Thursday, May 3, 2007

County finance: Storm becomes hurricane

By James Robinson
Staff Writer

The perfect financial storm became a major hurricane when Archuleta County Administrator Bob Campbell announced Tuesday the county faces a $2.4 million shortfall for 2007 and may not make payroll come June 1.

“We can make payroll Friday and payroll in two weeks, but based on our revenues, were not going to make the June 1 payroll,” Campbell told department heads, key county staff and elected officials.

“Revenue predictions are not good. What we thought would be a short term blip will be more than that.” Campbell said. “By year’s end we face a $2.4 million shortfall in meeting our expenses.”

Campbell said the shortfall puts the county in the red to the tune of about $300,000 per month, and he asked department heads to take hard looks at their budgets, and, as a first line of attack, to make 20-percent, across-the-board cuts.

As a second tier, Campbell suggested further reductions in travel and training, auctioning off of capital equipment, forfeiture of staff cell phones, suspension of internal service contracts such as office cleaning, coffee service, and some technical assistance services, and suspension of various county programs and services such as the recycling center and scaling back bus routes to reduce fuel and vehicle wear-and-tear costs.

We have to make some adaptations,” Campbell said. “Anything is on the table, as to what we do.”

As a second line of attack, and among Campbell’s most drastic proposals, were a 20- percent staff reduction and a reduction of hours among remaining staff from 40 hours down to 30 or 32.

Campbell gave department heads until tomorrow to provide budget cut proposals, and he said layoffs would be decided in the coming days.

Campbell briefed county employees Wednesday on the situation.

But Bill Nobles, head of the county’s Colorado State University Extension Office asked if 20-percent cuts would solve the problem.

“Will the 20-percent cut get us where we need to be?” Nobles asked.

And Archuleta County Assessor Keren Prior suggested the county commissioners give up their salaries.

“Expenditures over the years and the county managers we’ve had are the problem. The commissioners should give up their salaries. They should, because they’re part of the problem, they haven’t been part of the solution,” Prior said.

And although the elements Prior listed may have contributed to the problem, how the county arrived in its current financial situation may be more complex than an exercise in simple finger pointing.

“It’s not that we had a bad year in 2006, it’s that it has been a problem for the last four or five years,” Archuleta County Clerk June Madrid said.

Campbell confirmed Madrid’s assessment.

“This has been going on since 2003 and we’ve gotten ourselves into a pickle. This has been a trend, and now that reserves are gone, we’re in trouble,” Campbell said.

“We’ve been living on reserves for the last six years,” Commissioner Ronnie Zaday said.

“This didn’t happen in the last three months,” said Commissioner Bob Moomaw.

As mandated by state statute, the accounting firm Chadwick, Steinkirchner, Davis & Co., P.C. audited the county’s financial statements for 2003.

In the audit’s management comment letter — a document that provides a narrative of the firm’s findings — they reported “Many accounts had not been reconciled by management prior to the commencement of our audit.” Furthermore, the document states a number of “significant adjustments” related to adjusting cash held by the treasurer, capital assets and accumulated depreciation, accounts payable, accrued liabilities, interfund receivables, and interfund transfers. Many of the adjustments, according to the document, were made due to implementation of a new accounting system, a change in finance directors, and changes in accounting principles. The firm linked the changes to balance sheet accounts not being timely audited and to a “significant increase in the time required to complete the audit.”

The deadline for audit completion is July 31, however, counties generally receive a 90-extension to complete the task.

According to Christy Reeves, director of local government audit at the state auditor’s office, the county did not meet the 2003 audit deadline, even with the 90-day extension, and the state placed a two-month freeze on the county’s use of its property taxes.

Reeves described the move as analogous to freezing someone’s bank account.

“The money is there but you can’t spend it,” Reeves said.

Property taxes are the county’s primary revenue source.

The problems persist in 2004.

According to the management comment letter in the 2004 audit conducted by the same firm, “During our audit and as noted above, the County is not reconciling general ledger accounts on a monthly or timely basis.”

Furthermore, among other problems that appear as carryovers from 2003, the report says the county airport isn’t pulling its own financial weight, and “The airport is currently depending upon significant transfers from other County funds in order to maintain operations. The County is heavily subsidizing this operation.”

To compound the problem, the county saw a 30-percent staffing increase in 2004.

In 2004, the county missed the audit submittal deadline again, and the state levied a second, three-month freeze, on the county’s use of property taxes.

