MOHAVE COUNTY BOARD OF SUPERVISORS MOHAVE COUNTY, KINGMAN, ARIZONA SPECIAL MEETING JUNE 13, 2001 FISCAL YEAR 2001/2002 BUDGET HEARINGS The Board of Supervisors of Mohave County met in Special Session this 13th day of June, 2001, at 9:00 AM. In attendance were Pete Byers, Chairman; Tom Sockwell and Buster Johnson, Members; Ron Walker, Mohave County Manager; and Barbara Bracken, Clerk of the Board. The meeting was called to order by Chairman Byers. The following Mohave County Elected Officials and Department Heads addressed specific items as noted: Duc Ma, Financial Services Director; Beverly Payne, Assessor; Dave Chevalier, Chief Deputy Treasurer; Joan McCall, Recorder; William J. Ekstrom, Mohave County Attorney; Deborah Herbert, Chief Civil Deputy County Attorney; Bonnie Campbell, Library Director; Tom Sheahan, Sheriff; Jim McCabe, Chief Deputy Sheriff; Rick Lewis, Court Administrator; Paul Thomas; Limited Jurisdiction Court Administrator; Virlynn Tinnell, Clerk of the Court; Rod Marquardt, Chief Probation Officer; and Ron Nicholson, Chief Deputy Assessor. Manager Walker thanked the Board for their vote of confidence in selecting him as County Manager. He also conveyed his gratitude to the department heads and their staff for the motivation they displayed in working together as a team to make Mohave County the best managed county in Arizona. Lastly, he thanked the elected officials for their serious and genuine participation in the preliminary budget meetings. The following is a synopsis of Manager Walkers Report. The most critical assumption is achieving Mohave Countys mission as effectively and efficiently within available resources as the first order of business for all Mohave County leaders, managers, and employees. Government is the servant of the people. It has a moral obligation to spend no more than necessary to produce required quantity and quality of services; internal costs cannot be allowed to grow at a pace that exceeds revenue; must share in the burden of economic downturns; should continually improve to deliver better service at a lower cost; and should create quality communities that benefit the long-term well being of its citizens. His number one priority is to successfully manage the current general fund financial crisis, plan for the future, and ensure continued improvement in all aspects of service and productivity. Many of the critical issues highlighted in the 2000-2001 budget are still being faced today, i.e., whether to cut services and reduce costs to the same level of revenues, or increase taxes to pay for services; the Countys financial stability, employee morale and retention, deteriorating vehicle fleet, the technology reserve, and overall limited operating and capital fund. Mohave County General Fund has experienced a Net Operating Loss every year since 1995-96. Mohave County has been steadily depleting the Contingency Fund since 1995. The Finance Director projects an ending balance in the Contingency Fund this year of $184,000, whereas in FY 1996-97 the Fund had an approximate balance of $5 million. Mohave County has a serious fiscal crisis and must stop deficit spending. Mohave County must cut operations and services, or enhance revenue to meet needs. Mohave County is the fastest growing county in Arizona, and the demand for services accelerates faster than scheduled revenues. As the County grows, the County Departments have been faced with substantial budget cuts, 12% last fiscal year, and 8.5% this year, to achieve a balanced budget. The $1.2 million planned for the Contingency Fund is inadequate to handle any real emergencies. Without additional general fund revenues in FY 2001-02, the County faces severe impacts on County operations and services to citizens, and opens itself to substantial downside risk and liability. With over 52% of the general fund budget for personnel and benefits, County employees will be adversely affected. County employees are our most significant asset and we must ensure we are paying fair and competitive wages, and providing the best benefits package we can, contingent upon our ability to pay. Manager Walker strongly recommended that the Board of Supervisors adopt the cent sales tax, consider an increase in the property tax levy rate, and perhaps a Sheriffs override for next year. The best thing we can do for our citizens and our employees is to eliminate deficit spending, get our Countys general fund on firm financial footing and to keep it that way through sound fiscal and management system planning, and strict fiscal and management system responsibility and accountability. Manager Walker strongly urged the Board of Supervisors to adhere to the provisions of Resolution No. 99-148, and keep the funds accumulating in the Excise Tax Capital Improvement Fund; and to separate the critical Capital Budgeting issue from the equally critical and immediate Operational Budget issue of keeping our County Government operating effectively and efficiently in FY 2001-02, and beyond. The meeting continued with the Financial Services Director giving a presentation on the fiscal condition of the County general fund. Director Ma stated that since FY 95-96 the budget has