County finance:
‘It looks like we’re going to make it’

As the flagging national economy continues to take citizens and institutions on a tumultuous financial ride, Archuleta County’s coffers weathered the third quarter relatively well, despite local downturns in key revenue streams.

“It looks like we’re going to make it,” said Archuleta County Administrator Greg Schulte.

Schulte’s sober assessment came during a financial briefing Monday, when he and finance director Don Warn updated citizens and the board of county commissioners on the county’s third-quarter financial health, and prepped them for the challenge of two tough months of number crunching as the county moves toward adopting the 2009 budget.

During the briefing, Schulte identified two key revenue streams — building permit revenue and sales tax collections — that continued to limp through the third quarter.

According to Schulte, total building permits for 2008 are “the lowest in recent memory,” with just 53 percent, or $158,000, of $300,000 budgeted for 2008 collected thus far. Based on the numbers, Schulte anticipated a $100,000 shortfall in building permit revenue by year’s end.

Sales tax, said Schulte, is also down 1.7 percent from the adopted 2008 budget, although he added that collections are up 0.3 percent from 2007.

County staff projected a 2-percent sales tax increase over 2007 when budgeting for 2008.

Although sales tax collections are slightly off the mark, Schulte said collections remain stronger than expected, particularly after a summer analysis indicated they were likely to drop another 1 percent.

Despite a sharp downturn in building permit revenue and flaccid sales tax growth, the county continues to tread water, staying afloat in what Schulte described as “uncertain economic times.”

Nevertheless, although maintaining economic buoyancy has remained forefront on Schulte and Warn’s minds, a $1 million general fund line item error discovered in July, threatened the county’s tenuous financial position and sent staff and elected officials scrambling.

Schulte said staff, department heads and elected officials worked to rein in expenditures and analyze revenue streams, and ultimately produced a balanced 2008 amended budget that accounts for the shortfall. Better yet, Schulte said, aggressive budgeting coupled with a windfall from the national bailout, will likely leave the county with a surplus at the end of 2008.

“Expenditures continue to look favorable at this time. There are several large expenditures anticipated that will change the percentages in a significant manner, particularly the final payments for the parallel taxiway at Stevens Field,” Schulte said.

With a tight grip on expenditures, a careful tracking of revenue streams, and a $325,000 make-up Payment In Lieu of Taxes (PILT) payment through the federal bailout, Schulte said the county was poised to close 2008 with a positive fund balance of $326,000.

With the third quarter’s numbers crunched, Schulte and Warn are now focused on completing the 2009 budget, and they presented a draft version during Monday’s meeting for the board’s review.

Although preliminary numbers show budgeted increases in revenues and expenditures in 2009 over 2008, board direction given during Monday’s meeting means staff faces a daunting task ahead.

“Staff needs to get this budget as close to 2008 as you can get it. This is the first step. We have a two month process to go through. We do need to take a look at what is coming down the pike and it isn’t pretty,” Archuleta County Commissioner Bob Moomaw said.

Moomaw’s recommendation lines up with a similar recommendation put forth by the Citizen’s Financial Task Force.

In an interview Tuesday, Schulte said, “If our goal is to hit a flat 2008 budget (in 2009) there will be some choices that have to be made.”

And Warn added, “Anything is doable, it depends on what pain you’re willing to endure. We can get back to any number, but the question is how many programs or services do you want to cut and how many positions do you want to eliminate.”

Although the 2009 budget provides no merit pool raises or cost of living allowances to county employees, Schulte said cutting staff is not an option on the table at this time.

“The 2008 amended budget proved we can get by without cutting staff,” Schulte said.

Although staff may not see cost of living raises and Mountain Express will likely not expand its bus service, Schulte said the 2009 proposed budget has a number of bright spots.

As a sign of changing times, Schulte said, “The conversation now is: ‘How much can we put into reserves,’ rather than asking ‘How we can survive the year?’ At the end of 2009, like 2008, we are projecting a moderate surplus.”

In addition, the 2009 budget incorporates a five-year capital improvement plan, the first annual payment back to the Road Capital Improvement fund for money borrowed earlier in the year to zero out negative fund balances, $325,000 in additional PILT funding and the addition of two full time employees — a public works director, and an associate planner.

Between Oct. 20 and Dec. 9, staff will meet with department heads and elected officials to hammer the 2009 budget home with adoption scheduled for Dec. 16.

Schulte said the board of county commissioners will make the ultimate decision on the 2009 budget, and he described Monday’s presentation of the draft as “the first step on the journey.”