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BoCC hedging budget bets

An expected drop in 2012 property valuations, a need to build reserves, rising health insurance costs and the outcome of the Nov. 2 General Election lead the list of concerns expressed by the Archuleta County Board of County Commissioners as county staff prepares the 2011 budget.

Additionally, Commissioner John Ranson has noted his concern over public perception of a new budget format.

The budget message from designated budget officer and county administrator Greg Schulte highlights the root of the problem: “Nevertheless, the County, along with other local, state and federal governments, is faced with unprecedented economic times where revenues are uncertain and are the provision of services becomes increasingly difficult.”

A new property value assessment reflecting the recent economic climate due next year could potentially cause a significant drop in property tax revenue for the county in 2012 — a possibility that has the county tightening its budget well in advance and working with Project 2012, an internal workgroup looking at how to alleviate the effects of the expected revenue drop.

“Right off the bat, my biggest concern is 2012,” said Commissioner Clifford Lucero, citing 15 percent as a possible figure for the decrease in the revenue. “We need to prepare now so we’re not trying to do it at the last minute.”

“Up until this point, we haven’t been focusing on 2011 as much as how we’re going to finish 2010,” Ranson said, noting he is not concerned about 2011 revenue and adding, “We’ve been active on the (Project) 2012, which has been a focus on 2010; the next step is to hold the line in 2011.”

The probable drop in revenue has the county looking to build reserves as a safety net and in hopes of not needing a line of credit to operate through the first months of the year until property tax revenues come in — something the county has not accomplished in recent years.

“If we don’t (build reserves), we’re going to be back where we were a few years ago,” said Lucero.

Ranson said the BoCC is currently reserving the increased property tax revenues in preparation for 2012, and to get ready in case Amendments 60 and 61 and Proposition 101 pass Tuesday.

“One of the main things we’re working on and have in our field of vision is we have to get the reserves back up,” Commissioner Bob Moomaw said.

While the current board has vowed to put $300,000 a year into reserves, the commissioners hope to pack away more while the revenue allows them to in case future revenue declines prevents such action.

In addition to funding the reserves in advance of possible financial trouble, the BoCC is contemplating health insurance changes for county employees in hopes of balancing cost with providing for county staff.

Last year, the county paid $1.2 million toward healthcare, with the budgeted amount for 2011 with their current carrier at $1.5 million — an amount Ranson said is “significantly higher than expected.”

“Health insurance is just brutal on everybody,” Ranson said. “We’re looking how to bring that back in line.”

“We’re going to vote on health insurance here in another week and get it more under control. We just can’t afford to continue down that path,” Moomaw said, noting the difficulty of navigating the changing health care field on the heels of “Obamacare.”

In attempts to add to reserves and lessen expenses, the BoCC has sent the budget back to Schulte and Finance Director Diane Sorensen with the aim of reducing the budgeted General Fund expenditures from the $11.7 million in the draft to $10.3 million.

“You’re thinking, ‘Oh boy, this is going to be brutal and this is going to be significant,’” Ranson said of the cuts.

Ranson also noted that the 1A money dedicated to facilities will hopefully again go unbudgeted (it is currently budgeted in the draft budget), thereby relegating it to the county’s reserves in anticipation of construction of a new government facility or jail, leaving only $400,000 or 4-5 percent left to whittle from the budget, something Ranson says is very doable.

Ranson said the BoCC’s justification in not budgeting funding is to not be able to spend the money, versus seeing it and relying on willpower to avoid spending it.

Another possible revenue upset dependent upon the Nov. 2 election (Amendments 60 and 61 and Proposition 101) could leave county staff at square one with the need to formulate an entirely new budget.

“We’d have to redo the budget if any of them pass,” Lucero stated.

“An awful lot depends on what happens Tuesday with 60, 60, and 101. If those pass, we have huge problems and, really, two different scenarios,” Moomaw said. “If those pass, there are extreme cuts that are going to have to occur and major cutbacks in services. If not, we have to have a balanced budget that allows us to provide services that people want.”

In the budget message, Schulte notes that, although the outcome of the election will be known prior to the adoption of the final budget, many unanswered questions will remain going into 2011 — such as if anticipated lawsuits or injunctions would alleviate or postpone the monetary damage to the county.

“What we’re planning on is getting it ready and not planning on the lawsuits to change it,” Ranson said.

Ranson’s additional concern stems from the format of the county’s finances changing from last year with the consolidation of funds within the county (from 18 to nine) resulting from guidance from the Government Accounting Standards Board Statement No. 54.

Under the consolidation, the remaining funds will include more functions — for example, the Road and Bridge Fund will include the 1A roads funding, as well as the Road Capital Improvement funding.

Ranson pointed out that, although 1A will appear in the funds, it will be accounted for separately within the funds.

Since budget season is still young and Tuesday’s election could have a potentially large effect, there is no clear picture of what the final budget will look like come December, but it’s unlikely that it will closely resemble the draft budget.

The entire draft budget is available at