County needs long-term budget forecast


    The 2013 budget for Archuleta County was at topic during a work session Monday morning, following a less-than-pleasing forecast of the county’s financial health.

    The budget work session began with Finance Director Diane Sorensen presenting a preliminary 10-year budget forecast to the Board of County Commissioners on the heels of a finance conference the prior week.

    The budget-specific portion of the hearing centered on various aspects of the budget, including contentious discussions about nonprofit funding.

    Financial forecasting

    In presenting her forecast, Sorensen said the conference she attended opened her eyes — not to forecasting as a new practice, but to the overall picture forecasting can provide in terms of strategic planning.

    Sorensen then noted that her forecast was preliminary, with only a few hours of work put into it, and added that there were specialists and software programs dedicated to the job.

    Sorensen then presented information relating to 10-year forecasts for the Road and Bridge and General funds. The charts began with information from 2010, and extended the forecast to 2022.

    Within both funds, Sorensen assumed no change in FTEs (employment Full Time Equivalents), but projected an increase in personnel costs. For that increase, Sorensen said that, while the county has given no raises for years, that trend could not continue, and cost for benefits (such as health insurance), was conservatively expected to increase 5 percent a year.

    Sorensen later stated that employers are expected to take a hit in 2014 when more provisions of the Affordable Care Act go into effect.

    In the case of the Road and Bridge Fund, Sorensen said personnel would become the second-largest expense, second to capital outlay.

    In the 10-year forecast, Sorensen preliminarily projected capital outlay expenditures of $1.2 million per year beginning in 2014, or after the work to Piedra Road and other planned projects in 2013 are complete.

    Sorensen informed the commissioners, however, that the county had not spent that little on road maintenance since at least 2007.

    Later in the discussion, Sorenson also noted the need for Road and Bridge expenditures to decrease in coming years.

    Sorensen explained that the county’s Road and Bridge debt would not be paid off until 2023 (the county received a $5 million loan in 2009 to complete roadwork), but that, by 2014, the county would have no money left from the loan and would have to start, “living within its means.”

    On the revenue side, Sorensen projected that, after federal funding received for the reconstruction of Piedra Road, sales tax would provide the biggest increase in revenue, projected to increase if Wal-Mart opens a local store , but likely evening off at the new level.

    Sorensen then presented the picture of falling property tax revenues, followed by a slow climb back to levels seen prior to the economic downturn.

    That slow recovery, Sorensen explained, is affected by the county’s no longer being de-Bruced. Without that de-Brucing, the county can only increase property tax revenues by 5 percent per year, making it a long road to again meet levels collected while the county was de-Bruced under ballot measure 1A.

    Later in the discussion, Sorenson noted it would take about 10 years to reach property tax levels similar to 2012 with the county not de-Bruced.

    As the forecast progressed, Sorensen pointed out a difference between expenditures and revenues of about $1 million — with revenues on the lower end of the differential.

    “This isn’t about being the bearer of bad news, this is reality,” Sorensen said when beginning the forecast discussion for the General Fund.

    Again highlighting the property tax and sales tax components of General Fund revenue, Sorensen noted another possible hit to county coffers — as Baby Boomers retire, there will be a shift from the purchase of goods to purchasing services, which are not taxed within Colorado.

    Commissioner Clifford Lucero questioned if the county could choose to collect sales tax on services, with County Attorney/Interim County Administrator Todd Starr warning that such a process would require a vote of the public and could drive people to surrounding communities for those services.

    Sorensen again discussed personnel costs, this time in terms of the General Fund, again projecting a steady increase with current staffing levels.

    An increase in capital outlay in the coming years, Sorensen explained, comes from the expenditure of 1A funds still held by the county for the categories of technology and facilities.

    Despite increases in expenditures in those areas, Sorensen noted the need for the county to begin budgeting for building repairs that can be anticipated, such as roof and jail repairs.

    In response to commissioner questioning, Sorensen said the county would be unable to meet its reserve policy in the coming years by staying on a track of expenditures outpacing revenues — something she indicated served as a reminder that money spent now directly affect the county in the future.

    Lucero suggested that budget work begin earlier in the year, in June versus August, while Starr suggested that the information be presented to the commissioners on a regular basis.

    “The county needs to get a roommate,” Commissioner Steve Wadley suggested in jest, with Sorensen ending the conversation by expressing the desire for the county to have at least a five-year strategic plan, if not a plan that looks out 10 to 20 years.