increased approximately 6% per year. He advised that the budget for FY 2001-2002 is $136,113,056, which is a reduction of approximately 11 million dollars compared to last fiscal years budget. Director Ma advised that the projections for the end of the year show a fund balance of $183,454. He advised that there was a 2.5% reduction from what was budgeted for revenues, which accounts for approximately a 1.2 million dollar difference. Director Ma advised that the FY 2001-2002 projection shows approximately a 3.2 million dollar deficit. He stated additional expenditures, due to cost increase for FY 2001-2002, will be approximately $1,079,517, which include the ALTCS contribution, Liability Insurance Premiums, cost of electricity, and contract obligations. Director Ma advised that next year the property tax increase of approximately 5.5% of assessed value would generate about one million dollars for the general fund. He stated $894,145 is projected to be collected for interest/penalty fees. Director Ma stated that the County would experience a reduction in revenue for Sales Tax and Auto Lieu, due to a slow down in the economy; and a reduction in revenue from court fines and fees, service fees and charges; that there has been a steady increase in permits which will continue into next fiscal year; and that our investment interest is a continued reduction, however, there will be a one-time interest revenue deposit of $196,000 from the Clerk of the Court that will increase revenue for FY 2001-2002. Director Ma advised that reduction in the general fund carry over will require the County to use other funds to carry an operating cash flow, as well as possible use of the Countys line of credit. He advised that, in order to balance the budget, 3.2 million dollars has to be trimmed from the operating budget. In summary Director Ma advised that the pro forma budget for FY 2001-2002 would have a drastic effect on General Fund Departments. He advised that if approximately 1.7 million dollars in revenue could be identified, the Budget Committee recommended additional appropriations to some programs to sustain marginal operation. In response to Supervisor Johnson, Director Ma advised that the three million dollar difference for property tax revenue shown on his June 30, 2001 chart versus his April 30, 2001 chart, was because the second installment on property taxes was due in May, and the one million dollar anticipated increase in property tax revenue for FY 2001-2002 was based on the 5.5% increase in assessed values. In response to Supervisor Johnson, Ron Nicholson, Chief Deputy Assessor, advised there was a direct proportional relationship between the assessed value and the revenues, therefore, if there is an increase of 5.5% in the assessed value, you can plan on a 5.5% increase in revenue. Assessors Office - Assessor Payne advised that she supported the County Managers recommendations, i.e., reorganization, and an increase in property tax and sales tax. She stated that she will abide with the County Manager and the Finance Committees recommendation that her budget remain flat, however she believes this to be a disservice to her staff and the public. She stated that Mohave County is the fastest growing county in Arizona and her office has kept up with the growth and improved the equity of the valuations with a level workforce and minor budgetary increases. Treasurers Office - Chief Deputy Treasurer Chevalier advised the proposed budget would require the Treasurers office to lay off two employees, in addition to already having three vacant positions. He advised that the 9% budget cut for next year, along with the 13% budget cut for this fiscal year, represented a 22% cut in two years. Chief Deputy Treasurer Chevalier stated that to take a straight percentage cut across the board is very unrealistic, due to increased operating costs. He advised that they would have little choice, but to close their satellite offices, which would only save $7,000, and inconvenience an average of 12,000 walk-ins per year. Chief Deputy Treasurer Chevalier advised that there has been an 11.4% increase in revenues flowing through their office over the past 9 years, with an annual increase of expenditures of 10.3%. He advised that monies going through the Treasurers office has increased from 197 million dollars in 1992 to this fiscal years projection of 450 million dollars, and that a reduction in staff will cause delays in processing. Recorders Office - Recorder McCall advised that she was requested to cut $47,000 from her budget and her total operating expenses are $32,000, therefore, that would mean the firing of two employees. She stated that her staff has been reduced by five people over the last five years. Recorder McCall advised that all of her services are mandated. She stated that presently there is a 2-3 day turnaround for recordation of documents, however, should she lose two more employees, it will become a 2-3 week turnaround. Recorder McCall stated that she saw no way around the problems unless the Board took matters in hand and increased property and sales taxes. Attorneys Office - Attorney Ekstrom thanked the Board for listening, and the