County to dip into reserves

State of economy leads to projected revenue decrease of $11M

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— With tax revenues expected to decrease in the coming year, Routt County is poised to dip $2.9 million into its financial reserves to maintain current levels of service in 2009.

If budget shortfalls of that magnitude continue - and are not worsened in a continued economic slide - the county will burn through its Road and Bridge infrastructure reserves by 2012 and its equipment pool reserve fund by 2016, county officials warned Thursday.

Revenue from sales and use taxes at the county level are anticipated to decline a combined $825,000 for the 2009 budget - a 12 percent decrease since the 2008 budget. But if ski season bookings decline and the construction slowdown is more serious than anticipated, the county could end up another $1 million short, Routt County Finance Director Dan Strnad said.

"Uncertainty is big here," Strnad said. "We're going to continue to monitor financial indicators (into 2009)."

In the meantime, the county will be conservative with its spending until sales tax figures from the early part of the 2008-09 ski season begin to come to light in February or March, County Manager Tom Sullivan said.

"We're not going to be spending a lot. Road and Bridge is going to be very frugal until we know where things are going," Sullivan said. "Just like the city (of Steamboat Springs), if we're going to start cutting back, it'll be early in the year."

Strnad called the $2.9 million shortfall "very significant," with an eye toward the types of cuts that would have to be made to absorb that figure. The project shortfall is larger than the budgets of nearly all county departments except those of Yampa Valley Regional Airport and the Road and Bridge Department.

If economic and revenue trends continue down their current path, the Routt County Board of Commissioners likely would make adjustments to spending before the "drop-dead date" in 2016, when Routt County's reserves would decrease to less than mandated levels, Strnad said.

"At some point, we're going to have to do something," Strnad said. "We're going to look at revenue-generating and cost-saving ideas to make this work."

The county is lucky that it has reserves it can dip into; otherwise, it would "already be hitting the wall," Strnad said.

Revenues vs. expenditures

Overall, the county's revenue streams are poised to decrease by 18 percent - nearly $11 million - in 2009.

"The only revenue area showing an increase is property taxes," Strnad said. "Everything else is pretty much going down."

Personnel costs are budgeted to increase only about 1 percent, just trailing behind 2 percent cost-of-living increases and increasing workers' compensation costs. By not filling vacancies, the county thus far has avoided any layoffs, Sullivan said.

Skyrocketing materials costs for Road and Bridge, however, are an obstacle for budgeting infrastructure expenses. The cost of roadwork per mile is budgeted to increase about 50 percent compared with 2008 figures, bringing overlay to $198,000 a mile and chip and seal to $46,000 a mile. Those figures translate into $840,000 more in maintenance costs in 2009.

Road and Bridge reserve funds are aimed at replacing the county's paved roads on a 20-year schedule and chip-sealing on a five- or seven-year interval. But as costs have increased, chip-sealing has been pushed back where possible, and entire projects - such as reconstruction and realignment of Routt County Road 14 near Stagecoach - have been postponed indefinitely.

"We not producing revenue anywhere close to paying for this," Strnad said. "We had such a change in our costs, we decided we had to look at maintaining out system rather than improving our system."

In November 2007, Routt County voters overwhelmingly shot down Referendum 1A, a property tax increase that would have raised an estimated $3.3 million or more a year for road improvements and other capital projects.

The odds of a similar measure making it back onto the ballot any time soon are slim, Sullivan said.

"I don't anticipate voters looking to approve any tax questions for four or five years," Sullivan said.

The Routt County Board of Commissioners will conduct a public hearing on the proposed 2009 budget at 5 p.m. Tuesday in the commissioners' hearing room at the Routt County Courthouse. The commissioners are due to formally adopt the final budget Dec. 15.

Comments

Scott Berry 5 years, 8 months ago

What is your point? Are you giving the county credit for expecting a 18% reduction in revenue and proceed to reserves, which by the way may be illegally high, or encouraging the city to proceed with a 4% number and blow through minimal reserves before they make cuts? At least the county seems to understand the math, while the city finance director not only is either in denial or incompetent. She cannot generate a base line that is the same from day to day. Its all fuzzy math at city hall!

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ybul 5 years, 8 months ago

Unfortunately, I think common cents has to prevail, and the outlook of the city is probably way too optimistic. The city taking a wait and see attitude, without unrealistic reserves, is fiscally unsound and a breach of fiduciary responsibilities on the part of council members.

Taking a wait and see attitude is akin to sticking ones head in the sand as a freight train approaches. I can't imagine that the finance director thinks that Obama is going to save the cities budget. If he is going to do so then look forward to a Latin American currency crisis, which will not be fun.

Realistic expectations, and a plan to broaden the local economy are wise ideas today.

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aichempty 5 years, 8 months ago

The little $18,000,000 "dip" into the reserves the county made to build the Justice Center, to provide offices and facilities for State employees, that the County did not have to build using local funds, is the single greatest reason we are in this situation now.

Send the State a bill for $18,000,000 to make up the difference. It was a State employee, former Chief Justice Doucette, who wrote an unlawful court order starting this whole mess. Chief Justice O'Hara did nothing to correct the situation even though it was in his power after Doucette retired.

The County appealed the order, and it was reversed, but they built the thing anyway. Why? Because moving the court out of the Lincoln Ave facility would allow the County to waste more money building new offices in there for County employees.

So, isn't it nice that all the folks living on the taxpayer dollar have nice new places to spend their days working while the rest of us are scrambling to pay our bills and the ever-increasing real property tax?

Unfortunately, the actions taken by the County Commission to build the place were not illegal. However, it might be nice for the new DA to look into the relationships among officials and contractors, or their families, and see if anyone profited unlawfully from the situation.

Those who think taxing the rich to benefit the middle class is a great idea need to look at the lesson taught by the County Commission and the Justice Center. It wasn't their money, it was "tax" money. There was plenty of it around. They, the individuals who pushed the thing through, didn't have to pay the bill out of their own pocket, so they forged ahead without a thought for the future.

Now it's the future, and the single essential use of County money (roads and infrastruture) loses out because the money to cover us in hard times was spent on a Great White Elephant.

So, basically, every registered voter in the County got stuck for $1000 + that none of us had to spend. So, we should all take our Obama tax credits and donate them to Routt County to rebuild the reserve. That's the kind of government the majority just voted for -- yeah, to each according to need, but from each according to the tax credit he gets. And while we're at it, we should have a vote to pass a law to prohibit the County from spending reserve money on anything except essential maintenance of existing infrastructure.

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ybul 5 years, 8 months ago

The comment about money not being theirs, is right on the spot.

It is easy to spend money when it is not your own, nor is there a metric to measure the benefit of public good derived from that expenditure. New Zealand went through some tough times in the early 90s and they were forced to weigh their financial decisions upon the public benefit of those decisions.

The city and county should assess what is necessary, and wether the county employees can provide those services for less money than the private sector, if they are necessary.

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Doug Matthews 5 years, 8 months ago

so why is the revenue stream generated by property taxes planned to increase for 2009? Are the property values going to have their customary upward adjustment to accomplish this? Does anyone question that property values might just be lower in 2009 than in 2008, or are we in Routt County immune from the property value situation in the rest of the country? Property taxes should trend downward in 2009, to match the lowering of property values that we are seeing!

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