Although County Finance Director Bob Burchett said the 2005 audit is not yet available for review, Reeves indicated the county had missed the submittal deadline, with the 90-day extension, and the state once again imposed a five month freeze on the county’s use of property taxes.

According to Reeves, the state received the 2005 audit, April 20, 2007, but the audit was refused, due to “minor technicalities” and sent back to Archuleta County. Reeves said the county resubmitted the audit Monday April, 23, and the state accepted and released the property tax freeze.

Reeves said the county has problems reconciling cash and issues with an internal service fund.

Archuleta County Finance Director Bob Burchett played down the impact of the property tax freeze.

“It’s not such a big deal by the implementation date,” Campbell said.

Although other accounting professionals say a property tax freeze is a heavy hammer wielded by the state when counties or municipalities ignore or have repeat financial problems.

In 2006, hard numbers percolate to the surface, and according to Campbell, in 2006, the county lived on a $1.2 million draw against its budget.

“We spent more than we budgeted, and we spent more than we collected in 2006,” Campbell said.

Archuleta County documents confirm Campbell’s statement.

For example, in 2006, actual revenue coming into the county was $17 million while actual expenditures broached $21.4 million.

According to documents provided by the county finance department, during the first months of 2007, expenditures continued to outpace revenues, with the county overspending by $243,494 in January, $112,124 in February, and $706,845 in March. However, Campbell estimates 2007 revenues at $3.9 million with expenditures at $5.9 million, resulting in overspending by $2 million.

“It’s not that were spending like drunken sailors,” Campbell said. “It’s that revenues aren’t coming in as we expected.”

And Archuleta County Treasurer Lois Baker said June marks the last solid infusion of cash into the coffers before the bleak stretch of months ahead.

“The middle of June is the last big collection, and then it’s nothing,” Baker said.

And others in the county are skeptical.

“We can’t fix this in a month,” said Prior.
And Campbell responded, “We will fix this in a month.”

“We have to, or we can’t go on,” said Madrid.

Campbell said the county had already used $425,000 of its $500,000 line of credit, and if extreme financial measures are necessary, Campbell said he would consider dipping into its emergency reserve fund.

The Taxpayer’s Bill of Rights (TABOR) mandates counties maintain a special emergency fund, equal to 3-percent of general fund expenditures, although questions remain whether the current financial crisis constitutes a qualified “emergency,” under TABOR.

According to Campbell the emergency fund holds $435,000 in cash.

“I hope the message is out that the county realizes what they’ve done and were working on fixing the problem. We’ve got a positive direction to move toward but we’ll have to limp our way there,” said Campbell.

james@pagosasun.com

Sex offender gets 52 to life

By Louis Sherman
Staff Writer

Gary Jay Hauk, 46, a former resident of Ohio, was sentenced to 52 years to life in Sixth District Court Tuesday, after convictions resulting from the sexual assault and kidnapping of an Archuleta County woman on Jan. 9, 2006.

Hauk was convicted of second-degree kidnapping, Class 2 felony; sexual assault (use of force), Class 3 felony; and menacing with a deadly weapon, Class 5 felony on Jan. 30 of this year. Earlier, he pleaded guilty to aggravated motor vehicle theft.

The crimes occurred in the San Juan River subdivision, east of town on U.S. 160. Hauk was arrested after the victim reported the incident, prompting a brief manhunt, which involved the Archuleta County Sheriff’s Department, Pagosa Springs Police Department and the Colorado Division of Wildlife.

Hauk was sentenced to three years for the criminal menacing conviction, to be served concurrently with a four-year sentence for the motor vehicle theft plea. Hauk was also sentenced to 24 years for kidnapping, to be served after the concurrent sentences, for a total of 28 years of determinate sentence. According to District Attorney Craig Westberg, the 28-year determinate sentence could be reduced due to good behavior and time previously served. But, at the very least, said Westberg, Hauk should serve at least two-thirds of the concurrent sentences.

Consecutive to (following) the determinate portion of his sentence, Hauk will serve an indeterminate sentence of 24 years to life for sexual assault, with the use of force. The final length of the indeterminate sentence, but no less than 24 years, could be impacted by the completion of sex offender evaluation and a sex offender treatment program “at the very, very minimum,” said Westberg.

