In my previous column, I gave a brief overview of the budget process. Today, I will focus on a few highlights in the Fiscal Year (FY) 16 budget proposal to be presented by staff. As I mentioned in the last column, this budget proposal should ideally reflect the initial Council budget guidance discussed early in the budget process, as well as staff input regarding their operational needs.
It’s no surprise to anyone living in Los Alamos that spending has been down at Los Alamos National Laboratory – our biggest employer – for several years. LANL drives most of our revenue, contributing directly and indirectly to 97% of the local economy. While we are working hard on new economic development initiatives, such as the new tourism attraction opportunity that will be created by the opening of the Manhattan Project National Historical Park, the reality of our present-day situation is that LANL-reduced spending impacts our local economy.
Over the past five fiscal years, our gross receipts tax (GRT) collections have fallen by 29 percent, with the greatest impact to funds that rely on that revenue source – primarily the General Fund, the fund that runs most of the usual governmental functions
What does that mean for the County when developing a state-mandated balanced budget? It means we have to consider the obvious options that you would ponder with your own household budget: increase revenue or decrease spending. In governmental functions, salary and benefit costs are the lion’s share of expenditures. Deciding not to back-fill vacant positions (open due to attrition) is the most palatable option to reduce these expenses – but it’s a delicate juggling act against service disruptions or changes.
Including this year’s proposal, the County will have reduced nearly 25 positions in three years – making it harder to keep up with the top-notch service levels that we need and expect in our community. To staff’s credit, positions have been eliminated, jobs have changed, and tasks combined or redefined to help fill the gaps. Nevertheless, this year for the first time, you’ll see the County Manager proposing some minor service hour reductions at our public facilities.
The goal is to target minimally used hours and allow departments to reallocate scarce resources for better overall program leverage, but if you’re the person who liked having that extra hour at the library on a Thursday night, you’re going to feel the impacts more than others might.
In addition, the budget guidance provided by the Council included a targeted 1 percent decrease in the General Fund expenditure budget from the current year (FY15). To avoid making deeper cuts, the guidance also considers re-instating property taxes that had been reduced at the height of GRT collections five years ago. I think it’s safe to say that no one likes to think about a tax increase, and Council has managed for the past three budgets to delay re-instating these previously reduced property taxes by focusing on other budget factors.
However, the continued GRT revenue decline, coupled with ongoing and new operating costs (e.g. increased County Share of Fire Cooperative Agreement costs, and new Nature Center and Teen Center operating costs), has prompted Council to allow for the possibility of including in the proposed budget an increase of 2.25 mills of property taxes. Re-instating the ~$1.5 million of previous revenue reduction in the budget would provide a balancing and stabilizing factor to our budget.
What does that translate into for the average home owner with a $300,000 home? Approximately $225 in more taxes paid per year. Is that an option that property owners are willing to pay to avoid further service and staff reductions? These tradeoffs are part-and-parcel of our responsibility as councilors, and frankly, I don’t currently see a way around restoring this revenue without severe operational consequences. Without a doubt, this will be a lively community discussion!
I hope I have given you a few things to think about, and that you’ll take the time to study the budget, which is available on the County’s webpage in both summary and detailed form at http://www.losalamosnm.us/omb/Pages/BudgetsandReports.aspx – copies are also available in a variety of locations to review.
Budget hearings are one way to give Council your feedback. Meetings will be April 20, 21, 27 and 28 at 6:00 p.m. in Council Chambers. Or, simply send your comments to individual Councilors, staff, or the general County Council email address at firstname.lastname@example.org. I hope you’ll participate – we need to hear your thoughts.