    Budget discussion

    With that, the commissioners, along with Sorensen and Starr, held a discussion about various aspects of the 2013 budget to give staff information needed to prepare the final budget, due for adoption on Dec. 11.

    Discussion started with talk of moving additional mill levies from the General Fund to the Road and Bridge Fund to allow for roadwork in 2013 on three specific roads — Cloud Cap Avenue, Masters Circle and Pines Drive.

    That transfer would equate to about $182,000 from the General Fund and would, after fees paid on the transfer, give the Road and Bridge Fund about $160,000 for the road work.

    Even with that transfer, Sorensen said, the Road and Bridge Fund would delve into fund balance to the tune of $601,000 in 2013. Sorensen estimated the fund balance to be $2.5 million by year’s end, with about $1.9 million necessary for operational cash flow in the fund.

    The General Fund, on the other hand, would, if the current draft budget were approved, take $460,000 out of fund balance, where $2.2 million is needed in balance to serve as working capital.

    Sorensen again noted the need for the county to begin saving for anticipated needs, such as the roof and jail.

    “We’ve got to de-Bruce,” Wadley said, with the others in agreement.

    Lucero suggested the county would have to “restructure” in 2014 and further tighten its belt.

    Starr suggested that Sorensen refine her forecast presentation to present to community groups. Starr said that, like any household in a similar situation, the county has two options: cut spending, suggesting he would be informing the commissioners of what services were required, or find more revenue, suggesting that, because de-Brucing would have to be approved by the voters, education is necessary.

    Commissioner Michael Whiting suggested that, as a voter, he would want to see both sides of the ledger, pointing out two elections where ballot measures were, “soundly defeated.”

    After Wadley pointed out that de-Brucing was not an increase in the mill levy, Whiting responded, “It is what people think it is.”

    Discussion then shifted to funding nonprofits, with Starr suggesting the county fund an $800 request for utilities at the TARA Community Center to help provide meals.

    Starr also discussed the tourism budget, noting that the newest iteration of that budget would fund a Lodger’s Association request to the tune of $5,100 and $2,000 would be taken from the pot slated for repairs to the downtown visitor center — an amount Starr suggested would not, “cut the feet out from under” the visitor center, but would allow for a steady increase of funds to the Lodger’s Association for advertising.

    There was a disagreement during the discussion, however, on the amount of money requested by the Lodgers Association being either $5,100 or $10,500, but Starr suggested that the association would be funded by the town, also.

    The most contentious discussion of the day, providing the bulk of the budget discussion concerning nonprofits, considered funding to the Pagosa Springs Development Corporation. For more on that issue, see related story on Pg. 1.

    Talk then transitioned to several ideas voiced by Whiting as a starting point to cut the county’s General Fund budget.

    These ideas, according to Whiting, are:

    • Cut $8,000 from the coroner’s budget, to $10,000. A brief discussion on the topic noted that cutting the coroner’s budget by $4,500 had been contemplated to allow for part-time help within the department.

    • Cut $50,740 from GIS.

    • Cut $100,000 from the emergency management budget.

    • Cut $96,257 from Road and Bridge administration.

    • The Archuleta County Detention Center should repay the General Fund $43,000 for contingency funds used in purchasing a new jail control panel, with Whiting calling the situation an emergency, but not unforeseen — a statement Starr took issue with.

    Starr informed Whiting that he had given advice on the topic, but that Whiting could choose to ignore that advice.

    • Whiting also suggested $250,000 in Road and Bridge maintenance savings.

    In response to Whiting’s suggestions, Wadley stated that Road and Bridge would have its hands full with the amount of road work currently slated for 2013, to which Whiting responded that he believed Road and Bridge was “top heavy” and asked how many administrators a private company would have.

    Wadley said he agreed there was money that could be shifted around, such as from the coroner budget, but that the jail is “paper-thin,” and later pointed out that the county would realize a savings within buildings and grounds (due to a recent layoff and restructuring).

    Lucero cautioned against taking Whiting’s suggestions as fact, instead calling them a starting point for the county’s next budget work session.

    Whiting called the frankness of the discussion critical.

    “We have a whole lot to talk about in a short time,” Starr said.

    The BoCC is scheduled to hold another budget work session Friday morning at 8 a.m. at the Extension Building.

    The budget is scheduled for a public hearing and adoption at 3 p.m. on Dec. 11.