Pitkin County preps for hard times
Vail, CO Colorado
ASPEN, Colorado” Unsure of the future of the economy, Pitkin County, Colorado officials are planning for hard times, at least in part in recognition of the ongoing national and international financial crises.
County staffers this week told the county commissioners that they expect sales tax revenues, which make up about a third of the overall budget, to be below projections for this year, at slightly more than $7 million compared to early estimates of $7.4 million. And those revenues are expected to continue to fall through 2009 and to be flat for 2010, officials said. Sales tax revenue had been steadily rising in recent years.
Property tax income is expected to increase by more than 6 percent next year, bringing in roughly $5.6 million in 2008 and about $5.8 million in 2009.
Overall general fund revenues are expected to decline from more than $23.7 million this year to approximately $22.7 million in 2009. That reflects a 3 percent drop in sales tax income for the coming year, a “flat year” in 2010 and perhaps a rise of as much as 6 percent in 2012, County Manager Hilary Fletcher said.
“We are just barely maintaining basic services” with the projected 2009 budget, she said.
In their presentation to the commissioners, Fletcher and finance official John Redmond laid out an array of much more gloomy projections. One compared the current situation to the post-9/11 years, when revenues dropped off precipitously due to lagging tourism and other factors, and the county was forced to severely tighten its budgetary belt.
“This organization is in a much healthier state than it was post-9/11,” she said, explaining that the county now has some $13 million in reserve funds that can be tapped for emergencies, thanks to conservative budgeting practices in recent years.
But the planning documents presented to the commissioners offered scenarios in which revenues dropped by anywhere from 10 to 30 percent, resulting in cuts of perhaps a quarter of the county’s budget in the gloomiest future.
So, starting next year, as a hedge against the potential for a disastrous economic slump, the county will shift to what is called “zero-based budgeting.”
That essentially means the county’s finance office will “start from zero and build the budget from there,” directing department heads to justify every expenditure before it is approved, Fletcher said. She conceded, however, that certain state-mandated expenditures could not be “zeroed out,” so the budget actually would not drop to a completely blank slate.
The usual method of writing a budget is to estimate how much money will be coming in and then figuring out how to spend it.
The county tried the zero-based method six years ago, Fletcher said. It appeared to work well, although if the economic climate worsens the change in budgeting methods could take on much greater importance.
But as the budget now stands, it anticipates a flat period of a couple of years and then predicts local revenues will begin to bounce back.
Besides the decrease in tax revenues, another key source of funds is fees from the community development department, which director Cindy Houben said have dropped about 30 percent over levels last year.
To make up for the loss in general fund revenues in 2009, according to Fletcher and John Redmond of the county finance office, the annual roads maintenance fund has been cut from $1.9 million to $400,000. The remaining $1.5 million will be diverted to the general fund for basic operations, Fletcher told the board, meaning the county will not be forced to cut services in the coming year.
As for the roads, the commissioners are asking voters to approve a property tax hike to generate up to $5.4 million per year. A consultant estimated that the county needs to be spending between $5 million and $8 million per year to bring them up to adequate condition. The $1.9 million that has been the county’s annual expenditure for roads and bridges has not even been sufficient to maintain the roads, much less make safety and capacity improvements, county public works director Brian Pettet has said.
Although county staff has trimmed some items from the original budget proposal, the county is planning to fill four new positions for next year.
Two, including an energy manager and a records assistant for the sheriff’s department, were termed “revenue neutral” because they will be paid for by a grant from the Community Office for Resource Efficiency and a personnel shuffle in the sheriff’s office, respectively.
But two of them, a child welfare case worker and an additional jailer, are to be paid out of the general fund at an estimated cost of $75,000. Fletcher said in a letter to the commissioners that both are needed because of “increased demand on these critical services.”
Fletcher told the commissioners that they could expect to deal with the budget every Tuesday for the foreseeable future, as the staff further refines the figures.
Some commissioners already have staked out differing positions.
“This budget seems to me to be very much business as usual,” said commission chairman Jack Hatfield, asking how it could be that other jurisdictions are talking about slashing services and programs and Pitkin County is able to add four new staff members.
Hatfield urged the staff to look for areas to cut expenses, specifically mentioning the commissioners’ lunches, which are catered and delivered to the Courthouse Plaza on meeting days. He also questioned commissioners’ salary raises next year, a state-mandated change.
“Is the public aware that we’re going to be making $72,000?” he asked.
Commissioner Michael Owsley advocated putting back into the budget a line item to fund televising county commissioner work sessions on GrassRoots TV. Fletcher’s proposed budget would drop the $6,700 expense.
Although Commissioner Patti Clapper called it “a waste of time and money” to air the work sessions, Owsley countered, “It’s good for the public … it can’t possibly be a waste of time and money to see your commissioners at work. They deserve to see what we do.”
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