UPDATE: The County Supervisors approved La Paz County's tentative budget for the 2021-'22 fiscal year on July 20. The Pioneer will have details in a later story.
The La Paz County Supervisors are looking at how to eliminate a projected $2 million shortfall in the county’s general fund for fiscal year 2021-22. At work sessions with the county’s financial consultants July 12 and 14, various options were discussed, including a hiring freeze and furloughs for county employees of two to four days per month. The Supervisors made it clear such actions towards employees are not something they want to do.
“These things are not fun,” the Board’s Chairperson, District 2 Supervisor Duce Minor, said.
The county has until Monday, July 19 to approve a tentative budget and provide ways they are going to address the shortfall. County Administrator Megan Spielman said she was asking for herself and the financial consultants for direction at to what the supervisors wanted to do with the budget and address the shortfall.
Spielman said the county needed to make “smart and sustainable” changes to meet the current shortfall and have a better financial future.
“This is it,” she said. “We have to do this now. Everyone in this organization must decide what they want to give up today so we will have a sustainable future.”
It was noted by Spielman and the consultants that these efforts only affect the budget for FY 2021-22. They do not address the almost $4 million general fund shortfall from previous years. Spielman and the consultants said that shortfall is something that will need to be addressed.
The July 12 work session included a presentation from consultants Vanessa Burke and Russ Branson of the Pun Group, the financial advising firm hired by the county. They said the projected revenue for the general fund is $15.1 million, but expenditures are projected at $17.25 million. This will produce a shortfall of $2.15 million.
Burke said a healthy general fund would have a surplus of 16.67 percent. Given the funds needed to have an adequate contingency, Burke said 23.6 percent of the county’s general fund is deficit.
For the general fund to become financially sound, Burke said they will need to address the $4.1 million shortfall from previous years and add an additional $3 million.
Of the 109 county funds, including the general fund, Burke said negative balances came out to $6.6 million while positive balances came to $23.2 million. She noted the positive balances are mostly in restricted funds that cannot be used for the general fund.
“Only a small portion of revenue is within your control,” Burke told the Supervisors. “The county must learn to live within the limits of its revenue sources.”
Branson said 63 percent of the county’s labor costs, or $12.2 million, came from the general fund. About $7 million came from other funds. He said the Sheriff’s Office and the jail had the highest labor costs of all the departments.
Burke said 70.5 percent of the county’s general fund expenditures go to employee salaries and benefits. She added the county has 275 employees.
Burke and Branson offered several alternatives for employee costs. These included a hiring freeze and simply not filling open positions. They also offered two furlough options. To furlough county employees for 8 hours per week would produce a $1.06 million surplus for the general fund. To furlough county employees for 8 hours every two weeks would produce a surplus of $415,000 for the general fund.
These furloughs would apply to non-public safety employees.
Spielman said her preference was for a hiring freeze and furloughs. She said they were also looking at consolidating some county departments.
District 3 Supervisor Holly Irwin said some departments have employment requirements due to grants and other outside funding that they receive. She said she was glad they were talking about furloughs and not Reductions-in-Force (RIF).
“Those didn’t work in 2017,” she said.
Two county department heads had comments regarding the proposals. Sheriff Will Ponce said regular public financial reports were needed. These would allow department heads to keep better track of their budgets and how much money they actually had to spend.
Assessor Anna Camacho asked how much county employees would lose per year with the furlough proposals. She was told it would be an average of approximately $2,900 per year.
Minor said he wanted solutions to the shortfall that did not include furloughs or any reductions in pay for employees. He said that would be best for everyone. He said it was up to the department heads and the staff to do what they could to make furloughs unnecessary.
“It’s horrible that we’re talking about people’s lives and livelihoods,” he said.
Minor added that the county needs to adopt policies and habits so they do not have more financial crises in the future. He said the county had started following such habits during and after the 2017 financial crisis, but they stopped following these ideas and began falling back on old habits.
“I hate it that we’re here,” he said. “We did this to ourselves. We were making progress in 2017, but we stopped following those ideas. If we don’t stick to it this time, we’ll be right back here. I want to get this done right, so we don’t end up here again.”
Minor said the county will adopt a budget, and the supervisors will get monthly reports so they can make adjustments to the budget if they are needed. He added he felt confident the supervisors were getting real numbers to work with.
“We were getting smoke and mirrors,” he said.
“The numbers aren’t pretty,” he said. “We’re trying to minimize the pain for everyone.”