County struggles to spare jobs, reduce 2010 budget deficit

Cities and counties and even the state itself are facing furloughs and layoffs to help balance their 2010 budgets, but here in Chaffee County, the county board of commissioners is hoping to be able to avoid the same destiny.

“I’d rather cut programs than people,” said County Commissioner Chairman Frank Holman as fellow commissioners Dennis Giese and Tim Glenn nodded in agreement.

At a budget workshop last week, County Finance & Personnel Director Dan Short told commissioners he and County Administrator Bob Christiansen had done all they could to cut out “fluff” in the county $22 million budget but were still facing a $175,000 budget shortfall. Short explained the cuts county departments have already made in an effort to slash away at a budget shortfall that started at $691,000.

At the top of the cost-cutting list was the county road and bridge department which Short said opted to defer $200,000 – $300,000 in chip seal projects until 2011. Instead  $40,000 has been budgeted to patch only the most severe road damage. The road and bridge fund will also be buoyed by an expected $160,000 grant from the state’s FASTER fund. FASTER, which stands for Funding Advancement for Surface Transportation and Economic Recovery, is supported by two revenue streams approved by the state legislature earlier this year: a statewide $2 daily rental car fee and earmarked revenues from a weight-based surcharge on vehicle registration that charges heavier vehicles more since they cause more damage to the roads.

Short said he felt staff had exhausted all ways to raise revenue for the county short of going to voters. He said it could make sense at some point to revisit the idea of a use tax.

The commissioners directed the two men to go back to county department heads to see if further cuts – hopefully close to 20 percent in each department – could be made to help the county get to just a $50,000 deficit in its 2010 balance sheet.

Short, who has been the county’s finance man since 1994, explained to the Citizen that while bleak, the county is in a better financial position than others around the state due to its historically conservative approach to budgeting. “We tend to be “slow on the upswing,” Short said, usually only budgeting for projects well after need has already been identified and maintaining a strong fund balance which provides a cushion against economic hard times and emergencies.

FALLING REVENUE

As elsewhere throughout the state, the largest root causes of looming budget deficits are declines in sales tax revenue, building permit fees and interest earnings.

County sales tax revenues account for nearly one-third of general fund revenues. Gains of five percent annually in 2005 though 2008 have been rolled back by an expected 5.5 percent decline in sales tax receipts by the end of 2009 and a similar decline anticipated in 2010. In 2008, county sales tax revenues totaled just over $2.9 million, the same total as expected by the end of this year. In 2010, sales tax is expected to fall by $150,000 to $2.75 million.

With the local construction industry limping along, the county’s building permit fees have slid $128,000 in just two years; from $503,000 in 2008 to $375,000 in 2010.

The biggest hit to county revenues is in interest earnings, which are projected to plummet to $90,000 in 2010 from just over $252,000 in 2008. Short explained that the county tends to invest in short-term instruments which reached historic lows of less than one percent this year. Short writes in the budget draft that the county will continue to invest in short-term instruments but will “diversify our earning assets by slightly extending maturities when appropriate.”

For the past two years, county finances have ended in the red, 2007 being the last year the county ended in a positive financial position, Short told the commissioners. “At some point we need to balance the budget,” he said.

Giese said public safety and the road and bridge department need to be at the top of the list of basic services the county must provide.

The commissioners broached the topic of sales tax or property tax increases to create dedicated revenue streams for big ticket items such as emergency medical services or roads.

For example, emergency medical services have been a major impact on the budget since the countywide service was established in 2006. A dedicated, tax-supported revenue stream for EMS would aim to save the county $700,000 which could then be re-allocated to support other county priorities.

Christiansen said he would follow through with plans to hold a ballot initiative workshop between the county, the towns, and possibly the school districts to discuss a coordinated approach to what, if any, tax increases might be brought before voters in the coming year.

RISING EXPENSES

In addition to declining revenues, the cost to do county business continues to rise.

The county’s health insurance premium was slated to increase 15.5 percent, Short explained, but thanks to some revisions to the plan, only increased a still significant 8 percent. County paid health insurance, which includes dental, vision and health savings account options, amount to nearly $1 million of general fund expenses.

Also topping the list of expense increases was the county’s general fund legal budget which has mushroomed nearly 44.5 percent in two years, from $137,000 in 2008 to $197,950 in 2010.

The county commissioners’ legal budget alone is increasing $45,000, from $85,000 budgeted this year to $130,000 in 2010. Short and county attorney Jenny Davis attribute much of the increase to the county joining in reply to a grazing rights suit filed against the US Forest Service Pike-San Isabel National Forest by the conservation group Western Watersheds Project.

The sheriff’s department is also anticipating a major increase in legal fees as it battles the district attorney’s office over whether to prosecute as a crime, a death previously ruled accidental. Sheriff’s department legal expenses totaled $4,169 in 2008, more than doubled to $9,403 in 2009, and are budgeted to balloon 219 percent to $30,000 in 2010. Davis pointed out both legal cases are being prosecuted by outside counsel.

The fledgling county economic development corporation championed by Giese also came under scrutiny as the commissioners looked for ways to cut expenses. Giese said that even in this tough economy he still believes “we as a county need to commit funds” to economic development. He suggested cutting proposed economic development funding from $50,000 to $30,000. [See related story]

As commissioners continued to spend the afternoon wrangling with intransigent numbers, they kept returning to the same conclusion: “We need to focus on revenue streams,” Glenn said flatly.

The state mandated deadline for adoption of county budgets is Dec. 15. The next public hearing on the budget had not been scheduled as of this posting. Last week’s meeting was not posted on the county web site. The bulletin board outside the commissioners’ chambers at the county courthouse in Salida is the legal site for county public hearing notices.