Council Approves Budget Guidance

Deputy County Administrator Steven Lynne answers Council questions about the budget guidance while County Administrator Harry Burgess looks on. Photo from PAC 8 streaming video

Staff report

During Tuesday’s County Council meeting, County Budget and Grants Manager Gina Coluzzi presented the current fiscal year mid-year budget review highlighting revenue shortages.

Deputy County Administrator Steven Lynne and County Administrator Harry Burgess reviewed the draft Budget Guidance and shared their suggestions for creating the FY 2014 budget.

This is the second half of a two-year budget cycle and following hours of discussion, Council unanimously approved the Budget Guidance to County staff for development of the fiscal year 2014 County Budget.  

Echoing a sentiment repeated throughout the night about the severity of the financial situation at the County, Councilor Kristin Henderson thanked Coluzzi, Burgess and Lynne for their work in preparing the draft budget guidance and background information.

“It does not look like a crisis,” Henderson said.  

During public comment about the budget guidance, Los Alamos resident Chick Keller said that when he came to Los Alamos in 1969, people said that purchasing a house here was the dumbest thing because the Lab wouldn’t last. The Lab has its ups and downs, but it will last, he said, adding that until 10 years ago, it felt like the town had no future. “Thanks to the County and the Council, we are improving the town and there is a future.” Keller encouraged the councilors to “stay the course.”

Councilor Pete Sheehey made a motion that did not receive a second to have staff prepare a second budget option excluding any increases to GRT or property taxes.

Below is the draft budget guidance approved by Council with noted Council modifications and comments in red: 

 FY 2014 Budget Guidance

The Gross Receipts Tax (GRT) revenue for fiscal year (FY) 2013, and for future years, is projected to be significantly lower than in previous years. Since this is the primary funding source for most general governmental operations and capital projects, some changes must be made in order to move back toward having a balanced budget. Given this context, Council would expect that the FY 2014 proposed budget would be developed with noticeable changes in all of the following six categories. Changes in each area should be pursued to the extent deemed helpful and practical.

1. Fund Balance – use of fund balance is expected when severe revenue fluctuations occur. The following parameters serve as guidelines.

a. Use of up to 100 percent of the Fund Balance Committed for Revenue Stabilization through the end of FY 2016 is acceptable as long as the projected balance at the end of FY 2017 returns to the policy target level of 5 percent of revenues. This is an extension beyond the current financial policies.

Council suggested changing a) to allow extension beyond FY2017.

b. Manage all other variables so that the Unassigned Fund balance is maintained at the policy target level of 20 percent of revenues.

c. Re-evaluate all fund balance levels for potential re-programming and possible re-capture back into the General Fund.

2. Expenditures – reductions in General Fund expenditures, operating transfers to other funds, and transfers to the CIP Fund must address at a minimum 50 percent of the expected budget imbalance. This should be accomplished by :

a. Increasing operating efficiencies

b. Reducing discretionary items (travel, food, uniforms, etc.)

c. Lowering staff levels and staffing costs (see staffing below.)

d. Minimally lowering customer service levels. Because customer satisfaction levels are generally very high, minimally lowering customer service levels is acceptable. This may include reductions of outside service contracts. Reduction of some low use / high cost service hours is also acceptable.

3. Capital Projects

a. Staff has the option to defer some capital projects for up to five years.

b. Reduce annual placeholder amounts for Roads, Parks and IT projects by approximately 10%.

c. Finance new facilities with new revenues and new debt – see item 4.b.

4. Debt

a. Existing general County debt should be refinanced if there is a projected annual operating debt service savings and a projected total net present value savings.

b. New General Obligation (G.O.) debt with new property tax revenue for planned CIP projects that are new facilities (not replacement or major maintenance) should be pursued, including the related required voter approval.  Council suggested changing “should” to “may.”

5. Revenues – because of the magnitude of the projected revenue reduction, new revenues should be proposed.

a. New tax revenues

i. Property taxes – given the relatively low currently imposed County and Municipal rates, re-implementing the $1.5 million (which was removed in FY 2011) of property tax revenues may be included in the FY 2015 projection.

iii. Council excluded guidance to increase GRT rates.

b. User Fees – all user fees and the user fee policy should be re-evaluated and reasonable increases should be proposed.

6. Staff

a. Eliminate salary increases in FY 2014 proposed budget. Council changed “eliminate” to “reduce.”

b. Staff levels should be– reduced through attrition, while trying to minimize decreases to customer service.

c. Due to anticipated impacts on customer service, avoid a countywide reduction in force if possible.

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