Jeffco has finalized its 2014 budget, but the county commissioners warned the future fiscal outlook is grim and that cuts could be on the horizon in 2015 and beyond.
The commissioners voted 2-1 vote to approve a $350.5 million operating budget for 2014. The spending plan includes a 1.5-mill increase in the county's property-tax levy and a 3 percent merit increase for county employees.
The tax boost restores 1.5 mills of the 1.632-mill reduction the county instituted during the previous decade. The new levy will cost the owner of a $350,000 home a total of $720 annually, about $42 more than this year, and will generate about $10.4 million in additional revenues.
Even with the mill-levy increase, the county will have to take $20 million from reserves to balance the 2014 budget. While that is 2 percent less than the amount drawn from reserves in 2013, the county has used more than $71 million in reserve funds since 2011.
The continued reliance on reserve funds is why Commissioner Don Rosier said he voted against the 2014 budget. He said Jeffco shouldn’t raise taxes during a recession, especially if the county is spending beyond its means.
“The failure to address the horrible financial situation of the county in the 2014 budget and to kick it down the road until 2015 only makes the issues worse,” Rosier said in an e-mail after the vote. “Small problems will become big problems, and big problems will become insurmountable. By not taking a holistic and strategic approach to the 2014 budget, we are penalizing our employees, nonprofit partners, and citizens of Jefferson County.”
The county anticipates $373.8 million in revenue in 2014, a 3.3 percent increase over the projection for 2013.
While property taxes are predicted to generate $185.2 million next year, a 7.4 percent increase over 2013, much of that boost would come from the restored mill levy. Overall valuation of property in the county is up only 1 percent.
Jeffco relies heavily on property-tax revenue, and since 2011 the county has seen property-tax proceeds decrease by $11.2 million.
“This budget shows that the county is spending more than it receives in taxable revenue and that the unfunded mandates passed down from the federal and state governments are hindering the overall health and operation of the county," Rosier said. "It also shows that if the county does not control its spending, we will run over a fiscal cliff requiring drastic cuts to staffing, services and programs in the next two years or sooner.”
During the vote on the budget Nov. 26, Rosier said the county faces drastic choices in future budgets, including possible layoffs.
“I personally do not want to tell somebody in two years, a department director, 'Guess what? In order to make your budget, you're going to have to cut your staff by 50 percent.' That’s what this is saying,” Rosier said.
While Commissioner Casey Tighe agreed with Rosier’s concerns about 2015 and beyond, he argued that the 2014 budget is a step in the right direction.
Tighe said throughout the budget process the county needed to raise the mill levy closer to the voter-approved level to ensure Jeffco provides the expected level of services. He also said, even with the mill increase, property owners will pay roughly what they paid in 2011.
“I believe the budget is set up to help the employees and the county’s nonprofit partners deliver on the vision, mission and goals of the county,” Tighe said in an e-mail. “We need to have a budget process that is nimble and can adapt. It is very important that the county look at how services are being delivered and see if there are better ways to achieve the county’s goals.”
The reserve fund balance, at current levels of spending and revenue, will be depleted in several years. It’s projected to be below $43 million in 2015, with only $25 million available to use due to TABOR rules.
Commissioner Faye Griffin was concerned about the increase in spending in 2014. At the beginning of the process, the commissioners said they wanted a flat budget for 2014 yet were again presented with more requests.
Griffin said Jeffco would be faced with multiple challenges as it moves forward into 2015’s budget process.
“The budget will have to be less than what is approved this year," she said. "Cuts will need to be made. We need to have more innovative ideas, more automation if possible, and possibly a smaller workforce. It is difficult to reduce or have a flat budget due to the demands for services from our citizens and unfunded mandates.
The 3 percent merit increase for employees was another point of contention during the final budget hearing. The county hasn’t increased pay since 2009, and the costs of health insurance and other benefits have left county employees with less take-home pay.
The lack of raises has led to an increased attrition rate for county employees. Currently, the county has a turnover rate of about 10.5 percent, up from 7 percent in 2009.
Griffin said including a merit increase was necessary to keep quality employees.
“The turnover rate has grown from last year, and it could be a problem if the growth continues,” Griffin said. “The 3 percent merit increases were deemed necessary to retain quality employees within the county.”
Tighe agreed with Griffin on the need for the pay increase.
“Although retention is important and the cost to train employees has been well documented, the merit-based pay increase is about more than attrition and retention," Tighe said. "Most Jefferson County employees are doing a great job providing excellent services to the citizens of Jefferson County. The county needs to recognize and reward the hard work of staff.”
While Rosier also noted the importance of county employees, he argued against the need to increase taxes to provide the merit increase.
“The county’s turnover rate is far below private business for the last 10-plus years. From 2003 to 2012, private business had turnover rates between 17 and 26 percent,” Rosier said. “In comparison, the 10-county (made up of the 10 largest counties in Colorado, including Jeffco) turnover rate from 2003 to 2012 was 9 to 14 percent.”
Rosier also argued that the mill-levy increase not only penalizes county employees and negates the merit increase, it penalizes all Jeffco residents without solving any of the fiscal problems facing the county.
Contact Ramsey Scott at email@example.com or 303-933-2233, ext. 22, and follow him on Twitter @RamseyColumbine.