Office, among others.

Ludlow also noted no raises for elected officials or non-union employees are included in the proposed budget. Some union employees will get raises because of current contracts.

The commissioners didn’t take any action on Friday, but agreed to go through the proposed budget line-by-line over the weekend.

Another meeting is scheduled for 1 p.m. Tuesday at the Merchants Building at the Alpena County Fairgrounds.

Steve Schulwitz can be reached at 989-358-5689 at sschulwitz@thealpenanews.com. Follow him on Twitter @ss_alpenanews.com.