County officials warn that stellar revenues not normal
Financial officer reviews midyear budget during board retreat
A midyear budget review by Yuma County Chief Financial Officer Gil Villegas revealed that just about every revenue source is ahead of projections.
However, officials warned that these are not normal numbers and the county shouldn’t go on a spending spree.
“These past two years have been very unique years for us. These revenues we received should be treated as one-time revenues. We don’t know what will happen. We don’t know when things will stabilize,” Villegas said.
Board of Supervisors Chairman Tony Reyes agreed, noting “Revenues are unreliable. We could have a housing boom this year and a drop next year.”
The board discussed the county’s current fiscal year finances during a Feb. 9 retreat. Villegas provided information about the state of the general fund and jail, health, library and flood control districts.
“When we created this budget, it was right in the middle of the pandemic,’ Villegas said. “Last June, the uncertainty, we didn’t know how our general fund would do. We had a lot of concerns about our resources. We didn’t if the revenues would come in. The state was being shut down, a lot of local businesses were having issues.”
Consequently, the county stuck to a very conservative budget. “Back then we were just trying to be flat 2019,” he added.
Including transfers-in and other proceeds, the county is projecting to finish the fiscal year with $101.7 million in revenues, about $12.4 million more than budgeted. On top of that is the Arizona CARES Act allocation of $7 million, with the majority going to public safety and public health.
In addition, county administration asked department heads to be careful with expenditures and to save as much as possible. Departments saved $1.4 million, or 4.3%, of their budgeted expenses.
County sales taxes have come in almost $3 million more than the prior year. Officials estimate that the county will end up 15.4% above the previous year.
“We’ve never seen that type of an increase,” Villegas said.
“Another pleasant surprise” was the state-shared sales tax revenues of $2.7 million more than expected, a 9% increase. “If you had told us we would receive that during the pandemic, it was impossible for us to conceive this. That’s the reason we went with a very conservative budget,” he noted.
Villegas explained that normally sales tax collections decline during the summer, but in April, May and June, the county saw a hike in collections. July, August and September were also unusually high. The county experienced the first decrease in November. Tax reports from the state lag two months, so the county won’t receive the next report until mid to late February.
The county had been so concerned with property taxes that the treasurer implemented different ways to ease their collection, such as making online and partial payments, that made it easier for residents. It seems to have worked.
“We are trending a little higher, compared to last January FY 2020, we are trending 4.2% higher,” Villegas said.
While most line items in the general fund are performing well, a few line items are not doing so stellar. The line items not performing as expected are licenses and permits, fines and forfeits, interest on investments, rents and miscellaneous revenues.
The county started the year with strong building permits collections, but now construction has slowed down a bit. The most negatively impacted fund has been fines and forfeits. Although the courts have slowly restarted hearings and procedure, “collections are just not coming in,” Villegas noted.
Expenditures are trending very close to last year. They are about 1% above, mostly due to salary increases. Some purchases have been delayed as much as possible. Mostly likely, the county will finish the current year with expenses at $44 million, or 47.4%, of the county’s resources.
However, Villegas pointed out that the county has future hefty commitments, including vehicle replacements and debt service for public safety pension payments, building and infrastructure needs, in-car and body cameras for the Sheriff’s Office, and a large increase for the county’s portion of the Arizona Health Care Cost Containment System.
These expenses will bring the fund balance down to $38.3 million, or 41.2%
The other funds, including the jail, health and flood control districts, are healthy as well. The Library District is trending low because of the pandemic closure. Nevertheless, the Library District saved on expenses, such as not filling positions, and expects to finish the year with a $4.7 million balance, or 39.2% of its resources.
Reyes reiterated that the county must continue to budget conservatively. “We heard some numbers that are more than encouraging. They’re not normal. Every department ended up with more money. That’s not a trend, that’s an aberration,” he said.
Villegas agreed. “Everything that I have seen, this revenue level, these are not sustainable, these collections that we are receiving, so everybody should be careful when budgeting for the next year.”
Reyes noted: “We know businesses are in trouble, Perhaps not the housing and construction, but the regular commercial is still struggling to move forward. And we have to acknowledge that.”
The county might have to step in even further to help “pick up the pieces,” he added. “There’s still trouble in the economy, but it’s covered up by all this assistance from the federal government.”