With the national economy teetering on the edge of a deep recession, local governments throughout the Four Corners are feeling the jitters.
As a result, budgets for 2009 are set to be lean and mean, even though increased residential growth is creating a demand for more, not fewer, services.
On Oct. 13, the Montezuma County commissioners listened to budget requests from department heads, many of whom asked for more staff or higher salaries for the staff they do have, in order to retain them.
But most of those requests aren’t likely to be fulfilled.
Among the pleas the commissioners heard:
• Sheriff Gerald Wallace said the jail is 22 deputies short and Detention Lt. Vici Worcester and her staff are “lucky to keep their heads above water.” He would like to add one detention sergeant in 2009, another in 2011, and five detention deputies every year for the next four years. Otherwise, overtime costs will rise, he said.
Further complicating the picture, the county’s 0.45-cent sales tax, which is earmarked for the jail and its operations, will probably sunset around the end of 2009, when the bonds used to finance construction of the new jail are paid off. That means some $350,000 a year of operations and maintenance money provided by that tax will vanish.
• The sheriff’s department itself, rather than the jail, is doing better. Wallace said he is seeking a budget increase so one position can increase from half-time to full-time. And the price the sheriff’s office pays to the city of Cortez for dispatch services is expected to rise to about $175,000, up from $90,000 just 3 1/2 years ago.
Wallace said monies from the special law-enforcement authority taxing district created two years ago have helped raise deputies’ salaries to keep them competitive with other law agencies in the area, and he hopes to hire a person who would work half-time on agricultural and water conflicts, half-time on animal control.
• District Attorney Jim Wilson pleaded for funding for a second county court deputy DA. Currently his district court deputies have to help with the county-court load “and their dockets and their cases are suffering.” He said he would like to be able to “quick track” domestic-violence cases so they could be handled within 36 hours, but it simply isn’t possible with the workload his deputies currently must bear. Wilson said he would be happy to share a desk with another person if he could just have another staff member.
• Health Department Director Lori Cooper asked for money to raise her nurses’ wages by at least $3 an hour to keep them competitive. She said she had recently lost a nurse and advertised for a replacement. “I had one applicant, and she said she couldn’t take the job because of the pay cut,” Cooper said.
• Planning Director Susan Carver asked for an additional staff member in her office. Currently, she and her assistant handle, every day, an average of two scheduled meetings with applicants, each lasting an hour or two; four unscheduled meetings with walk-ins; and 16 phone calls. In addition, they must prepare lengthy packets for planning- commission meetings and public hearings.
Carver said she would like to hold work sessions with the planning commission and training sessions for the board and staff, and would like to work on updating the county’s comprehensive plan and revising land-use applications, but there simply is no time.
Revenues are flat
But most of those requests can’t be met in 2009, according to Montezuma County Administrator Ashton Harrison, who is still working on budget recommendations to present to the county commissioners.
“There are real needs,” he said.
“Planning needs a person — they want to do more than just processing applications. The DA needs another attorney, the sheriff needs detention deputies – those are real needs.”
In addition, the DA needs more space, as does the health department. “They’re crammed like sardines.”
However, revenues are “just flat.”
Montezuma County has no sales tax in place except for the jail tax. The county depends on property taxes, which provide 39 percent of generalfund revenues and 28 percent of road and bridge funding. The county also gets money from outside sources such as grants and the Highway Users Tax Fund.
The social services and health departments are largely funded by grants from the state, Harrison said. That’s good, but it also can cause a problem. “I think the feeling is at some point, with the national deficit, they’re going to have to get that spending under control, which means they may have to cut certain programs.”
Also, with declining interest rates, the county may be earning less interest on the money it carries in its reserves. Harrison said Treasurer Sherry Dyess has done “a real good job” of shifting their monies into very safe investments to protect the principal.
Despite continuing residential growth, residential property taxes provided just 21 percent of property-tax revenues in 2007; taxes on oil and gas are the county’s mainstay, furnishing 41 percent. (The rest comes from property taxes on commercial enterprises, utilities, vacant land, agriculture, industry and natural resources.)
Dec. 10 is when the assessor will have his final valuation for the year, and the county budget will be adjusted accordingly. Oil and gas revenues are expected to be down slightly, but the remainder may be up.
Harrison said he will probably be recommending a small across-theboard cost-of-living increase for county employees “but it probably won’t be enough to keep up with inflation.”
Regarding the jail, Harrison said the bond will probably be paid off in 2012, which means the sales tax could be eliminated as early as 2009. “And about $350,000 of that goes into operations for the jail so when the sales tax goes away, that operational money goes away too. So unless there’s a big leap in assessed valuation we’ll have to figure out where to come up with $350,000 in order to keep the jail just operating at its normal levels.”
Another problem looming for the future is the need for more space — not just for the DA and the health departments, but for the courts and county offices. “If we had the money for additional staff right now, where would we even put them?” Harrison asked.
But the good news is that the county has worked hard to keep its budget balanced, “so we don’t have a situation where we have to do a bunch of cutbacks, or eliminate capital projects. We’re not there yet.” In contrast, many states, including Colorado, have hiring freezes and are borrowing money from the federal government to maintain payroll.
