It was a painful process for Santa Cruz County supervisors and staff to hammer out a budget for fiscal year 2009-10, and the future does not look any brighter.

“We will still be short $2.1 million going into next year’s budget,” said County Manager Greg Lucero.

The supervisors voted 3-0 on Aug. 12 to approve a budget of $109.8 million, but the casualties were high. Eight county employees in the community development and maintenance departments- lost their jobs. The county slashed travel expenses and nearly scraped the bottom of its rainy day fund. Next spring, it plans to form a library tax district and ask voters to approve a levy for a community college district.

All these measures, called Phase I, will save the county an estimated $500,000 a year, Lucero said. But if voters turn down the community college tax, county officials will move to Phase II and cut all non-essential services.

They would lay off 23 additional employees, close all parks, the Tubac Community Center, the Sonoita rest stop and the 1904 Courthouse and end support for Cochise College. They might also eliminate Justice of the Peace Precinct No. 2 and its constable, Lucero said.

These actions could save an additional $1.6 million a year, he predicted.

Last year, the budget was $69.3 million. The budget this year is 58 percent higher because the county borrowed about $60 million from a state program to pay for construction of a new jail and courthouse. Sales tax collected from a county jail district contributes to the construction and debt service.

Currently, the general fund has $30.6 million, up about $96,000 from this time last year, said Finance Director Jennifer St. John.

She led a “Truth in Taxation” hearing to set the property tax rates for FY 2009-10.

The primary property tax will drop from $3.01 per $100 of assessed value to almost $2.90, St. John said. The state required the decrease.

Add in the secondary tax rates for flood control, the jail district and fire districts, and the total property tax rate is $3.57, down about 14 cents from last year, St. John said.

The figure did not include school district taxes, which were set on Aug. 17.

“The reduction is a boon for taxpayers,” Lucero said.

A law passed several years ago required the property tax decrease, he said. At the same time, sales tax revenue is down because consumer spending has dropped. This leaves the county short of revenues to feed its general fund, which pays for most county services.

“We (counties) are considered an arm of the state,” said Supervisor John Maynard. “Sometimes we’re reimbursed (for services provided), sometimes not.”

Next March, the county will ask voters to approve a property tax of about 4 cents for higher education, Lucero said. It would pay Cochise College nearly $200,000 a year to offer local classes, money that now comes out of the general fund.

The county would drop its property tax rate by an equivalent amount, so the change would not cost the taxpayers any more, Lucero said. But it would allow the county to keep about $1.4 million a year it now pays the state to reimburse other counties for local students to attend their colleges.

Forming a library district would not require a vote of the people. But county officials would publicize the issue in spring 2010 and hold a public hearing, Maynard said.

How would a library district work?

Currently, the county pays $232,000 annually to the City of Nogales for library services the municipal government provides in Nogales, Rio Rico, Tubac and Sonoita, Lucero said. If the county forms a tax district, it would collect about 14 cents on the secondary property tax rate, “roughly the amount by which we’re reducing taxes,” Lucero said. “It would be a wash.”

The county’s Intergovernmental Agreement (IGA) for library services with the City of Nogales will expire June 30, 2010, Lucero said.

“I think it’s the right thing to do,” said Supervisor Manuel Ruiz.

Supervisor Rudy Molera described the proposal as “a win-win situation.”

Eleven Arizona counties have created library districts, Maynard said. He suggested the board hold a study session in October.

“What if you create this library district and it’s (the Tubac Library) in a building you propose to close in Phase II?” asked Carol Cullen, executive director of the Tubac Chamber of Commerce.

The county will find out in March if the voters approve a community college district, Lucero said. If they do, then the Phase II closings will not happen.

The supervisors voted 3-0 to study creation of a library district.

Abbie Zeltzer, librarian in the independent Town of Patagonia Library, invited county staff and the public to a presentation on library district formation in Arizona. Safford Library Director Jan Elliott, a former consultant with the Arizona State Library, will speak at 2 p.m. Friday, Aug. 28, at the Patagonia Library, 342 Duquesne Ave, or in adjoining Cady Hall.