Ever since 2009, Eagle County's budget discussions have had a consistent refrain - revenues are down and expenses need to follow suit.
And during the 2013 budget presentation Tuesday, county finance officials advised the Eagle County Commissioners that the tune isn't likely to change in 2014.
During Tuesdays hearing, Eagle County Manager Keith Montag was joined by County Finance Director John Lewis and County Controller Tom Hyatt to present an overview of the proposed 2013 spending plan. The actual budget adoption is slated next week.
As they structured the spending plan for the year ahead, the county officials noted the challenges were concrete - property tax revenues are projected to drop 20 percent or $3.2 million and the county's other revenue sources are not rebounding quickly enough to cover that loss.
Montag noted that while sales tax receipts actually increased 8 percent during 2012 and are anticipated to grow another 2 percent during 2013, the county's licensing permits and fees dollars are showing a much less dramatic increase and interest income is slated to grow by only $100,000 in 2013. That's a particularly noteworthy figure considering that the county's investment income has dropped 79 percent, or nearly $3.6 million, since 2007.
With a bit of wiggle room provided by healthy fund balances, the county finance team figured it needed to cut operating expenses by approximately $1.6 million for 2013. Montag said that means following a six-point program:
• Examine all programs and related expenses.
• Ask departments to increase/find revenues opportunities and decrease expenditures.
• Continue the soft hiring freeze.
• Fill vacancies from natural attrition only after approval.
• Improve accuracy of cost allocations
• Work with health care costs to change funding levels for improved claims.
"I am very delighted to report that for 2013, the Eagle County budget is balanced. We had some challenges," said Montag.
The latest 30 percent drop in property tax revenues is only the latest hit to the Eagle County operating budget. Since 2009, annual operating revenues have dropped from $41 million to $30 million. With revenues drying up, the county has cut operating expenses by $12.6 million.
A large portion of those dollars came from the county's payroll. In 2008, the county employed 312 full time equivalent (FTE) workers. That figure has dropped to 235 FTEs in 2013, down from 238 FTEs in 2012.
The largest portion of the $2.6 million operating expenses cuts came from the county's Health and Human Services Department. This arm of county government cut 3.5 FTEs and reduced its overall budget by $777,000.
While the biggest theme of the 2013 operating budget is cutting expenses, the county has earmarked $518,000 for a 3 percent merit pool, which means employees will be eligible for raises. Last year the budget included a 4 percent merit pool and it was the first time in four years that the county offered raises.
During the budget presentation Tuesday, county officials noted that while much of the attention is centered on the operating, or general fund, there are actually a number of other county funds that make up the entire budget. Some of these funds have their own property tax mill levy or earmarked sales tax revenues (such as the county's open space fund or the ECO transit fund) while others are enterprise or independently funded (the solid waste disposal department or the Eagle County Airport) that can not be applied to other county operations.
In the case of some funds, the open space fund for example, the county has traditionally saved revenues for a number of years and then spent the dollars on larger land purchases. Additionally, grant funds are often allocated to the county's non-operating funds, which produce one-time revenue and expenditure peaks.
When taking the entire operation into consideration to include the non-operating expenses, the county is looking at $90 million in revenues and $84 million in expenditures during 2013.
As part of developing a 2013 budget, the county is looking ahead to 2014 and 2015. A property reappraisal is slated for next year and the county is forecasting an additional $2.3 million drop in revenues.
That's one of the reasons why it was critical to cut spending in 2013 to avoid an even deeper hole next year, said Montag.
"Because property values run in cycles, the next one will hit in 2014 and we don't want to want to wait until 2014 (to address the anticipated revenue drop)," Montag said. "We did make changes and we are closing that gap.
Tuesday's hearing won't be the last time the county commissioners visit 2013 budget issues. Next week will be the formal adoption of the plan and consideration of how to allocated the $240,000 earmarked for community grants. Additionally, the commissioners will make final decisions regarding how to allocate capital improvements dollars in January.