San Juan County cash reserves continue to drop

San Juan County is taking a closer look at expenditures and revenues as the financial crisis has a continuing impact on local governments. Recent trends show that the fund balance held by San Juan County continues a downward spiral.

At the November 2 meeting of the San Juan County Commission, Commissioners discussed methods of controlling expenditures. Each month, Commissioners receive a report which includes the total fund balance in the various county accounts.

When Commissioner Bruce Adams asked why the county is spending more than it brings in, IT Manager John Fellmeth said that one challenge is that actual revenues may not match budget projections.

Fellmeth said that “a lot of little things” are adding up to larger problems. In addition, he said that large expenditures are occasionally authorized before grant funds are received or before a contract is finalized. While it is generally just a matter of time before the funds arrive, it can create a cash flow issue in the short run.

As a matter of business, Commissioners say they generally ask if proposed expenditures are within the department budget. However, Fellmeth said budgets may overstate revenue projections.

Commissioners discussed holding requests for expenditures for an additional week in order to verify if funds are available and if budget projections were accurate.

In addition, the county has invested nearly $1.8 million in a project to explore the expansion of the San Juan County jail. Funding for the project has yet to secured.

Clerk Norman Johnson said that the issues will be carefully tracked as budgets are set for the coming year. Johnson reports that preliminary budget requests are “flat” in most county departments.

In recent weeks, the City of Monticello announced that sales tax collections for the year are significantly below projections. If trends continue, the City may face actual revenues that are $100,000 below budget projections.

Cash flow issues are generally more critical for Monticello than for the county because of low fund balances in city accounts. That has not been the case for San Juan County, which has carried fund balances up to $44 million in recent years. The funds were carried over from previous years, when the county had higher revenues and larger tax base.

While the San Juan County fund balance varies from month to month, and will increase this month when property tax payments arrive, the long-term trend has been a steady decline. In the past decade, the fund balance has fallen from $44 million in the early part of the decade to $33 million in recent months.

More than a decade ago, when the State of Utah was earning significant interest revenue on cash reserves, the interest from the fund balance was generating nearly as much revenue as from property taxes. In recent years, the interest earned on cash reserves has been very low.

Commissioners state that they have used portions of the fund balance to purchase assets that better serve the county than simply cash reserves.

Commissioner Lynn Stevens said that the county purchased crushed gravel and stockpiled steel culverts with the Road fund balance several years ago.

He said that the price of steel increased dramatically since that time and the gravel crushing equipment has been a good investment. Stevens said that this represents a better use of the funds than the one percent interest they would have earned by holding the money.