County finds itself with tight budget
County officials and commissioners are in a tough spot as they plan for the next fiscal year.
With two departments needing significant personnel increases, and the rest of the county needing more everything — from people to equipment — the county manager says, bottom line, there are $1.8 million more requested than what the general fund will support next year.
"We have to balance the budget, which means reducing that $1.8 million in requests," said Bruce Swingle.
The lion's share of that amount come from the need to increase fire services in the unincorporated county through paid personnel and the additional staff needed to run the two new units at the jail.
"We are prioritizing some significant issues," Swingle said. "We need to look at paid fire personnel. If we want to operate 24/7, we need to add 12 paid positions."
Total salaries and benefits for those positions is about $500,000, he said, but that doesn't include safety equipment for the firefighters or the intensive, ongoing training all fire personnel must have.
While a completion date for the jail expansion hasn't been set, when those new pods are filled, there need to be officers on staff.
"We are looking at options, what we can make work," Swingle said. "Some of the things the departments want may have to wait until mid-year."
The need to increase the budget to cover additional services and personnel isn't surprising, since Valencia County has been growing in the last decade.
What hasn't grown at the same pace is the revenue needed to increase the county's $13,053,969 million budget.
One thing hampering increased revenues is the state's yield control formula, Swingle said.
Valencia County, like all the other counties in the state, relies on property taxes for most of its revenue.
Conversely, municipalities get the bulk of their funds from gross receipts taxes.
The Catch-22 of the yield control formula is, increases to property values don't equal additional revenues.
Essentially, yield control reduces property tax rates by the same percentage as property values increase due to reassessment and the net revenue yielded stays the same.
"As we grow, we increase in value, but revenues remain flat," Swingle said. "I understand in principle the purpose of the formula is to protect taxpayers and the government.
"But that needs to be within reason. You have these counties, at this point of growth, that are not able to meet the needs of the community with the existing taxes that come into the general fund."
In other words, property values usually increase due to development and growth in a community — and more people equals more services.
If property tax revenues are proportionately reduced by the same percentage, reassessments increase, then your growing population is served by the same number of dollars the smaller population was, prior to growth.
Other factors play a part on individual properties, including things such as treatment of new construction and inflation.
Swingle said he is in the process of scheduling a meeting with the New Mexico Department of Finance and Administration.
"Last year we presented the state with a budget that exceeded our revenues," he said. "We will see what latitude DFA can offer, what discretion DFA may have or if it's strictly done by the formula."
In the year since he has been manager, Swingle said the county administration has done a lot to improve county finances and make it a fiscally healthy entity.
"DFA has to recognize that," he said.
County Finance Director Nick Telles said the county fully realizes it is using county taxpayer dollars.
"As I like to tell everybody, we are trying to utilize taxpayers dollars and be fiscally accountable with every dollar we utilize," Telles said. "That was the attitude going into this budget."
Another blow the county is preparing to deal with in the coming years is the loss of "hold harmless" distributions from the state. The cuts aren't due to come until July 2015, but they are coming.
Since 2005, the county has received more than $500,000 annually from the state to compensate for the gross receipts tax revenues it loses on the sales of groceries and prescription medications. The Legislature suspended imposition of those GRTs in 2004.
"After this legislative session, it became clear that they are putting more of the funding burden on the counties and municipalities," Swingle said. "Essentially, they said, 'You want more revenues? Increase GRT.'"
The county can implement additional GRTs, Swingle said, but it can only do that in specific one-eighths at a time, and for very specific purposes.
"We have an infrastructure tax that hasn't ever been exercised. We no longer have the detention center tax," he said. "It brought in about $1 million annual and helped offset the $4 million in operating costs. Now that $4 million all comes out of the county's general fund."
Fire, emergency medical services, roads — they all have tax options, but there is no funding source that really comes close to offsetting the true costs of operations, Swingle said.
"There's not enough tax dollars to totally do it," he said.
There won't be any employee raises this year, Swingle said, but they can expect to see their costs rise.
There will be a 15 percent increase to health insurance costs to employees in the first six months of the coming fiscal year.
In the second half of the year, costs will increase by another 12 percent, Swingle said.
County employee health insurance is managed by the state risk management department, the manager said, and during the past five years, the department has adsorbed the increases, something it cannot do this year.
"We have one of the worst benefits packages in the state," Swingle said frankly. "I don't know of a county that pays less than 80 percent, salaries are low."
The county's contributions to employees' Public Employee Retirement Accounts are low as well, he said. Effective July 1, employee contributions will increase and the county's portion will increase in 2015.
"This is the situation we have to make work," Swingle said. "It's what we have to work with."
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