County Manager for being an innovator and a leader and giving staff and elected officials a ray of hope for the future, and involvement in the budget process. Attorney Ekstrom advised that his submitted budget is the minimum necessary, at the lowest possible cost, to provide the necessary services to the public. He advised that his office will continue to do the best they can with the resources and equipment they have, with the goal of seeing that justice is done for the citizens of the County. Chief Civil Deputy Attorney Herbert advised that she represents the Self-Insured Retention Trust Board, which deals with claims, lawsuits and risk management issues. She advised that the SIR Trust balance is decreasing, largely due to the decreasing transfer of funds the County makes to them, on an annual basis, due to its financial crisis over the last several years. Attorney Herbert advised that the estimated SIR Trust balance for the end of this fiscal year will be $423,512 and for FY 2001-2002, $173,326. She advised that the anticipated and desired goal would be around one million dollars. Library - Director Campbell advised she had presented a balanced budget, however it does not include the $106,585 central service charge. She advised that the budget did include a 3% merit increase for library staff, and noted that her non-general funded employees did not receive the 3% increase that was awarded this year, as they did not have the money. She advised operational costs had increased 264.4% this year. Director Campbell advised that the library has had to slice the books and materials budget by approximately half in order to keep up with costs. Director Campbell advised that she would be requesting a tax levy increase from 0.2980 to 0.3236, which would increase revenues $250,312, allowing for $106,585 in central services charges, and restoration of the books and materials line item to $293,727. Director Campbell advised that the quality of library services in Mohave County rests with the decision the Board makes in relation to the FY 2001-2002 budget. In closing, she thanked the Board for their choice of County Manager, as she felt encouraged by Manager Walkers perceptions, his approach to utilizing senior management as a team, and his vision for a future healthy and thriving Mohave County, and she encouraged the Board members to listen carefully and consider responsibly his recommendations. Sheriffs Office - Sheriff Sheahan advised that the Sheriffs Office would be presenting a very bleak picture to the Board and citizens of Mohave County if the proposed budget cuts come into effect. He advised that Chief Deputy McCabe would give an overview of the Sheriffs budget and advised that there had been a 16% increase in calls for service, therefore, they could not afford a decrease in the budget. Chief Deputy McCabe advised that the Sheriffs Office was not any more important than other departments that provide a service to the citizenry of Mohave County, however they were looking at what they had to do as a division to provide those services Chief Deputy McCabe advised that animal control is not a mandated service. However, several years ago, it was being handled by the Humane Society who was unable to do the job because their request for monies were continually refused, therefore, the Board assigned the responsibility to the Sheriffs office. He advised that with the proposed budget they would have to eliminate overtime, which entails call-outs; eliminate travel, which means eliminating animal services for the Arizona strip area; turn in 3 animal control vehicles; eliminate all take home vehicles; eliminate one part-time shelter worker and one full-time animal control officer position; eliminate free rabies clinics; and stop providing trap cages for public use. Chief Deputy McCabe stated that the Sheriffs Office would have to reduce the flight budget, which would drastically reduce the aircraft repair, which may result in the grounding of the aircraft. He advised that they receive grants for the waterways (mandated service), and the amount is based on how many hours waterway officers are on the waterway, this year they ran out of gas money, which reduced the hours the watercraft was on the water, subsequently the grant was reduced. Chief Deputy McCabe advised that the jails in Mohave Valley and Lake Havasu were closed this year due to budget reductions. He advised that the Sheriffs Office has 18.5 positions open in corrections and they are at critical/unsafe staffing. Chief Deputy McCabe advised that the Sheriffs Office will have to turn in two vehicles, drastically reduce overtime and layoff 10 officers, which will have profound effects. He advised that they were not asking for an increase, only to maintain the same budget. Courts - Administrator Lewis advised that they had requested 4% over the baseline budget and the recommended amount was 10% below their requested budget. He advised that the judiciary understood the Countys situation and had requested considerably less than in previous years and felt they had submitted a reasonable budget. Administrator Lewis expressed concern with the $557,612 allotted for mandated services, as