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San Juan County budget woes deepen despite success of Proposition 1
Voters ponied up in a big way on Nov. 3 to spare an assortment of popular county-funded programs from the chopping block.
But if you thought San Juan County's financial woes would be more or less resolved with the passage of Proposition 1, then think again.
They've only gotten worse.
"In general, expenses are where we would like them to be," Auditor Milene Henley said, noting that the $1 million budget cut authorized four months ago has helped to minimize spending. "But for revenues, it's not quite such a pretty picture."
Based on a third-quarter financial review, Henley on Nov. 3 said the county could come up short by as much as $550,000 in the amount of revenue it counted on having in its general fund by the end of the year. If so, she said that fund, also known as County Current, would end this year with roughly $700,000 of so-called "year-end cash" on hand rather than the $1.2 million that a trimmed 2009 budget and preliminary 2010 budget are anchored on.
Henley said the preliminary 2010 budget is built on assumption that sales-tax revenue would increase next year by 2 percent. She said she's no longer confident about that figure. She said third-quarter results show sales tax revenue will likely fall 5-9 percent below its budgeted mark of $3.8 million by the end of 2009, and that declines in other revenue accounts could contribute to an even steeper shortfall.
(The 2009 general fund anticipated a 5 percent drop in sales tax revenue compared to 2008).
The general fund pays for the bulk of day-to-day county expenses, including payroll. It's the single-largest of an assortment of county funds that together make up the overall county budget. The Department of Public Works and the Land Bank have distinct funding sources outside the general fund.
In addition to a 2 percent increase in sales tax, Administrator Pete Rose noted that assumptions in next year's preliminary budget also call for no use of "year-end cash" to offset expenses and for maintaining 10 percent of the $13.4 million general fund in reserve.
"In technical terms, our assumptions have been shot to hell," Rose said.
The County Council is expected to put finishing touches on the 2010 budget today. The council had been prepared to eliminate another $1 million in general fund spending for the coming year in the event that Prop. 1, a six-year property-tax of 12 cents per $1,000 of assessed value, had been rejected by voters.
By law, however, income generated by Prop. 1 is earmarked for exclusive support of 11 separate programs, such as Parks, Public Health, 4-H and Master Gardeners, and for keeping three county jobs at full-time over the course of its six-year lifespan. The $960,000 that Prop.1 is expected to raise beginning next year cannot be used to offset any other expenses or a general shortfall.
Councilman Richard Fralick, chairman of the council budget subcommittee, expects the council will be hard-pressed to find another $500,000 or more to cut from the general fund. But with only six weeks to go before the end of the year, options are few, he said.
"We have very limited things we can do at this point," Fralick said. "About the only way we can deal with this is by lowering expenses somehow. And there aren't a lot of options with our ending cash being lower than it was expected to be."
As an entity, Fralick said, the county needs to be reconfigured so that its revenue and its spending are compatible and the operation is financially sustainable.
"We've got to get the county into a sustainable format," he said. "But right now, I don't know what that would be."
Shortfalls are looming in other county funds as well.
A downturn in the local economy has resulted in a first-ever overall drop in garbage collection at the three county solid-waste transfer stations. And with its operation almost solely dependent on tipping fees, the solid-waste division is anticipating a $650,000 revenue shortfall by the end of the year.