Strong revenues, increased expenditures and saving for projects
[ By Katherine Nettles ]
Gunnison County is preparing for its 2023 budget, which has included several work sessions throughout October and November as individual departments and service providers presented their respective budget requests. Gunnison County commissioners have now seen three drafts in advance of the final budget draft which will be considered in a public hearing December 6 and is scheduled for formal adoption December 15.
The county budget includes estimates for revenue and expenditures for all county funds from January 1 through December 31, and commissioners reviewed several proposals this fall with chief financial officer Perry Solheim and county manager Matthew Birnie.
According to the third budget draft reviewed on November 22, tax revenues are projected to total $27.4 million for 2022, up from $26.4 million in 2021, and the finance team has estimated it will collect $29.1 million in 2023. Other sources of county revenue are licenses, permits and charges for services, expected to total $7.6 million; intergovernmental funds and grants, totaling $16.6 million; interfund transfers and other transfers totaling $13 million; and fines/forfeitures which total an estimated $70,000. Overall county revenue is projected to total $70.6 million, and expenditures are projected to total $73.1 million for a negative balance of $2.4 million. Personnel will cost an estimated $19.9 million, and operations will cost an estimated $53.1 million. These figures do not account for Gunnison Valley Health, which operates through the county but handles its budget as a separate entity.
“Revenues are strong; expenditures are up but well managed, so our balances are strong,” summarized Birnie. “We’re saving some money for some projects.”
County commissioner chairperson Jonathan Houck spoke to “a long-standing perspective and approach of budgeting conservatively, and then having opportunity when our revenues exceed our projections.” He said that excess revenues are targeted specifically within the county strategic plan.
Birnie agreed that the county tends toward underestimating revenues, overestimating expenditures and creating the opportunity to use fund balances, especially on capital projects. “We’re quite disciplined about trying not to use one-time funds to create ongoing expenses.” He said because of that approach it sometimes looks like the budget is “deficit spending, but it rarely ends up that way.”
The general fund will bring in approximately $20.6 million in revenue and expend $16.4 million for a 2023 fund balance of $4.1 million.
The road and bridge fund has an expected revenue total of $5.8 million and expenditures of $5.6 million for a $224,000 fund balance. The county has struggled for years to keep up with essential road maintenance and decreasing revenue streams with limited power to fund projects. “Road and bridge has a structural deficit that lies outside of everything else, because we are unable to use local tax dollars to support those functions. Which puts us in this weird sort of a bind. We’re in a very strong financial position but we’re unable to use some of the resources as defined by the [state] statutes,” reflected Birnie.
The sales tax fund is estimated to bring in $3.9 million in revenue and expend $4.4 million, with a negative balance of $481,000.
The capital expenditure fund was discussed for the first time on November 22, with estimated revenue of $1.9 million and expenditures of $1.9 million for a zero balance. The 10 year Capital Improvement Plan (CIP) for 2023-2033 includes public works improvement for $1.5 million; public works trails for $110,000 which includes the CB to CB South trail and Gunnison Whitewater Park engineering and feature improvements; wastewater for $100,000; water for $110,000; solid waste for $650,000 which includes landfill improvements; housing authority for $1.7 million which includes the Sawtooth construction and parking, Whetstone engineering and planning and potential Mountain View apartment renovations and HVAC upgrades; vehicle fleet for $582,000; and technology for $238,000.
Birnie has advised commissioners in recent months to reactivate the preexisting housing authority fund, which is separate from the Gunnison Valley Regional Housing Authority. Birnie has suggested that this fund will be helpful for earmarking and saving funds for upcoming affordable housing projects rather than including those entirely in the CIP fund. The county’s housing project funds have largely been moved to the housing authority funds as a result. It has a projected revenue of $4.6 million and expenditures of $8 million for a negative balance of $3.4 million.
The local marketing district, or lodging tax fund, is projected to have revenues of $3.1 million, and expenditures of $3.4 million for a negative balance of $350,000.
The county will transfer an estimated $2.3 million to its debt service fund, for full expenditure. The airport fund will bring in $1.8 million, with expenditures nearly the same for a slight balance of $1,800.
The 2023 annual RTA budget is for $7.5 million in revenue and $9.5 million in expenditures for a negative balance of $1.9 million.
Solheim has been working on his first budget for the county since being hired last spring, and said there are some changes in finalizing the numbers for 2022 for the sake of better transparency and to make future budgets easier to manage.
“One, we will start using what is called encumbrances, which the county typically has not used,” said Solheim. He said this applies to when capital purchases have been budgeted for 2022 but the county won’t be able to get them or pay for them in 2022. “Rather than just clear that slate and rebudget in 2023, typically what larger governments do is that goes under an encumbrance,” he explained. “It marks that money that this is not in the fund balance—we’re just still waiting to pay for it.” He said this will come into play with purchasing new fleet vehicles in a challenging supply chain environment.
“With the capital piece, it’s very difficult. We have to be careful about the information that could be proprietary or influence negotiations, and we have to make sure that we follow the rules of transparency but at the same time don’t play our hand if we need to talk to lenders,” said Solheim.
The local marketing district fund is expected to generate $3.1 million in revenue and expend $3.4 for a negative balance of $350,000.
Solheim said that lodging taxes are very strong but changing geographically. “We’re seeing strong sales tax and the local marketing district as well. But as I look at those numbers, I think we’re seeing a little bit of differences in pockets. And I think that’s worth analyzing.” He said he and his team will present their findings, including changes related to Marble’s tax revenues, in more detail in the next few months.
“The state is trying to do more to help us get good data to make sure we’re handling our 1% [county sales tax] and half percent payback to the municipalities [in the origin of sale],” he said.
Among smaller funds, the land preservation fund is expected to collect $611,000 in revenues and expend the same amount for a zero balance. Public Works has proposed a 4% utility rate increase next year to balance the solid waste fund which is expected to carry a deficit of $645,000
The final draft of the proposed budget, including plans for capital expenditures, will be available in December, followed by a public meeting and formal adoption.