Runyon: Spending change is smart
Vail CO, Colorado
It continues to surprise me that people can throw accusations at the county without checking the facts. The group attempting to recall Commissioner Menconi alleges that he “dangerously reduced county reserve funds from 25 percent to 15 percent.” As a county commissioner I also approved that policy because it is not dangerous, but in fact a much more responsible use of taxpayer’s money.
The independent auditors who monitor Eagle County’s finances recommend we keep a reserve between 15 and 25 percent. We are, and have always been, within that guideline. Some counties keep their reserves closer to 25 percent primarily because most of their income comes from property tax, which is only collected in the spring and late summer. Eagle County does not rely heavily on property tax because of our unusually low property taxes. In fact, we receive only about 20 percent of our total revenues from property taxes. The remainder of our revenue comes from sales taxes, fees for services, licenses, state and federal programs and other sources.
Cash flow in Eagle County is fairly constant throughout the year, making large reserves unnecessary. Despite our new 15 percent policy, we currently maintain invested funds that are close to 50 percent of our annual budgeted expenditures. We are fully prepared to handle any fiscal emergency. Additionally, our 15 percent identified reserve is seven times what the state’s tax law, TABOR, requires, which is an emergency reserve of about $2 million. Perhaps most significant of all is that our bond rating didn’t fall when we changed our policy, and we continue with the same high “A” rating. Further, the county has no general obligation debt.
Keeping unnecessarily large reserves in a bank account earning a paltry 4.5 to 5 percent does not help the county serve the needs of its residents. Instead, tax money must also be invested wisely and responsibly in much-needed services. Every growth projection for Eagle County indicates future land shortages, and increases in construction and other costs. The taxpayer’s money is better invested in those items now than when costs are dramatically higher in the future. An example is the El Jebel road and bridge building, which the county has needed to replace for years but delayed doing so because the funds weren’t available under the 25 percent reserve policy. Meanwhile the cost of construction and land has been going up at 15 percent per year.
We have been accused of not saving for a “disaster.” Let’s take a look at the disaster we are saving for. We know that it will have to be worse than Sept. 11 because we didn’t have to dip into our reserves that year. So we know it’s going to be very bad; perhaps a couple of years of warm winters and no snow. If that should happen, will our commissioners say, “Spend the reserves!” I sincerely doubt it. No, they will be responsible and progressively cut back services to match projected cash flows.
Please know that my top priority as a county commissioner is always being fiscally responsible and using your tax dollars wisely. Accusing this board of doing otherwise is irresponsible and ignores the facts.
Peter Runyon is an Eagle County commissioner.