County seeks to cut debt with surplus in revenue

McCloud proposes using money to boost employee pay

A majority of the Yuma County Board of Supervisors said during their annual retreat Wednesday they wanted to use some of the higher-than-projected revenues from last fiscal year to pay down debt in the upcoming budget.

The county’s general fund balance at the close of the 201819 fiscal year, which ended last June 30, was almost $22 million, according to its final audits. This was $4.8 million more than had been projected for that year.

Money that comes in above general fund expenditures go into the general fund reserve or “rainy day fund,” and the county’s adopted budget policy is to have the equivalent of at least 20 percent of total annual operating expenses, to have in case of financial emergency and disaster.

At the beginning of the current 2018-19 fiscal year, the general fund was at 28 percent of annual expenditures.

District 2 Supervisor Russell McCloud said the money saved in the long run could be used for employee pay, which is facing upward pressure from the state’s increasing minimum wage, as well as a proposed pay increase for city of Yuma police officers, which would put their starting salaries ahead of those for sheriff’s office deputies.

“I’d like to see us consider use of one-time money, with our general fund reserves, and choose a debt, and just pay it off. That frees up the annual payments for the salaries issue we have coming up,” he said.

Supervisors Tony Reyes and Lynne Pancrazi agreed with his idea. No formal votes were taken during the work session, which is held at the beginning of the budgeting process for the upcoming fiscal year.

The additional revenue from last fiscal year came from two sources. One was higher revenue from economy-based sources such as property tax (an additional $637,000), state-shared sales tax (an additional $629,000). This offset county sales tax proceeds, which were up from the previous year but fell just short of the projections.

The other main revenue source was departments underspending their allocated budgets, which County Administrator Susan Thorpe said happens more often than not.

“We project revenues very conservatively, and

“I’d like to see us consider use of one-time money, with our general fund reserves, and choose a debt, and just pay it off. That frees up the annual payments for the salaries issue we have coming up.” – Yuma County Suervisor Russell McCloud

the state was surprised by all the money that was coming in last year as well, so we’re surprised about that.”

She added, “But we also have a situation where we’re projecting expenditures, the departments project that they’re going to spend everything that they have. And they don’t. So we’re not very good at projecting our expenditures, and we need to get more realistic about that.”

She said county CFO Gil Villegas would be working with department heads on getting more accurate spending forecasts into this year’s budget.

County Budget Director Tony Struck said there are several issues weighing on the upcoming budget besides salary pressures, including pension payments, health insurance costs, higher required contributions to the state’s Medicaid and mental health care programs and vehicle replacement.

County staff and consultants also gave presentations on employee salary pressures, employee benefits, vehicle maintenance plans to replace older vehicles according to

a schedule, beginning in fiscal year 2022-23.

Besides paying down debt, most of the supervisors’ priorities for the upcoming budget were connected to employee pay or benefits.

Supervisor Darren Simmons said the coverage currently offered by health insurance plans should be considered.

“I’d like to talk to employees about how they feel about what they currently have. Is there any way we can tweak on that, maybe something that’s not being utilized, to save some money, to save them some money, when we do the increase,” he said.

Pancrazi said she doesn’t want to see any employee pay increase eclipsed by escalating health insurance costs. “I want to make sure that the salary actually increases.”

McCloud responded that issue gets overblown because there may be a 2 percent increase to both salaries and to the amount deducted from paychecks for benefits, but those two figures usually aren’t comparable, given salary figures are higher than benefit figures.

Reyes said the pay increase the county has been

generally giving to all employees annually of 1 percent or 2 percent may keep up with the cost of living, but often doesn’t keep up with the overall market rate increase.

He also said the way the board has set the county property tax rate in recent years, by leaving the tax rate the same and allowing higher property values and new construction to bring in additional funding, backfires once the economy slows down.

“It’s good when the economy’s good, the economy’s driving, but when you don’t adjust your tax rate it’s leaving a tool behind that eventually catches up with you over the long range,” he said. During a downturn, officials are left with a choice between hiking the tax rate or cutting services and employees.

One issue that likely won’t have much of an impact on county finances, officials said, is the possible annexation of the Mesa del Sol area by the city of Yuma after a group of residents asked for the matter to be considered.

Reyes pointed out that county property and sales taxes are assessed countywide, and anything collected by a city or other

entity goes on top of that.

“Maybe on building permits, that will probably change, because that has to be secured from the city,” Reyes said, but that change will probably be minimal.

The county’s public safety costs could go down with the Yuma Police Department taking over jurisdiction of that area.