Representatives for the Ironton-Lawrence County Community Action Organization's Community Development Department hope that a few changes can help "stop the bleeding" financially on expensive economic development projects.

City and county leaders were notified in August that some changes would be needed to fund the community development department's grant-seeking projects in 2004 because it ended with a final deficit of $88,100 last year, said Ralph Kline, community development director.

In the future, the community development department will try to operate on a fee-for-services basis and will try to seek grants to pay for as much of the administrative costs as possible, build these costs into the overall project and bill against the money set aside in the budget as only a last resort, Kline said.

"It takes, for us and our agency, a whole new way of looking at things," he said. "The agency wants to continue working with the city and county on development projects. Last year just brought to a real crucial head that you have to have the green to pay the bills."

In recent years, the city and county have each allocated $35,000 annually to pay for the CAO's planning and administration costs, but this only accounted for about 40 percent of the department's budget. Typically, the CAO covers the other 60 percent through internal funding sources, Kline said.

A big part of the problem is that the state continues to add additional administrative requirements for grants but provides less and less administrative funding, he said.

In 2003, the CAO administered $10 million for CAO, county and city programs, but only $230,000 was set aside for administrative costs.

Last year's deficit contributed to the community development department not filling two positions and has caused the department to look at these alternative ways to fund projects, Kline said.

Hopefully, the new process will work well enough that the city and county will not have to commit more than the $35,000 out of each general fund and all of that may not even be necessary if everything goes well, Kline said

This new way of covering the administrative costs will give everyone a better planning tool and a way to prioritize and say "what do we want to spend the money on," Kline said.

By making these changes now, it may not help on projects that are already under way but will help the department prevent huge deficits in the future, he said.

Kline has also recommended that the city and county create an economic development fund that could be used to cover administrative costs and as matching funds for various grants.

The amount of money that needs to be set aside will become increasingly important because the city and county must each adopt a budget by March 31.

The finance committee members said they appreciate Kline keeping them up to speed and that this is a topic that will certainly require more discussion in the near future.

"I think you guys have done a bang up job and your agency is something the city and the county haven't been able to do without," committee member Richard Price said.