“I think we’ve done a good job as a county not overspending our budget. I think we’ll be able to meet our capital needs,” Harrison said.
The county “de-Bruced” (voted to let the county exceed the TABOR revenue limits) in 2002, and that “has helped a lot,” Harrison said.
People sometimes ask why the county doesn’t just spend its reserves when there’s a funding shortfall. “We have to be realistic, being property-tax-dependent,” Harrison said. “If things go south, we will need those reserves to maintain the status quo and not have to cut services. At least for a couple years, I’d like to be able to recommend we maintain services at their current level and not have to cut back or do layoffs.”
The rule of thumb is to try to keep an amount equal to 20 percent of your total expenditures in reserve, he said, and the county does that.
Montezuma County will have a budget surplus of about $300,000 for 2008, much of that from grant-money reimbursements for projects that were paid for in 2007.
In good shape
The city of Cortez likewise has concerns about its budget next year, though Cortez is in fairly good shape overall.
The city gets only a tiny amount of property-tax revenue; most of its money comes from its 4.05 percent sales tax and, of course, from grants. The city had projected a 5 percent increase in sales taxes over 2007 and will likely finish up about 5.2 percent, according to City Manager Jay Harrington. “We’re in a little bit of a wait-andsee mode to see how the rest of the year finishes out,” he said.
The city lodgers’ tax is up 6.3 percent for the year to date.
Still, challenges lie ahead. “Our employee costs and our benefits costs, coupled with our energy costs, are going up higher than the revenue side is,” Harrington said. He doesn’t think that is related to the current economic downturn but is part of a long-term trend.
One place the recession is having an impact is on money from interest on the city’s investments. “We’re looking at being down $100,000 from 2007,” he said.
Energy costs are rising. Even though gasoline prices have dropped recently, the price of natural gas and electricity is not expected to drop significantly.
The city uses a great deal of gasoline to run its fleet of vehicles for the police and parks and recreation. “We’ve been shrinking that fleet, but we have a fair amount on the road,” he said. The city spends about $500,000 a year on natural gas and electricity, the bulk of that for the recreation center.
The public-works department is feeling the pinch from rising road-construction and maintenance costs. Since the early 1990s, state monies for transportation have not been indexed to inflation, he said, even as construction costs soared, “and the local are forced to pick up the slack.”
Realizing it may never be able to afford to put asphalt on all its streets, the city is looking at sealing gravel roads with a mixture of fly ash and cement followed by a light chip-seal on top.
“We want to experiment with different construction techniques because the standard model of building roads out of basically oil-based products is growing too expensive,” Harrington said. “We’re in the grant-writing stage.”
Over the past six or seven years, the city has been able to save money in its reserves, “so we can cushion some of those changes.”
“There are a lot of regional towns and cities that would kind of want to be in the shape we’re in,” Harrington admitted.
That certainly is true.
In Dolores County, Colo., which has no administrator, the county commissioners have been warned by the Colorado Department of Transportation to prepare for possible cuts. When gas prices were high, Highway Users Tax Fund revenues dwindled as motorists drove less, the CDOT representatives said, although they have rebounded somewhat recently.
The CDOT representatives said the state transportation budget is down $300 million and fuel costs are up $2.5 million. What this may mean, according to the Dove Creek Press, is that roads under a certain traffic threshold, such as Highway 141 to Egnar, may end up with less-frequent snow removal.
Navajo Nation Vice President Ben Shelly told the Navajo Times recently that he has warned tribal departments to prepare for reductions in federal grants that may mean cutting staff and services. The Navajo Housing Services Department recently had its funding drop by more than 60 percent.
In San Juan County, Utah, a $24 million project to expand the jail and court system is on hold because the project was dependent on a large grant, and grant funds have withered. Construction of a new reservoir in the county is also being held up by a shortage of funding, according to the San Juan Record.
San Juan County Administrator Rick Bailey said the jail has not had major improvements since about 1980 and is full, creating security issues.
But the jail is not the only area of concern.
Bailey is anticipating some reductions in revenue that will affect other projects and areas. “We know we’re going to get less road tax money because people are driving less and buying fewer gallons of gas. That money will be reduced, but it’s hard to tell how much.”
As a result, the road department will probably do more maintenance and less construction, and may not be able to fill some positions that come open.
And even as highway tax revenues fell, the price of gasoline went up overall in 2008, hurting not only the road department but other departments such as the sheriff and the landfill. “Our senior citizens’ programs even have cut back on some activities and trips,” Bailey said.
Monies coming to the county from the state will likely be shrinking too, he said. The Utah legislature had a special session a month ago to balance its budget, but there is concern that when the solons meet again in January, state revenues may be even less than expected, “so there may be some more hits from the state funds we get.
“It will be an interesting legislative session,” Bailey added.
On the bright side, oil and gas exploration is booming, though it usually takes about a year for the county to see any resultant increase in tax revenues.
“We hope the situation turns around quickly,” Bailey said, “but we’ll have to wait and see, and react to what happens.”