Archuleta County Finance Director Don Warn’s Friday request for commissioner approval to secure a $500,000 line of credit from Citizen’s Bank echoed ominously back to a similar event in 2007 — an event that foreshadowed a fiscal meltdown hovering just over the county’s financial horizon.
On April 17, 2007 former finance director Bob Burchett sought board approval for a half-a-million-dollar note from the Bank of the San Juans to cover, what former county staff described as, “ a cash flow hiccup.” And, as in 2007, Friday’s board approved the request.
“We may need to use it, we may not,” Burchett said in his presentation to the board. “This is strictly an operating line of credit based on revenues coming into the county. Our intent is to have this in place for cash flow pick-ups.”
Fast forward to Jan. 23, 2009, and Warn’s Friday presentation struck a similar chord — with one caveat: Warn and Archuleta County Administrator Greg Schulte said county staff and elected officials’ knowledge of the organization’s financial position, as confirmed by recent audits, is drastically different.
“The numbers sitting in front of me then were basically bogus,” said Archuleta County Commissioner Bob Moomaw.
Moomaw took office January 2007, just before the county’s finances unraveled.
Nevertheless, and similar to 2007, Warn said the need for the loan is largely an issue of timing.
Specifically, Warn explained, without sufficient reserves set aside, cash flow can be tight during the first two months of the year, as the county waits for the first large infusion of property tax revenue to revitalize the coffers after a year of spending. In the meantime, however, Warn said the county faces payments for day-to-day operating expenses, in addition to bills for a number of big ticket expenses such as insurance policy premiums.
Burchett sang a similar refrain.
One of the key differences between 2007 and 2009 Moomaw said is, “the quality of our staff is infinitely better.”
Staffing improvements have bettered the organization, and Schulte said recent audits confirm the county is solvent and has made major strides in solving many of the organization’s most vexing financial problems, such as negative fund balances.
Nevertheless, the county closed 2008 with just $152,000 left in the General Fund, despite receiving $325,121 through the federal bailout package. As a sign of the economic times, the board recently contemplated pillaging the TABOR emergency reserve fund — instead of seeking a line of credit — to bridge the cash flow gap.
The board ultimately chose to abandon the TABOR funding strategy during Friday’s meeting.
“I think it’s important we break that habit of using TABOR for cash flow problems,” Moomaw said.
With scant reserves, cash flow delays, property tax revenues at less than desirable levels and a weak national economy, old habits may be hard to break.
And then there are other issues.
Although the county finished 2008 in the black, some on the Citizen’s Financial Advisory Task Force argue the county is overstaffed and payroll is growing when it should be shrinking. In addition, and according to the 2007 government audit, the county carries a burden of $631,914 in unbudgeted comp time that, if cashed in en masse, could cause significant financial stress. Furthermore, the county airport remains upside down, obligated to millions in federal loans and utterly dependent on a general fund subsidy. That situation is unlikely to change in the foreseeable future. Lastly, while the county squeaked by with $152,000 left on the books at the end of 2008, it remains unclear how much cash the organization can stash during 2009.
“I’m concerned about the 2009 budget, as is every household in the U.S.,” said Archuleta County Commissioner John Ranson.
Ranson, long the fiscal watchdog, said he will keep tabs on the 2009 budget, and will lean on his fellow members of the task force to keep the county out of trouble and to strategize ways to amass reserves.
“We need substantially more in reserves, but it’s going to be tough in these economic times,” Ranson said.
To that end, the board, county staff and the task force will meet in monthly public meetings to address many of the above topics and to ensure finances are on track.
“We really hope the public will hold us accountable in these monthly meetings,” Ranson said.