‘Economic monsoon’ could force county to dip into reserve funds, as property tax revenues may drop by $4.6 million in 2012
By Bob Berwyn
SUMMIT COUNTY — Even though the national economic picture is improving in some areas, local officials are worried about another budget crunch that could be worse than the belt-tightening of the past couple of years.
Specifically, County manager Gary Martinez said the county could be facing a $4.6 million budget shortfall in in 2012, when revenues from property taxes are expected to dip significantly. Even at this early stage, county officials said they’ll have to look at every possible avenue for cutting expenses, including potential personnel cuts, Martinez said.
“Summit County is facing quite a dilemma … because we rely on property values,” Martinez said. “It’s a worse problem than we faced last year and the year before … even if the economy improves, we have to prepare for a worse revenue picture.”
The gloomy budget outlook is based on the current round of property valuations ending in about six weeks, on June 30. Based on preliminary sales data, County assessor Beverly Breakstone is estimating that assessed values are down about 20 to 22 percent. Those are the values that will used to calculate the 2012 property tax bills.
That translates into a $2.2 million hit to the general fund and a $1 million hit to the capital fund. Revenues from Measure 1A, approved by voters in 2008 in large part fund the open space program, could drop by $1.25 million. Early childhood programs, also funded by property tax revenues, could take a $200,000 hit.
“We have some ideas what to do in some areas, but it’s going to require some pain in county government,” Martinez said. “We know we have a cliff we’re going to hit.”
Property taxes make up one-third of the county’s tax revenues, with rest coming from sales taxes and from various fees and permits. The tax base is mainly at Keystone and Copper Mountain, with rest spread around the other unincorporated county lands.
For now, sales taxes have also continued a double-digit month-to-month slide that has lasted for more than a year. In January and February of 2010, sales tax revenues dropped another 11 percent from the previous year, down nearly a third from two years ago. The county collects the bulk of those taxes during the busy peak months of the ski season.
“Are we facing cuts?” Sheriff John Minor said during the work session that included all the county’s elected officials.
“Everything is on the table,” Martinez replied, as county finance director Marty Ferris explained that the county’s payroll makes up 7 percent of the county’s budget.
“If we start now, and use things like attrition, hopefully we can make it less painful for everyone,” said County Commissioner Thomas Davidson. He said it might be the time to start thinking about using some of the county’s reserve funds to take the edge off the pain.
“You save it for a rainy day, and right now we’re in a monsoon … then the question is, if you do use it, how much longer till you get out of it?” he said.
Colorado’s TABOR Amendment compounds the county’s future budget challenges with a ratcheting-down effect that will cap future revenue growth at a lower level.