County budget unbalanced by $2.1 million

Santa Cruz County must plug a $2.1 million hole in its 2009-2010 budget and the remedy will hurt, County Manager Greg Lucero told the board of supervisors on July 15.

The supervisors were poised to vote on a tentative budget that set a cap of $111.5 million. For the 2008-2009 fiscal year that just ended, the cap was about $113 million, said Finance Director Jennifer St. John.

“Last year, we made significant cuts and sacrifices to balance the budget with the understanding our reserves could sustain operations for two years,” Lucero said.

The sagging economy has cut state and local tax revenue, a trend that will continue, he said. To balance the 2009-2010 budget, the county will spend about $6 million of the approximately $10 million in its reserves.

Next year, “our entire reserve fund will be depleted and we will still be short $2.1 million,” Lucero predicted.

He met recently with department heads and elected officials and they came up with a “Phase I” plan:

1. Cut four positions in community development and one in information technology

2. Outsource facilities maintenance to eliminate five positions.

3. Shift increases in health insurance costs onto employees.

4. Eliminate the GIS (geographic information systems) contract that provides outside help with data entry.

5. Reduce travel by up to 50 percent.

6. Create a county library district to tax residents to help offset expenses.

7. Ask voters to approve a tax rate for a provisional community college district.

If the county can implement items 1-6, and the voters say “yes” to the college district, the county would save approximately $2.2 million annually, Lucero said.

If the voters say “no,” he would recommend the county move to “Phase II” to slash almost $1.8 million a year, Lucero said in an interview.

The plan would cut 23 positions, close all parks, the Tubac Community Center, the Sonoita rest area, and the 1904 Historic Courthouse. The county would end its support for Cochise College and eliminate the Justice of the Peace Precinct No. 2 in Sonoita and its constable.

What is contributing to the budget dilemma?

In 2008, the county borrowed about $60 million from the Greater Arizona Development Authority (GADA) to build the new county courthouse and jail, St John said. The cost of debt service comes to $4.2 million per year, but some of it comes from the jail district sales tax. A year ago, the county transferred $2 million from the general fund to pay two years of debt service on the courthouse.

At a time when the county needs more revenue, the supervisors had to cut the primary property tax rate from 3.0142 cents per $100 of assessed value to 2.8956 cents for fiscal year 2009-2010.

“The state is forcing local governments to reduce their tax rates,” Lucero said, referring to a state formula for property taxes based on 12-month- to-18-month-old property values.

Supervisor Manuel Ruiz asked why the county hadn’t considered work furloughs. “Rather than lose bodies, we’ll cut work hours,” he said.

Lucero described furloughs as “the last tool in the shed” because of the hardship it would impose on county employees.

To generate enough savings, the county would have to cut 16-to-20 hours per 80-hour pay period from employees, Lucero said.

Several members of the public got up to express their views.

“We should not be laying off people,” said Marcelino Varona Jr., former mayor of Nogales and a member of the county planning and zoning commission. “I believe in conservative financial restraints, but don’t run government into the ground.”

Marshall Magruder, an advocate for utility customers, urged supervisors not to establish the library tax district.

“Libraries are the heart of a basic information system in a community,” Magruder said. “I’ve been in communities with library tax rates. They nickel and dime it to death.”

Magruder noted that the meeting room was a little chilly. “Raise the thermostat two degrees and save a lot of money,” he suggested.

The community relies on tourism and sales to generate tax revenue, said County Treasurer Caesar Ramirez. On a recent trip to Phoenix, he counted 150 cars with Sonoran license plates, he told the supervisors. “These people are going elsewhere to buy. We’re missing our piece of the pie.”

Ramirez chided the county, city and school district for buying from vendors outside the county. “We’re shooting ourselves in the foot,” he said.

Kathi Campana of Rio Rico picked up the issue.

“If you (the county) don’t set the example, how can you expect your residents to shop locally?” she asked.

Board Chairman John Maynard asked to bring back the employee committee that came up with energy-saving suggestions last year.

“We are all in dire need of revising our use of gasoline and diesel,” he said. “There are conservation methods we could be utilizing that could save the county $100,000 a year.”

Maynard emphasized that forming a community college district did not mean building a new campus. “We’re going to get the community to understand what this issue is all about.”

The state takes about $1.4 million in shared sales tax revenue from Santa Cruz County each year, “because we don’t have a tax in place earmarked for the community college district,” Lucero explained in an interview,

The money reimburses the state for the cost of county residents who attend community college in Pima and other counties, Lucero said.

Voters approved a community college district a decade ago, but turned down a tax rate three times, Lucero said. He proposed a property tax rate of 4 cents for the district to allow the county to keep the $1.4 million, he said. In exchange, the county would drop the primary tax rate by an additional 4 cents.

The county would continue to contract with Cochise College, that provides classes at the 1904 Courthouse and elsewhere, Lucero said.

The supervisors voted 3-0 to adopt the tentative budget. They will hold a “truth-in-taxation” hearing before they adopt the final budget in August.