Looks like that $1 million budget cut is just the beginning.
The San Juan County Council on Tuesday vowed to reduce next year’s general fund by $550,000, the first step of a multi-year effort to whittle down expenses and avoid a potential financial collapse.
In a unanimous decision, the council backed a series of recommendations offered up by its own budget subcommittee that together set the stage for a significant shift in the way the county conducts day-to-day business. Council Chairman Richard Fralick, a member of that subcommittee, said that “structural changes” will be needed to steer clear of a fiscal meltdown.
“If we continue to business as usual, we’ll be in a whole lot of trouble,” he said.
Support for the subcommittee’s recommendations came in the wake a troubling long-range forecast compiled by the county’s financial team. Presented by Auditor Milene Henley, that forecast anticipates that the general fund, which this year totals $13.5 million, is likely run out of money midway through 2012, and that without a major influx of revenue or a significant cut in expenses, or some combination of the two, it could be as much as $7.8 million in the red by 2016.
Henley prefaced her presentation by noting numerous counties and cities, as well as states, are faced with similar financial woes.
“We are not alone,” she said.
The council cut $1 million from the general fund in 2009, but was sparred from making a similar-sized cut for 2010 thanks in large part to a voter-approved property tax hike, which is slated to expire after 2015.
Henley said any gains in so-called economy-based revenues, such as sales-tax receipts, are likely to be neutralized by an equal rate of growth in operating expenses over the next six years. Which leaves the general fund lacking enough income to offset an anticipated 4.5 percent annual increase in payroll costs.
Henley noted that keeping the general fund in balance may require a total of $2.3 million in spending cuts over the next six years. That would be equivalent to eliminating 24 full-time positions, or roughly 17 percent of the general fund workforce.
With exception of the Department of Public Works, the general fund pays the bulk of day-to-day county expenses, including wages and benefits of 139 full-time employees. Henley noted the fund has been propped in the past by “dramatic” growth in various economy-based revenue sources.
“I don’t think we’ll see those kinds of increases anytime soon,” she said.
As recommended by the subcommittee, the council also agreed to ween the general fund off roughly $400,000 in annual income it derives through a long-standing shift in revenue from the Road Fund. Roughly $100,000 will be returned to roads in each of the next four years.
Meanwhile, the council also put the finishing touch on this year’s budget cuts by reducing the 2010 general fund by $264,000. More than one-third of that reduction — $100,000 — will be achieved through voluntary employees furloughs and a 2 percent across-the-board cut in expenses of departments supported by the general fund. The county also avoided a potential $70,000 increase in general fund payroll expenses when members of the Sheriff’s Guild agreed earlier to a one-year wage freeze as part of a 2010 contract extension.
Though only a temporary solution, Henley said employees deserve credit for their willingness to take furloughs and for helping to keep the county afloat.
“They should be thanked,” she said.
