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Wise moves in difficult times

A page 1 story in this week’s edition details several items that shed light on current economic conditions. The news is a mixed bag, with one bit of raw data showing the local unemployment figure is below the statewide average and clearly below the national average. The data is raw due to the fact that some aspects of the local employment picture are not figured in — and, perhaps, cannot be evaluated in an accurate manner.

The local employment pool increased, July to August. On the other hand, a report available Tuesday shows sales tax revenues continue to lag year-to-date 2009 compared to 2008, down 11.55 percent. The August sales tax report shows a decline of 7.53 percent from August 2008.

On the plus side, the local economy is receiving a gentle lift due to the big game hunting season (nothing like the overall boost seen, say, 20 years ago during hunting seasons) but, soon the traditional fall activity will end. Then … winter.

It is impossible to say what kind of winter it will be in Pagosa Country, in terms of snowfall and in terms of the winter tourism business.

With all this and more in mind, local governments, in particular the county and the town, are locked on to the budget glide path. Both entities are in the process of finalizing 2010 budgets and both must deal with shortfalls and the task of meeting recurrent demands.

County and town should be commended for the manner in which they are dealing with a budget situation dogged by tough circumstances. Both are being fiscally conservative, both are crafting budgets in terms of potentially difficult fiscal scenarios.

The town first took this turn in November 2008, while working on the 2009 budget. The town council adopted a flexible budget approach at that time, with phased reductions keyed to revenue flows. When all was said and done, the town reduced its budgetary profile 15 percent compared to 2008. Major efforts have been made by town staff in all departments to cut costs and the efforts continue as the 2010 budget takes shape. The town is unique among county governmental entities, in that its major revenue source is sales tax. With sales tax revenues in a slide, town government must find ways to fund the necessities — the street department, the police department, upkeep of infrastructure and primary amenities. This task is being undertaken in a responsible manner, mindful of the importance of these activities and elements in a business environment heavily dependent on the town’s ability to attract visitors year round.

The county, likewise, must craft a budget that serves to keep the foundation intact and improving. That means, among other things, continued work on roads (with a five-year road plan in the works), development of capacity at the landfill, public safety services, maintenance of an airport, the transportation department. There is little left for nonessential services and work.

The county is much less dependent on sales tax than the town and, as it receives considerable revenue from property tax, given the current high average assessed values in the county, the revenue stream is fairly stable. For a while. The next assessment could take the car over the hill on the tax revenue roller coaster, with assessed values, and attendant taxes, likely to fall. Here, the county is making a move to prepare for any outcome. A group is being formed now that will study what might happen in 2012 if and when there is a drop in property tax revenues. A smart approach to the situation, and one that parallels the formation of a task force to deal with the county’s financial problems in recent years — another piece in a pattern of solid work that has managed the county’s fiscal affairs for more than a year.

Karl Isberg