they were projecting $800,000 for that budget, therefore, the County would be looking at a contingency fund transfer. Administrator Lewis outlined the Superior Courts strategic plan, describing goals they have achieved, and goals they hope to attain. He advised that they had requested 2.24 million dollars for FY 2001-2002, and the recommended amount was 2 million dollars. Supervisor Johnson stated that the Superior Court had used their budget to fund positions for the justice court in Lake Havasu and wanted to get out of it now. The Board had not wanted those positions in the first place and the Court was trying to stick us with the bill. In response to Supervisor Johnson, Administrator Lewis advised that it was their intention to establish courts in all the cities and ultimately there were funding issues that had to be worked through with the Supreme Court. He advised that in regard to the justice court positions, it was negotiated as part of the budget settlement agreement. In response to Administrator Lewis, Supervisor Johnson advised that when the Lake Havasu courts were combined, clerk positions became administrative assistants, which cost an additional $93,000. Administrator Thomas advised that he submitted the same budget for the justice courts as he submitted last year, which was based on an analysis by the Finance Department. He stated that the courts do anticipate $30,000 in additional expenses. Administrator Thomas stated that should the courts have to reduce their budget by the 8.39% requested, it would result in layoffs of collection clerks, which would lead to a revenue loss of approximately $500,000. In response to Supervisor Johnson, Administrator Thomas advised that Lake Havasu Citys charges to the County are based on caseload. Director Ma advised that he had received correspondence from Judge Andress, City Magistrate, advising that there would be an approximate increase of $21,000 for next fiscal year. In response to Supervisor Johnson, Director Ma stated that the County had not renegotiated the contract with the City for office space, and Manager Walker advised that new charges were in the negotiation phase. Director Ma listed approximately $115,000 in additional expenses that had been added by the courts, subsequent to the original budget information submitted, which he did not think were included in the worksheet provided to the Board by Administrator Lewis. In response to Director Ma, Administrator Lewis advised that it was his understanding that the Sheriffs Office was going to pick up the cost for video arraignment. Probation - Officer Marquardt stated that his department essentially prepared a flat budget, i.e., no new positions, no new programs, etc. Officer Marquardt advised that, should the County proceed with the recommended budget, the Probation Department will have sustained a 25% decrease in their budget since 1998, while the workload has increased. He advised that while the general fund makes up an important part of their budget, it is a relatively small part, as the departments budget is roughly six million dollars, and the general fund makes up one million dollars of that; and, if budget cuts are implemented, the County would be placing their state funding in jeopardy. He expressed his concerns regarding employee raises, work conditions, and the Countys pay scale. He advised that, in the last 16 months, 33% of his staff has resigned and, in his opinion, the troops are tired. Officer Marquardt expressed his concerns regarding the budget having no provisions for improving the motor pool when the average odometer reading on the Probation Department cars is in excess of 127,000 miles. In response to Supervisor Johnson, Officer Marquardt advised that when having to make arrests of people on probation, they often do the transport themselves. Clerk of the Court - Clerk Tinnell advised that she concurred with Officer Marquardt and her chief concern was staffs burn out. She advised that she did apply for two additional positions with the understanding that they were going to apply for those positions with Fill the Gap grant funds, and they did receive one of those. In conclusion, Manager Walker advised that, in his opinion, the County now had the ability to quantify and qualify the kinds of things that are not going to get done in the County given our revenues for next year and the distributed budget. He advised that the County was either going to have to provide services with the available resources, or say that our needs exceed our revenues and do something quickly to provide more revenue for our general funds. Motion was made by Supervisor Johnson, seconded by Supervisor Sockwell, and unanimously carried to adjourn at 11:25 AM, this 13th day of June 2001. MOHAVE COUNTY BOARD OF SUPERVISORS _____________________________ Pete Byers, Chairman ATTEST: ____________________________________ Barbara Bracken, Clerk of the Board SPECIAL MEETING PAGE  PAGE 7 JUNE 13, 2001 ###%&=*N*,,}1166@@KKPPS^T_T{T}TT:U;U> ? ?@@/B0B3C4CHDIDEEdOPJK  @A""XYTUKL--! !""#$##%%((<*=*\+]+H,I,,,- -/ /|1}1334466Q8R8M9N9$N9/<0<>> ? ?@@/B0B3C4CHDIDEEfFgF4H5HHHnIoIBJCJEKFKK$EfFgF4H5HHHnIoIBJCJEKFKKKAPBPPP0R1RSSTTTT"TTTTTU;U