County proposes balanced 2010 budget

“This was a tough process”

Despite enduring the second year of an economic downturn that has left public coffers light on cash, Gunnison County is projecting a balanced budget in 2010.

Like last year, state and federal money is filling many of the holes left in the budget by shrinking sales tax revenue, which dropped 5 percent in 2009 compared with the year before.
On the plus side, Gunnison County received more than $3 million in cash from Forest Service programs and another $1 million in severance taxes for minerals extracted inside its borders, offsetting the loss.
That will be just enough to fill the gaps left by the shortfall in tax revenues and the need to shift funds between departments. County finance director Linda Nienhueser told county commissioners on Wednesday, October 15 that she is confident the added funds will be enough to “hold services steady” for the year.
“This was a tough process, especially the General Fund. We did present a balanced budget in all the funds,” Nienhueser said. “It’s more challenging these days to match revenues with expenditures.”
Gunnison County will be starting 2010 with a smaller budget than it had in 2009 and government employees won’t be seeing the 1.5 percent cost of living increase that had been proposed early this year.
But with the help of more than $5 million in state and federal grants, the amount of money available in key funds has gone up. The Housing Authority was able to erase old debts and the road and bridge fund is $2.2 million higher than it was last year.
Even the grants for community-based organizations, awarded by the Board of County Commissioners every year, will be funded at the same $150,000 level as last year.
The money, however, could be gone as quickly as it came to the county.
“Every year things change,” Nienhueser said. When the county received money last year from the federal Payment in Lieu of Taxes [PILT] program, it was the first time the program had gotten full funding since 1976. Now the county can expect full PILT funding for three more years. The severance tax money won’t be so long lived.
Things can also change at the operational level to make budgeting more challenging. This year the county took the public health portion of the budget out of the general fund and moved it to its own department. That decision moved more than $600,000 out of the general fund.
More money was moved to departments where cash was needed to stop the bleeding from failed funding sources or lost revenue. The Housing Authority needed more than $350,000 to balance its budget and wipe its debt clean, which could be done with the higher than usual severance tax payment.
“They had been dragging their deficit forward from years past, so we thought with the severance tax money we would just wipe that off the books and let the Housing Authority start next year with a clean slate,” county manager Matthew Birnie said.
The ephemeral federal money and the continued decrease in revenues has put the county in a tight spot as it already starts looking to the 2011 budget. The draft budget projects the county’s sales tax revenue will stay 5 percent down for the remainder of this year and drop another two percent throughout next year.
But sales tax for August was even lower than expected and there is also some uncertainty about funding for human services, which receive about 80 percent of the budgeted money from the state.
“If a lot of that money dries up, it could be a different story in 2011,” Nienhueser said. “I’m not convinced that those revenues will be there in the future. If that happens, we would be looking to reduce services in some areas.”
But Nienhueser is hoping it doesn’t come to that. All of the county employees are making an effort to cut costs and increase revenue, she said.
As it stands, the budget leaves the county with 25 percent of this year’s operating expenses in reserve for next year, a 1 percent dip from last year’s reserve. The reserve is meant to provide the county with enough money to operate for three months if revenues suddenly stopped coming in.
Birnie said that the dip in reserve funds is a compromise, but an understandable one in the current economy.
“I’m comfortable with that, but we wanted to hold the line at that level,” he said. “We did use severance tax money to fill some gaps. That won’t be sustainable in 2011 and the reserve is down from where it was.”
The staff proposed budget is just a starting point for the county, as it negotiates and builds the final budget over the next couple of months. Some details of the budget will be ironed out at a work session November 6 before the final budget is adopted by the Board of County Commissioners on December 15.