County’s raise razed by higher healthcare costs | VailDaily.com
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County’s raise razed by higher healthcare costs

EAGLE — You know how you sometimes get a raise, but the extra money is already spent because of increasing costs?

That’s how it goes with Eagle County’s government.

Because of increasing property values (18 percent since the last appraisal), your property taxes and the county’s property tax revenue will be about $2 million more next year than they were this year.

However, skyrocketing healthcare costs will devour most of that.

Between spiraling healthcare costs, other increasing expenses and flat revenue in other areas, the county is being forced to dip into its reserves to pay the bills, according to the latest financial statements.

It’s money the county has so it’s not a crisis … yet, and it’s not new information. The county tightened its belt when the Great Recession hit, and that belt will remain tight, the commissioners said.

“This didn’t happen yesterday. It’s a result of some decisions we have made,” said County Commissioner Kathy Chandler-Henry. “We’re healthy, and we’ll have to make some adjustments on the path forward.”

Threefold hit

The cause of the cash flow crunch is threefold.

First, rising healthcare costs. Because of the number of medical claims, and because healthcare costs in this region remain among the country’s most expensive, the county was forced to spend $2.9 million, instead of the $1.7 million budgeted.

The county’s healthcare plan covers most of its 450 employees, as well as several spouses and family members — about 900 people total.

“We’re insuring a lot of lives,” said Brent McFall, county manager. “It’s an attractive plan.”

Second, the county’s sales taxes remain flat. While Vail is banking about $1 million more in sales tax revenue, other areas of the county are still lagging behind pre-recession levels.

Third, plummeting interest income. In 2006, more than 7.5 percent ($2.8 million) of the county’s revenue came from interest revenue. Because interest rates are near zero, the 2015 projected interest revenue is $400,000 — about 1 percent of the county’s budget.

Expense inertia

If nothing changes, then the county will be running $3.2 million short by the year 2019, according to the county’s finances. They’ll still have money in the reserve accounts, but not as much.

“We’re not in crisis, but this is the time to have this discussion,” said County Commissioner Jill Ryan.

The prevailing opinion is that we should be able to grow our way out of the cash crunch. But based on financial projections, that’s not likely, McFall said.

More likely is another hard look at what services the county is required by law to provide, and what they actually do, McFall said.

“We really have to take a look at some things,” McFall said.

The county spent $1 million on solar energy, money it will recover over about 11 years through energy savings. A private company would not have to show that as an expense, but governments do, said John Lewis, the county’s finance director.

The county also provided grants to local nonprofits to get them through the recession.

Staff Writer Randy Wyrick can be reached at 970-748-2935 and rwyrick@vaildaily.com.


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