Assistant Navajo County Manager Bryan Layton introduced a fiscal year 2017-18 budget update and overview to the Board of Supervisors last week. He explained that the concerns facing the county are revenue challenges due primarily to industry changes such as impending closures of the region’s coal-fired power plants.
Layton also noted that property tax is projected to have no growth in the coming year and that even though more new construction is expected, the loss of revenues from the previous year leave it virtually flat.
State sales tax is showing a modest positive trend with $43,000, or .46 percent, more than projected earlier in the year, with a similar increase expected in fiscal year 2018. County sales tax is .69 percent lower than projected, with a one percent decrease forecast in the next year.
A big hit to finances is coming from healthcare costs. The county’s healthcare plan will increase dramatically this next fiscal year by approximately $600,000. The Elected Officials Retirement Plan increased by 129 percent this year, an increased cost of $520,000, and Arizona Long Term Care System costs increased by $133,000. In addition, Layton reported, “We just saw a dramatic increase in the number of high dollar claims. Financially, it was very, very hard on us this year.”
According to Layton, there are also capital needs that cannot be overlooked at a cost of approximately $1 million, with the bulk of that going toward technology needs.
Layton noted some positive developments, including housing federal inmates for revenues of $1.2 million. He also reported full funding of Payment In Lieu of Taxes funds in the amount of $1.49 million, which, according to Layton, “is a little bit higher, at about $40,000 higher than last year.” This is generally a one-time appropriation, meaning it is not guaranteed each year. These funds will be placed in contingency to assist with unexpected expenses, citing as example a wildfire that required additional resources.
There is also a continuation of what was expected to be a one-time reduction to the Arizona Department of Juvenile Corrections in the amount of $134,000, as well as the restoration of Highway User Revenue funds similar to fiscal year 2017.
Layton reported that total reductions would come to nearly $2.6 million, with 12 position reductions. Ten of those positions are “either vacant or scheduled to be vacant.” Two jobs will be cut, but which two has not been revealed.
“We have talked a lot about the closure of NGS and the Kayenta mine, and we are now forecasting that to be December of 2019. We are forecasting a corresponding closure of Cholla. They have not made any formal announcements regarding their closure, but for our planning purposes we’re forecasting that those changes will happen at the same time,” said Layton, referring to the Navajo Generating Station in Page and the Cholla Power Plant in Joseph City.
Layton explained that at that time the county would be seeing a significant drop in both property and sales tax. He is also forecasting up to a 12 percent increase in health care costs over that same time frame. “This is if we change nothing. With the way we are doing business right now, I think those increases are very likely,” he said.
He went on to say that with the delay in closure for NGS he felt it was an opportunity to not only meet the current needs, but also allow for a small contingency fund to build along with the PILT funds. “It allows us to handle the bumps in the road that we haven’t been able to do before,” said Layton.
Moving forward, Layton said that the county has to look at creating partnerships. “We need to look for additional expanded partnerships with additional entities,” he said, noting in particular local municipalities, Northland Pioneer College, hospitals, fire districts and other entities.
As this was just an overview of the budget, the board took no action on it.
