Gila County must once again draw on its dwindling reserves to provide more services with less money this year, county administrators told the board of supervisors at a marathon budget session on Tuesday.
The biggest difference between last year’s general fund budget, and this year’s budget: The state cut the county’s funding but increased its responsibilities.
Last year the supervisors adopted a general fund budget of $40 million, but ended up spending 10 percent less than projected.
For the fiscal year that starts in July, the supervisors are considering a general fund budget decrease of about $345,556 — a decline of 1 percent.
“The budget is balanced, as required by law, but at the current rate of spending and revenues, we have two years to go with reserves until we hit rock bottom,” said John Nelson, deputy county manager.
Unlike last year, the supervisors decided not to increase the property tax rate to compensate for declining home values.
Several factors have contributed to the drop in revenue. The assessed property values in the county have dropped 11 percent, the county has used up a bond issue for $8 million to build new buildings, and state and federal grants have declined.
Meanwhile, the state Legislature has shifted new costs onto the county, including funds for Gila Community College, school resource officers and paying sheriff’s deputies to patrol county lakes.
The county’s overall budget will top $96 million, but that includes grants the county might not actually get, bond payments and the money that flows through the county to special districts.
The county gets 53 percent of its general fund revenue from property taxes, with other taxes, licenses, fines, forfeitures, and service charges providing the rest.
The sheriff’s department and the courts account for almost 60 percent of all county, general fund spending. The rest goes for general government, debt servicing, health, sanitation, education and recreation.
Under state law, the supervisors could raise property taxes another 2 percent, but the supervisors decided to forego an increase. The supervisors insisted repeatedly during the discussion that they did not want to increase the property tax rate in the face of falling property values.
Supervisor Tommie Martin said many of the county’s problems this year stem from cost shifting by the state Legislature.
“They have balanced their financial statement, not balanced their budget,” said Martin. All told, changes approved by the Legislature cost Gila County about $700,000 this year.
Nelson said he’s worried the county will take another hit as a result of efforts to reduce the federal budget deficit. The federal government makes extra payments to rural counties where the feds own so much land it weakens the local tax base. Congress has not yet approved this year’s Payment in Lieu of Taxes (PILT). Since Arizona and other western states carry the burden of housing forest land without the opportunity to charge property taxes, the federal government pays a stipend to those states to help cover costs.
If Congress doesn’t approve the extra payments, Gila County could lose $3 million. That would force an additional 8 percent cut in the general fund budget.
The current budget on the table is not set in stone; the meeting Tuesday, June 28, simply presented budget possibilities.
Another meeting on July 20 will set the budget for the year.
To prepare, the supervisors asked the staff to come up with a contingency budget just in case.
“We’re throwing around figures, but we don’t know what we’re really looking at. We need staff to prepare for what the state throws at counties and prepare for the federal government to not pay PILT,” said board chairman Michael Pastor.