Economically, county dealing with ‘new normal’

By AMY JONES / Associate Editor

*Editor’s note: This story is the first in a yearlong in-depth series examining the state of Shelby County’s economy. Shelby County leads the state in most key economic categories, but the state of Alabama trails much of the nation in many of those same key categories. With this in-depth series, we plan to take a deeper look at the good and the bad about our county’s economic situation.

While Shelby County is considered one of the wealthiest counties in the state of Alabama, no county has proven immune to the national recession.

Now, after years of lower revenues, county officials are realistic about what county Finance Manager Butch Burbage termed a “new normal.”

Shelby County’s sales and use taxes have dropped significantly over the past five years.

For example, in September 2006, the county brought in approximately $2.09 million in sales and use taxes. In September 2011, the county brought in about $1.92 million — a drop of about $170,000.

Sales and use tax revenue is divided equally between the county’s school system and the county’s general fund. The general fund has two major sources of revenue: sales and use taxes, and property taxes, Burbage said.

“Obviously, if revenues are down, we have less money to use for county services. Shelby County is the same as all the other counties in the state,” Burbage said.

Burbage said over the length of the recession, the county has cumulatively reduced its expenditures by about $5 million, or about 10 percent.

However, that doesn’t change consumer expectations, according to County Manager Alex Dudchock.

“The pressure to continue delivering services is ever-increasing,” Dudchock said. “We have less to operate. Bottom line, our revenue and the growth of our revenue have been declining.”

THE UNEMPLOYMENT EFFECT

Dudchock said a rising unemployment rate and lower household income are two major factors contributing to the lower revenues.

The county’s jobless rate went from 2.3 percent in 2007 to 7 percent in 2011.

“When you triple unemployment, household income decreases as well, which is one of the strongest economic indicators,” he said.

In five years, between 2005-2010, Shelby County’s average household income went from $71,829 to $65,673, a decrease of 8.57 percent, Dudchock said.

Burbage said, however, that Shelby County’s families are changing their lifestyles to fit the new economic reality.

“We’ve been in this slow-down for about three years. Families are beginning to adapt. People have adapted to this new normal they have,” Burbage said. “When people first lost jobs or had salaries cut, they cut off all their extra spending. Now they’ve adapted to that, or gotten another job, maybe, that doesn’t pay as much.”

Dudchock said he does not expect the economy to rise back to pre-recession levels.

“We don’t expect for us to suddenly get back to the same growth we were experiencing for two decades,” Dudchock said. “No one is comfortable making a projection of where our growth will be because of how abrupt this recession was.”

He said the county is working to bring more businesses to the county, both to raise revenues and to bring employment opportunities so citizens don’t have to drive as far for work.

Currently, Shelby County citizens must travel about 30 minutes to work, on average.

“Unfortunately, that makes us married to our cars, as well,” he said. “We still have greater than 50 percent of our citizens leaving our county for employment. That tells us two things: our roads are more congested, and people are less productive because they’re spending more time in a car.”

Dudchock said the county is still a state leader — just one that has to tighten the purse strings.

“We’re still the highest-educated, have the highest per-capita income, the highest property values. We’re still the trendsetters. We just don’t have as much money to work with,” he said.

SCHOOLS DEAL WITH IMPACT

Shelby County Schools is also dealing with an economic impact, with the number of children eligible for free and reduced lunch rising.

Leah Anne Lowe, federal programs supervisor for Shelby County Schools, said in 2011, 34 percent of children in the school system were eligible for free and reduced lunch.

In 2010, that number was 31 percent. From 2006-2007, the percentage of students on free and reduced lunch was about 24 percent.

A family of four with a yearly income of $29,055 is eligible for free meals; a family of four with a yearly income of $41,348 is eligible for reduced cost meals.

Lowe said she thinks the economy is a factor contributing to the rising percentage of students eligible for free and reduced lunch, but the school system has also worked to let parents know the program is available.

“We’ve done a better job educating parents and making it easier to apply. We’re online now,” she said.

The school system receives funding from the federal government based on the percentage of students on free and reduced lunch, Lowe said.

“Right now, we serve eight of our schools that have at least 40 percent or more of their students on free and reduced lunch,” she said.

Those eight schools are Calera Elementary, Calera Middle, Elvin Hill Elementary, Montevallo Elementary, Shelby Elementary, Valley Elementary, Vincent Elementary and Wilsonville Elementary, Lowe said.

With that federal funding, the school system hires teachers, reading and math coaches, and purchases supplemental materials and classroom technology, such as interactive whiteboards, for those eight schools.

“We focus on the elementary grades because we feel that’s where we can make a huge impact,” she said. “For those that qualify, we’re going to serve those students. We do receive federal funds based on students that are on free and reduced lunch, and we use it in the best way we can to support our students.”

Christine Boatwright, Jan Griffey, Wesley Hallman, Katie McDowell and Neal Wagner contributed to this report.