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Los Alamos County Council’s mid-year budget review will be anything but normal. Staff has estimated a $9.5 million shortfall in projected revenues for FY2013, and further contractions for ensuing budget years.
Staff had noted decreasing revenues during the yearly audit, estimating a $6.5 million shortfall based on revenues through August 2012. But Los Alamos National Laboratory spending dropped dramatically in September compared to previous years, resulting in a $3 million reduction in gross receipts tax flowing into county coffers. The county received that report in November, along with the news that the state was refunding part of LANL’s 2011 GRT, with the county’s share set at $3.5 million.
“It is a moving target. Any budget is our best guess. So we’re projecting revenues based on history, based on information we receive from news media as well as directly from the lab,” County Administrator Harry Burgess said. In this case, LANL’s expenditures were far lower than the amount budgeted for the year, which is what the county’s early projections were based on.
“Given that information, we began an internal process of evaluating our existing budgets for the present fiscal year and trying to identify ways we could save money,” Burgess said. “And I say we because it’s been a multi-pronged approach.”
He has met with senior management, middle management and employees in various departments to come up with solutions.
“We’ve tried to gather input from those in the field, those on the direct customer service plane. Everybody sees from some different perspective and we’ve tried to gather suggestions from all levels within the organization, because we all have a part in trying to balance this budget scenario and also to communicate the need to reduce our expenditures.”
Officials say it is too late in the 2013 fiscal year to address more than a fraction of the shortfall through spending cuts.
“We’ve identified about $1.1 million in savings for the present fiscal year, and $4.85 for future fiscal years,” Burgess said.
He wants to make the point that the county is not going to run out of money.
“We have a history of setting aside reserves in addition to what we’re otherwise required to have by the state. The primary one is called the revenue stabilization fund,” Burgess said. “We’ve already put it to use in the present budget year, and anticipate we will in future budget years. It’s the magnitude of the shortfall that requires us to go beyond simply the use of those funds for future fiscal years.”
Burgess has focused on reductions that will result in recurring savings, such as reorganizing departments so full time positions can be reduced, putting a hold on filling 26 vacancies and filling key vacancies with internal applicants.
“What we have done to date is attempt to avoid any countywide reduction in force. Instead, we’re looking to attrition and reorganization to realize those savings,” Burgess said. “My hope is that it’s a cycle and that we’ll see increased revenues in some future year, and we want to have those employees here today and tomorrow to provide the level of service that we do.”
Tuesday’s council meeting will focus on two key elements: what actions staff has taken to date to address the shortfall and what options are available for confronting the issue in future budget years.
Burgess said the focus will be on high level guidance from council. He will present a broad-based plan with options for reducing or deferring expenditures and possibly raising revenue.
“In individual conversations the councilors have indicated a desire to see broad based efforts instead of looking at any single source,” Burgess said.
Some of the questions Burgess put forth are:
Do we continue to utilize the reserve fund? If so, to what level?
To what degree should we reduce levels of service?
Should we consider additional taxes or higher fees?
Should we defer some of the capital projects approved in May?
Should we refinance the debt for Pajarito Basin, which could free up $770,000 a year?
“What we’re really seeking is that budget guidance, not getting into details of any particular item, because there’ a lot of work to be done to bring things back based upon the direction we receive,” Burgess said. “For example, if there’s the potential to increase our taxes, then we know what the bottom line is we’re trying to hit. Or, similarly, if there’s a certain amount of money deferred in the capital projects, then we know what we’re able to bring back in terms of our budget target.”
Burgess is aware that CIP projects are a major concern for many members of the community. He stressed that Tuesday’s meeting will look at the overall capital improvements budget, but not individual projects. If council directs staff to come back with a plan for reducing or deferring spending on capital projects, a meeting will be scheduled to evaluate which projects would be affected
“I anticipate we would have a lot of public participation at that meeting,” Burgess said. “And with our council being fairly new, we certainly need to educate them on the nuances of each project, the potential effects on each of them, so it’s not just a simple this sounds better than this type of decision.”
Burgess acknowledges that council will be faced with difficult choices during the Tuesday meeting.
“I think it’s going to be a very hard thing, because I don’t think anybody’s going to say, oh, yeah, let’s raise taxes, let’s postpone projects, let’s lay off people, whatever the mix is,” Burgess said.
“With the reserve fund, we could carry on even at the same level of service for the current fiscal year, and probably even into the next two. But then we’d have a very steep deficit to recover from and I don’t think anyone wants us to do that. So instead we’re trying to find a path forward that is at lower expenditure levels and we’ll hopefully forego any severe cuts.”
The council meeting is scheduled for 7 p.m. Tuesday in council chambers.