The above explanation was shared with the Archuleta Board of County Commissioners earlier this week, during a presentation of the proposed 2019 County budget.
We all make assumptions about the future, and I suppose we generally hope that our assumptions are reasonable and accurate.
The Archuleta Board of County Commissioners met on Tuesday morning, October 9, to agree on some assumptions about 2019, and in particular, to agree on a draft budget for the coming year — as they are required to do by October 15 each year, under Colorado law.
Actually, only two of our three commissioners were present on October 9 for this important decision: Ronnie Maez and Michael Whiting. Commissioner Steve Wadley was absent.
A couple of news reporters were in attendance, but the taxpaying public was largely absent — even though they will pay for this budget out of their own pockets.
Some of us believe that the annual budget process is the single most important action a government board takes, because it defines for the next year what will be attempted, and — just as importantly — what won’t be attempted. In that sense, the annual budget defines a government’s priorities.
The general public — the folks paying for those priorities — rarely participate in this process, however, because government boards generally provide no mechanism for authentic input. So budget decisions are made, year after year, in mostly empty meeting rooms.
The current budget approval process will be no different, even though the BOCC has placed a massive tax increase on the November ballot. “Massive” in the sense that Ballot Measure 1A, if approved by the voters, would increase the County sales tax by 50 percent — from a “two-percent sales tax” to a “three-percent sales tax.” That’s an increase of up to $3 million, or more, every year for the next 15 years.
As we found out, the County has built its 2019 budget on three key assumptions, which might be reasonable and accurate — or they might be wildly unreasonable and inaccurate.
The first assumption was that the voters are going to vote ‘NO’ on Ballot Measure 1A.
A second assumption was that, once Ballot Measure 1A fails, the County can still build an acceptable new Sheriff’s facility for about $14 million, with existing revenues… even though Ballot Measure 1A has proposed a $19.2 million facility and a $25.8 million debt (including interest payments.)
A third assumption was that the County should not touch the $8 million they’ve socked away into three separate saving accounts, and should instead take money out of our Road and Bridge budget to build their new jail — once Ballot Measure 1A fails.
These assumptions seemed to be endorsed equally by the two commissioners present — Ronnie Maez and Michael Whiting — and by certain County staff members.
The October 9 budget presentation was delivered by County Finance Director Larry Walton, one of the staff members who has helped construct a budget built upon the three above-stated assumptions. The following Powerpoint slide, detailing the recent evolution of some financial resources flowing into the County’s coffers, was one of the first slides we saw. Mr. Walton had selected the year 2009 as the starting point for these graphs.
We’re going to ignore the two charts on the right — Solid Waste Fees, and PILT funding. ‘Solid Waste Fees’ come from people dumping their garbage at the County Landfill. The more garbage we dump, the more the County accrues in fees, but also, the sooner we will have to locate and construct a new Landfill, at who-knows-what cost. So the long-term value of these fees is essentially unknown.
PILT revenues (Payment In Lieu of Taxes) come at the whim of the federal government, and are — like the weather — something we have no local control over.
But the two charts on the left… now, that’s a more interesting story.
Here are those two graphs, again.
The top chart purportedly shows the historical revenues from property taxes, starting in 2009 at about $7.7 million per year, and ending with a projection of about $5.6 million for 2019. The bottom chart shows sales tax revenues.
Mr. Walton referred to the top chart. The property tax chart:
“I thought it would be interesting to point out the difference in that revenue. If the revenue had been steady [from 2009] all the way into 2019, rather than drop as it did during that last recession and fail to really recover, the ‘lost revenue’ represented by that [drop] comes to $19.8 million during that period of time. It’s a very significant hit. And it hasn’t really recovered, for any number of reasons.”
Our two commissioners nodded in agreement.
The take-away from Mr. Walton’s comments might be that the County government has done a remarkable job of continuing to provide services to the community, even in the face of a $19.8 million drop in revenue.
Of course, property tax revenues depend upon the value of real estate in the county. So if the County government took a “significant hit,” then so did the community’s property owners, whose property values have stayed well below their 2009 valuations. We’re all in this game together, guys.
But more importantly, Mr. Walton is not telling us the whole story.
If we refer to the 2012 Archuleta County budget — which you can download here — we might find ourselves looking at a graph on Page 30. That graph tells a very different tale of property taxes and property valuations.
As we see here, the Archuleta County government was collecting around $4 million a year in property tax revenues, between 2004 and 2006. Then, in 2006, the BOCC convinced the voters to “de-Bruce” the County’s property taxes, thus removing the constitutional TABOR controls on tax increases. The result? Property tax revenues nearly doubled, hitting $7.7 million in 2010.
Same County government. Same level of service. Double the property tax income.
If we were to accept Mr. Walton’s misleading argument — that County property tax revenues really ought to remain steady, and not go up or down — then maybe we can calculate the amount of windfall taxes the County has happily collected and spent since 2004.
According to my pocket calculator, the County has taken in more than $28 million in windfall property taxes since 2004, thanks mainly to a voter decision to pass Ballot Measure 1A in 2006.
Yes, folks, it had the same name in 2006. “Ballot Measure 1A.”
Supposedly, the extra money was to be spent mainly on road maintenance.