Westberg said the intent of the sentences was to prevent Hauk from committing another crime, and parole on the lower end of the sentence would only be possible if Hauk shows he is not a threat to society.

By Westberg’s estimation, even if Hauk’s determinate sentence of 28 years is reduced by a third, he would still be 88 when paroled, if he lived that long.

If Hauk is ever paroled, he would face sexual assault charges in Missouri and Ohio, said Westberg.

According to Westberg, Hauk has a previous conviction as a 17-year-old, for sexual assault with a knife. Hauk “does not appear to be a realistic candidate for rehabilitation,” Westberg said.

If that remains true, Hauk will likely spend the rest of his life in prison.

louis@pagosasun.com

BoCC changes leadership

By James Robinson
Staff Writer

A coup d’état orchestrated by Archuleta County Commissioners Bob Moomaw and Ronnie Zaday during Tuesday’s Board of County Commissioners (BoCC) meeting, stripped Commissioner Robin Schiro of her chairmanship and key committee appointments and left the embattled commissioner reeling and some in the room befuddled.

Reading a prepared statement to fellow board members and the public, Moomaw said, “At the recent strategic planning retreat the staff and elected officials were very successful in building a successful team to improve the leadership of department heads and elected officials. This teamwork will lead to improved services to the residents of Archuleta County. It is unfortunate Commissioner Schiro choose (sic) not to attend the strategic planning sessions or retreat. At the strategic planning retreat while discussing leadership problems it became obvious the consensus of the staff and other elected officials was that they had lost respect for Commissioner Schiro’s leadership. This move is not taken lightly but is necessary in order to restore morale and trust of the county leadership and staff. Commissioner Schiro was asked to resign the chairmanship but refused leaving the commissioners no alternative but to remove her from the chairmanship.”

Schiro responded with her own prepared statement. (See this week’s Letters to the Editor section.)

Following reading of the statement, Moomaw moved to change the board’s organization, removing Schiro and installing himself as board chair, and Zaday as vice chair.

Schiro challenged the motion and the procedure in general, citing statute to support her assertions. She argued the reorganization of the board could not be done without public comment and without the restructuring placed on the commissioners’ agenda as a regular agenda item.

County Attorney Teresa Williams upheld Moomaw and Zaday’s tack, and said reorganization of the board was the purview of said board, that the move did not necessarily need to be on the agenda, and that public comment was not a requirement of the proceedings.

Zaday then called the question, with Moomaw and Zaday voting in favor of removing Schiro as chair, and Schiro voting against.

In a second move, Zaday and Prior reaffirmed their commitment to a streamlined meeting minutes policy adopted in January.

Archuleta County Clerk June Madrid has been dogged by multiple and last-minute requests for changes to meeting minutes, and the meeting minutes have been the topic of infighting between the commissioners, often with Schiro and Zaday battling over changes.

Recommitting to the meeting minutes policy mandates that all changes be made to the minutes the Tuesday before the board meeting and, if two versions appear, one adhering to the policy and one contrary to the policy, the board will vote the compliant version up and the other down.

Commissioners Moomaw and Zaday voted in favor of the motion, and Schiro against.

Schiro argued that her version of the minutes was essential to county and community concerns and business; however, an archived recording is available to citizens wishing to hear the full discussion during BoCC meetings.

A third measure, approved by Zaday and Moomaw and voted against by Schiro, mandates that the commissioners’ agenda will be set one week before the BoCC meeting and no changes will be allowed unless the matter is time sensitive.

The board chair is typically charged with managing meetings and setting agendas, and during Schiro’s tenure as chair, staff and fellow commissioners complained they had difficulty keeping pace with the chair’s multiple and last-minute agenda changes.

During the agenda timetable discussion, Schiro said, “Where is this on the agenda? I don’t have this on my agenda.”

And board chair Moomaw charged forward.

The final blow came when Moomaw and Zaday pulled Schiro from various committee appointments such as the Archuleta Economic Development Association, Region 9 transportation committee, Region 9 economic development committee, Colorado Counties Incorporated’s tourism, resorts and economic development committee, and its transportation and telecommunications committee and its public lands committee.

According to the motion, Moomaw and Zaday will replace Schiro on the various committee appointments.

After the vote, Moomaw and Zaday in favor, Schiro opposed, Schiro said, “What boards do I have left if you’re going to take me off the boards,” Schiro asked.

Moomaw responded, “You have NACo and Club 20.”

james@pagosasun.com