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• Background From a peak of $815,719 in FY &8-89, building division operating revenues dropped to $471,932 in FY91-92. That represents a 42.2% decrease in annual revenue between those two fiscal years. While revenues have fallen significantly over the past three years, the workload has not decreased as much. Measured by number of permits issued and number of inspections conducted, the building division's work load decreased from 39,819 in FY 88-89 to 31,770 in FY 91-92. That represents a 20.2% decrease. Since the building division functions as an enterprise account, the continual loss of revenue has made a significant difference. Because of this revenue reduction, the building division's expenses have exceeded its revenues for the past three fiscal years. In 1990-1991, there was a $278,000 shortfall, while in 1991-1992 there was a $395,502 shortfall, and in 1992-1993 the deficit is currently projected to be $301,311. Because the building division had accumulated a reserve of over $1,100,000 by the end of FY 1989-1990, there was sufficient money to continue operations even with an annual shortfall. In fact, the purpose of having the reserve was to compensate for the cyclical nature of the construction industry. Although the enterprise account reserve compensated for the revenue shortfall when construction activity declined in FY90-91, staff realized that the reserve could not make up the revenue deficit indefinitely. For that reason, staff started monitoring building division revenue and expenditures closely. Not only did staff continually assess construction activity, but staff also projected revenues and cash position on a regular basis. While it initially appeared that the construction slowdown would be temporary, it soon became apparent that a recovery would not occur quickly. Consequently, staff determined that expenditures would need to be reduced to lessen the deficit. Staff did take a number of actions to cut costs, and these did reduce the difference between monthly expenditures and monthly revenues. • Cost Reduction Since late in calendar year 1990, building division costs have been reduced substantially. This has involved reducing capital expenditures, cutting operating costs, and eliminating staff positions. Even with these actions, however, costs still exceed revenues by a significant amount each month. The most significant of the cost reductions has been a staff cut of 5 positions. Since 1990, building division staff positions have been reduced from 21 to 16. This reduction was accomplished by eliminating an unfilled inspector position, eliminating a vacant clerk position, and then eliminating three other positions -- a plans examiner, an inspector, and a clerk. While the first position was eliminated in FY 90-91, the other four were cut in FY 91-92. A copy of the memo sent to the Board of County Commissioners regarding the last three position cuts is attached to this memo. Besides eliminating positions, staff also cut costs by eliminating capital expenditures. This has involved cutting programmed computer expenses as well as cutting approved vehicle replacement costs. No capital expenses are included within the 1992-1993 budget. In addition, staff has reduced operating costs by reducing travel expenses, supply costs, and other operating costs as much as possible. -- 39 MAR 2 31993 860K 8 0 FA E 135