We've Got The County Covered
We've Got The County Covered
By Steve Edwards
Last week the Blaine County Commissioners approved the 2017-2018 budget to operate the county. Again, the annual budget cycle for Blaine County had a familiar ring to it. Declining non-tax revenues, minimal growth in the value of taxable property, uncertainty about key annual payments from the federal government and county commissioners’ goal to keep an ‘emergency reserve’ have required more belt tightening by county departments. The result is a 2017-18 budget that is at the same overall level as last year and will again require supplemental funds from what normally would go toward maintaining the emergency reserve fund.
Numbers tell the story
The short story is both the county’s major sources of funding are down from last year. The first source of revenue, property taxes, will generate about $3.6 million this coming budget year, $100,000 less than last. Long term, the potential for revenue to the county from property taxes will not change as the overall value of property in the county remains basically static. Some larger counties, such as Gallatin, Flathead and Yellowstone, are experiencing a strong uptick in the value of property and they are feeling less squeeze on their budgets. Blaine County is currently at the legal limit, set by the state, that it can tax property. Without putting the issue to a vote or a change in state law, the county cannot raise property taxes to generate more income for the county.
Non-tax revenues, the second source of county funds, are payments to local governments that are not connected to property taxes. Non-tax revenues are also declining. Revenue from oil and gas sales from federal lands across the entire country are distributed to counties. In 2016, Blaine County’s share was roughly $127,000. That compares to the county’s share of oil and gas income in 2005 of $1 million. Those payments are dependent on oil and gas markets, which have been weak for the last several years. Revenue from mineral sales on federal lands is also down. This year Blaine County’s forecasted income from mineral sales will be about $40,000, down from a high of $200,000 a few years ago.
A major non-tax revenue has been the annual PILT payment--Payment in Lieu of Taxes. It’s a direct payment to counties where there are large tracts of federal land provide no property taxes toward county services. The amount of PILT varies by year, but has averaged about $850,000 per year. Traditionally the commissioners in Blaine County have tried to use the majority of the PILT payments to keep a reserve fund for emergencies. Last year the payment was just over $1 million dollars, the largest ever received. Because of last year’s shortfall, some PILT money was used to balance the budget. At this point in time Congress has not acted to approve PILT.
There are other non-tax revenues that are generated by activities of county departments. For example, revenues generated from the annual fair, weed control, extension service, library and public safety remain in the departments’ respective budgets. Income generated by the county departments is not part of the general fund.
Revenues and expenditures are also affected by events that cannot be planned for in a budget. Two examples happened during 2016-17. NorthWestern Energy sought and won a reduced assessment on its Montana based holdings. That reduced the budgeted property tax in many counties, including Blaine County. Also, the special election required to fill the vacated congressional seat cost the county $14,000. Both these shortfalls had to be covered under a budget that did not anticipate the expenses.
See Page A3: Blaine County Budget
The impact of the shortfalls on
Blaine County’s 2017-18 budget
Since the shortfalls have now happened for the past few years, most county departments were forced to make cuts and adjustments this year to keep spending at the 2017-18 level. Some departmental budgets did increase by small amounts for salary increases. Because of the unplanned reductions described above, the county had to delve into its reserve account to keep a balanced budget for 2017-2018. Part of the larger than average PILT payment was used to make up the shortfall. Commissioners anticipate they will have to use part of the PILT payment this year, assuming there is one, to keep a balanced budget.
The effect of the budget shortfall on county residents for 2017-18
First, there will be an effect on every resident in Blaine County because of a budget that will remain at the same level as last year. Just like our personal businesses and households, operating costs go up each year and governments face the same challenge of keeping pace. The commissioners have spent many hours working with department heads to make sure essential services are still in place, but expanding existing or starting new programs is not likely to happen.
Second, future belt-tightening for the budget is likely. With the uncertainty of energy markets, which drives a lot of the Montana economy by generating severance taxes, money from both federal and state sources will continue to decline. Some analysts are forecasting that county governments may soon face the ability to fund only services required by law.
Reflecting on the budget process
To create a balanced budget the last couple of years, commissioners and departments have had to “hold the line.” For 2017-18, the budget is about $100,000 less than last year. Most officials who are looking to future budgets, see more of the same with reduced non-tax revenues continuing. The county is taxing property at the maximum allowable under law and the value of property in Blaine County is not currently growing appreciably. There is a finite amount of property tax available.
During the budget process, including the public hearings, commissioners have expressed their appreciation for the way county departments have tightened their belts for the last few years. Unfortunately, there doesn’t seem to be much prospect for that situation to improve as revenues continue to contract.
