2010 budget keeps Rio Blanco County on solid financial footing

RBC I Despite losing its budget and finance director in the middle of the budgeting process.
Despite an anticipated drop-off in intergovernmental funding — revenue coming from other governmental sources.
Despite a slowdown in oil and gas activity in the Piceance Basin, not to mention the local economy.
Despite losing a years-long court battle over application of its use tax on industrial construction and building materials.
Despite all of the above, the county completed the budget process on time and remains on solid footing financially.
“Despite the tough economic times, the county is in a relatively healthy financial position,” said Commissioner Ken Parsons of Rangely, the chairman pro tem.
Parsons gave an overview of the proposed 2010 budget during a hearing Dec. 14. Afterward, commissioners approved a resolution adopting the budget for next year, which included no pay raises for county employees and appropriations of $57.9 million, compared to $49.7 million in 2009.
“Most of that has a lot to do with the court case on use tax and the liability that’s going to go into that,” Parsons said. “We’re also seeing $20 million being budgeted toward the County Road 5 project.”
As far as the county’s 2010 budget, Parsons said the County Road 5 improvement project “tends to skew … all that we’re looking at here.”
Parsons explained, “We’re applying for Senate bill 232 grant funds that are a one-time funding opportunity through (the Colorado Department of) Local Affairs. There is $17 million that they are going to distribute. We are one of seven finalists for those grant funds. We have to budget for them whether we get them or not. That really makes the capital grants look pretty enormous this year, compared to the past. But, if we don’t get the grant, the money will not be spent.
“There is an anticipation that there might be an industry match coming in on this SB 232 grant,” Parsons continued. “If that doesn’t materialize, then the pie picture changes quite a bit.”
As well as presenting facts and figures from the county’s 2010 budget, Parsons outlined the commissioners’ goals for the new year.
“We’re still looking at completing the master plan and updating the land use resolutions,” he said. “We’re still looking at the former (Meeker) library space for our offices. We’re still looking at what we’re going to do for a criminal justice facility. I hope we’ll make more progress on that this year.
“We’re working on increased radio coverage in areas not currently covered in the county. We have to be completely converted over to a new system of emergency communications by 2013,” Parsons added. “We’re going to continue our work toward design and financing on the transportation improvements on Piceance Creek. We’re going to need to determine a course of action in light of the use tax decision that has been handed down on the county’s construction material use tax. And we’re, finally, interested in recruiting and retaining qualified people. That’s the core of our services — the people we have working for us.”
The county is currently advertising for a new budget and finance director to replace Diane Sorensen, who resigned in November to take another job. The county hired two outsiders on a contract basis to help complete the budget process and handle the day-to-day operations of the finance department.
Regarding the Fairfield Com-munity Center in Meeker, commissioners budgeted $525,000 for remodeling space formerly occupied by the Meeker Public Library and converting it to offices for county staff.
Also, commissioners budgeted $1 million for site preparation and design for a justice center. The county is considering several different site options for the facility, which would allow for expanded jail and courtroom space. A neighborhood group has opposed locating the justice center in Meeker’s downtown district at the site of the old elementary school, which will be vacated at the end of the school year.
Shortly before Christmas, the county’s request for the Colorado Supreme Court to reconsider its decision in the use tax case was denied.
“Unfortunately, the court denied our motion for a rehearing,” said Malcolm Murray, an attorney from Denver who represented the county in the use tax case.
The supreme court’s decision in the use tax case had a significant impact on the county’s 2010 budget.
“The ExxonMobil (the plaintiff in the case) use tax decision is probably the No. 1 revenue-affecting decision that will affect our budget,” Commissioner Parsons said during his Dec. 14 presentation. “It will have profound long-term implications for the county, as well as an immediate impact. The county is estimating our liabilities on this will be on the order of about $9.5 million.”
Parsons said the county had taken steps to prepare for the financial hit it would take in the event it lost the use tax case.
“We do have sufficient funds budgeted in contingency that we’ve put away over the past few years in anticipation of what we would consider to be a worst-case scenario,” Parsons said. “So, there is fund balance that will enable us to get through this, but we’re not going to have these revenues in the future.
“While we have put this money in contingency out of use tax against this eventuality, we’ve also set aside funds … through these good years that have occurred recently,” Parsons added. “So, we do have fund balances that are enabling us to get through this year without problems — thanks to the flat budget — and perhaps even more, should we have to in the future.”
Still, Parsons noted, “The immediate effect is that an 82 percent drop in (use tax) revenues from $3.6 million that was budgeted (in 2009) to about $700,000 budgeted for this year. So, we’re looking at a revenue stream that will be much smaller than it was before.”
Here are additional numbers from the county’s 2010 budget, with comments by the chairman pro tem:
REVENUE
“Property tax is 39 percent of our revenues,” Parsons said. “This year, property tax (revenue) is going to increase, but virtually every other significant source of revenue is declining.”
The county’s mill levy will remain the same for 2010 at 9.05 mills.
“Assessed valuations continue to grow,” Parsons said. “We’re looking at the revenues that are increasing there as being temporary. They will probably last about two years. Then there will be a reassessment based on lower property values, and we expect that these revenues will go down.”
As far as intergovernmental revenue — money from the state and other government sources — it is expected to decrease dramatically.
“That’s mainly from decreases in state severance tax and in federal mineral revenues to the state,” Parsons said. “This one worries me. The state is having its fair share of fiscal problems, and the federal government isn’t doing that much better. … when a third of your revenues are depending on people who are having fiscal problems, that’s a worrisome source of revenue.”
EXPENDITURES
“Capital projects, that’s taking up the biggest part,” Parsons said. “Capital outlay takes up 56 percent. Personnel costs are up 19 percent (due to increased health insurance premiums). That’s the biggest chunk outside of capital.
“Again, the County Road 5 project is completely dominating,” Parsons added. “Although full funding from the grant is not anticipated, it must be budgeted, and expenditures will be proportionally decreased to reflect any actual award.”
FUND BALANCES
“We’ve been building up fund balances since 2004, and at the end of 2009 we’re expecting that those will total about $54 million,” Parsons said.
Total fund balances are expected to decrease about $5 million by the end of 2010.
“That’s still a very substantial reserve,” Parsons said. “But in this climate and economic uncertainty, I believe it is very prudent that we have this to get through the tough times. And, if good times come back again, perhaps, we’ll have some funds that will help us with capital construction down the road.”
The largest decrease in fund balance — due to the County Road 5 project — is expected in the capital expenditure fund.
“Again, when you’re looking at one huge project, it really distorts the statistics,” Parsons said.