The 2012 Archuleta County budget approved on Dec. 14 shows a county that continues to improve financially, but also a county that continues to tighten its belt in light of decreased revenues.
As required by statute, the Board of County Commissioners approved a balanced budget that projects 2012 expenditures for all county functions to land at $26,355,011.
In presenting an overview of the budget to the BoCC and public, Finance Director Diane Sorensen noted four “significant issues” for 2012 — the decrease in property tax revenue, the capital outlay budget, the Fleet Fund and county staffing.
Property tax revenues to the county are projected to drop $1.8 million, due to a 24.8-percent drop in assessed valuations, from $7.8 million projected to end 2011 to 2012 anticipated revenues of just under $5.9 million.
Property tax revenues account for 24.7 percent of the county’s total revenues, second only to intergovernmental revenues (grants and so forth). Sales and use taxes are the third-highest source of revenues for the county at 12.2 percent (and are projected to remain flat in 2012 at $2,905,500).
Three funds receive revenue from property taxes — the General Fund, Road and Bridge Fund and Department of Human Services. Sorensen said neither the Road and Bridge or DHS funds will see a decrease in property tax revenue, but that a $400,000 hit will be taken by the General Fund.
Also because of the drop in property tax revenues, county staff does not anticipate receiving any 1A funding under the final year of the de-Brucing measure, which allowed the county to keep revenues above TABOR limits for five years.
The General Fund and Road and Bridge Fund will take a hit of approximately $1.4 million from the loss of 1A money, Sorensen said — a 56.9-percent decrease for Road and Bridge.
Once the Road and Bridge fund balance is expended, the fund will be limited to the current year’s revenues of $3.6 million, Sorensen explained — a decrease of almost $3 million per year from the last three years.
Two categories of 1A funding have remaining fund balances, however, and those fund balances will be budgeted in 2012 for projects the BoCC deems appropriate.
While anticipating a revenue drop of $1.8 million on the year, the 2012 budget shows approximately $2.6 million spent for Capital Outlay projects, funded through a variety of sources.
Three of the Capital Outlay projects for 2012, according to the budget overview, will cost approximately $400,000 from 1A Facilities funding to improve the county’s Internet, network and broadband capabilities, as well as switching the county to a Voice Over Internet Protocol (VOIP) phone system.
It should be noted that the projects will improve the technology for only the county government and not the general population.
The VOIP phone system comes with an estimated cost of $105,000 and is anticipated to reduce annual operating costs for the county by $37,461, putting the break-even point on the project at 2.8 years, Sorensen said.
The Internet and network work at the county is anticipated to cost $209,485 in 2012 and will save the county $47,711 per year, giving the upgrade a break-even point of 4.4 years.
Lastly, the broadband work is part of a federal grant for which the county’s match is 10 percent. The project will improve broadband in the town and county and should be completed over two years. The county’s 2012 expenditure on the project is budgeted at $81,280.
Other Capital Outlay budgeting includes a road and parking lot to reach the county’s open space on Cloman Boulevard, design and construction on the Town-to-Lakes Trail, and $383,064 for undesignated projects (all three funded through the 1A Parks and Recreation fund balance), as well as for motorized equipment and the completion of ongoing projects (such as the county website upgrade, Archuleta County Combined Dispatch technology upgrade and the Emergency Operations Center renovation).
The total Capital Outlay budgeted equals $2,593,285 in 2012, according to the budget overview.
The third significant issue raised by Sorensen was the Internal Fleet Fund, which was started last year to help the county maintain its vehicles and equipment on a cash basis, as well as to maintain reserves adequate to allow the county to replace vehicles and equipment as needed.
Because the fund is only in its second year and in beginning phases, its 2012 proposed fund balance will jump to $95,474, from the estimated 2011 year-end balance of $14,429 (revenues primarily come from other funds and departments). Expenses within the fund are also budgeted to increase because of the county’s aging fleet, Sorensen said.
The final significant issue brought up by Sorensen was staffing.
For the fourth year in a row, county employees will not receive cost of living or merit increases in 2012.
Additionally, the county has eliminated 8.45 positions for 2012 (including three positions from the sheriff’s office), which is anticipated to save the county $329,000 in wages and benefits.
With the drop in full-time equivalents (FTEs) in 2012, the county sits at 151.8 FTEs, the lowest since 2004. The county employed 141.33 FTEs in 2003. For comparison, the county employed 176.33 FTEs in 2006, just prior to the financial meltdown.
In 2012, salaries and benefits account for 30 percent of the county’s overall budget.
Despite the “significant issues” brought up by Sorensen, the county has shown progress since its financial crisis in 2007 — with a fund balance over 233 percent higher than it was in 2009 — at $1,231,710 in 2009, versus the $4,102,925 estimated for 2012.
In a later interview, Sorensen said the 2012 fund balance could not be compared to those prior to 2009 because of the inaccuracy of the earlier records, the negative (and illegal) fund balances, and the fact that the county had many more, separate funds at the time.
“Archuleta County citizens, county employees and elected officials should be proud of just how far they have come back in four years,” Sorensen said in presenting the budget.
The 2012 fund balance also allows for the target amount of fund reserves called for in the county’s fund reserve policy approved in 2011 — three months’ of operating expenses in reserves to allow for increased financial stability and adequate cash flow until property tax revenues are received.
The county’s Solid Waste business-type fund continues to be a source of caution for the county, with the fund balance set to decrease in 2012 by 40.6 percent because expenses continue to be higher than revenues collected by the fund.
Should expenses continue to best revenues, Sorensen said the General Fund would need to supplement the Solid Waste Fund.
Public works functions, which includes solid waste, road and bridge and weed control, are expected to account for 24.6 percent of the county’s expenditures in 2012, up 11.9 percent from 2011, at $6,467,400.
In total, the budget reflects the county continuing down a path to financial stability, while expending fund balances to prepare for additional years on par with 2012 in terms of revenues.
Following the passage of the budget, the commissioners made their first contribution out of the budgeted fund balances that was not specifically included in the budget — $5,000 for the Community for Recovery program, which runs an accountability court to help lower recidivism rates for things such as drugs and alcohol offenses committed in Archuleta County.
Also at the meeting, the BoCC appropriated sums of money to the various county funds in accordance with the budget, and set the Archuleta County mill levy at 18.233 (the same as in 2011).