Tax Increase Distribution
One of the challenges to government budgeting, management, and providing appropriate services that the public expects is operating within a fiscal budget where expenses are increasing and revenues are decreasing. This is the situation in which San Juan County finds itself.
We fully understand and recognize that all of us citizens here in the County are amongst one of the highest-taxed Counties per capita and yet we are the largest and least populated.
When reviewing the tax distribution in San Juan County, we hope citizens recognize that the County’s General Fund Budget is only 18.1% of the total tax collection. The Library Fund is 3.7% and the Public Health Fund only 1.2% of that distribution. The County is requesting to increase the taxes only to those portions of the entire tax collection pie; County General, Library and Public Health. If you look at the pie chart, we are the one in blue, dark orange and yellow, not even a full 1/4 of the pie.
That increase to those portions of the tax pie will equal to the following annual increases based on a primary residence assessed at $200,000 or a commercial building assessed at $500,000:
The increase to the General Fund will equal an increase to your taxes of $39.93 a year for residence and $181.50 for commercial.
The increase to the Library Fund will equal an increase to your taxes of $18.70 a year for residence and $85.oo for commercial.
The increase to the Public Health will equal an increase to your taxes of $20.68 a year for residence and $94.00 for commercial.
The total increase for all of these funds would result in an increase to your annual taxes which would equate to $79.31 for residence and $360.50 for commercial using this scenario.
What services do your taxes provide?
San Juan County provides multiple services throughout the County, which includes the following: Property Rights Recordation, Criminal Prosecution, 911 Services, Correctional Facility, Human Resources, Paramedic Services, Justice Court, Accounting Services, Election Management, Senior Services, Aging and Adult Services, Flood Prevention, Road Maintenance and Snow Removal, Land Survey, Public Health, Human Services, Criminal Defense, Treasury Services, Property Assessments, Law Enforcement, Information Technology, Marriage Licensing, Tax Administration, Television, Radio, Airport Management, County Fair and Rodeo, Economic Development, Special Service Districts, Landfill, Library, Surveyor, Planning, Historic Preservation, Fire Rescue and Control, Building Inspections, Search and Rescue, Weed and Rodent Control, Agriculture and Extension Services, just to name a few. The inability to generate enough revenue to provide these services, either means we are reducing our overall efficiency in some of these services or reducing the amount of these services we can provide.
Why are we asking to increase taxes?
For several years now, just as you experience in your personal budgets, the costs of goods have increased. Not only are we faced with the fact that costs of goods sold has increased, so has our revenue been decreasing for years. Here is what it looks like with the trends for the taxable value and revenue we receive from our portions of the pie. Wait, it looks like the last three years have actually increased in taxable value? Continue to read on…
Over the years, we have also seen a reduction in our tax base. This is the taxable value that we have available to generate revenue from. We also have revenue that comes in from both the Federal Government and State Payments in Lieu of Taxes; this is also a portion of our revenue. This is revenue that we receive from the oil, gas, mineral and lease revenue. These revenues have been either stable or increasing which allows us to offset a lack of revenue in other areas.
There has been a question regarding those who live in the Navajo Nation not paying property tax because they do not own property. This is true; however, they also live on the County’s largest generator of oil, gas, mineral and lease revenues that we receive from the Federal and State governments. From those oil, gas and mineral systems that exist on the Navajo Nation, we receive a significant portion of the centrally assessed taxable value from those systems on the Navajo Nation as revenue. They do also pay sales tax which we receive a portion of.
At one point in time, within the last 10 years, we had a taxable value of $1,041,759,290. In 2019, that taxable value is at $774,308,232.
It has been well over 10 years since we have asked for a tax increase, in fact, most years we have worked to remain tax rate neutral or less than the certified tax rates with our budget. This is when the commission decides to take a hard revenue neutral stance and lower the certified tax rate instead of taking the full amount. At times, this meant that there was a 12-18 percent decrease in County property tax revenue that could have been collected by many property owners. With the taxable value decreasing since 2012, and by not increasing the amount we could collect, our revenue from these funds has decreased with that taxable value.
We will continue to manage with this focus, but with the shortage of revenue, we can either short services or increase areas of revenue. We also continue to seek any grant or other funding sources that we can. You see this effort in the amount of grant funding we receive here in San Juan County. Several of our grants are matched dollar for dollar, such as those you see in our Federal and State programs. The less we have available to participate in these matching grants, the less we receive.
Inflation affects the base tax revenue. For example, in 2009, $1,000 in tax revenue generated would only generate $807.86 in 2019 due to inflation. A tax base that cannot keep up with inflation alone with continue to decrease in revenue throughout time which also means fewer services provided for the same base tax revenue generated year after year.
What will the increases be used for?
You’re thinking it, so let’s address it upfront, YES, the General Fund will be paying for the lawsuits and litigation in which we have reached an agreement or those in which we are now required to pay. In the past, we have used portions of the general fund balance to cover these costs and continue to improve government operations at the same time. However, this has reduced the amount of fund balance available to cover all expenditures. Continuing in this direction would require the County to reduce services, possibly reducing staff, and would take years to recover. Even without the lawsuits, we are still not receiving enough revenue to provide the services efficiently. However, that is not all of it. There are more needs that the General Fund covers.
Over that last several years we have been short in our budget for EMS and Ambulance services. This is supposed to be a proprietary fund, an enterprise fund, which is a business-type of activity and supposed to be self-sustainable. However, the General Fund has been used in the past to supplement and support this fund. This means that we are non-compliant because our EMS and Ambulance services have been exceeding their allocated budget and using General Funds to pay for the shortfall. Our situation is similar to other rural Counties and we are working with the State Legislator to help but until then… It has been difficult to collect payments for these services from citizens and foreigners who utilize this service but it is a service we cannot do without. We need to be in compliance with the State with this fund as noted in the findings in last year’s financial audit.
We need to stop our losses in the Sheriff’s department. We continue to lose Sheriff Officers due to our pay scale in the County. Who hires them away from us at higher pay? Several cities within and surrounding San Juan County have been able to attract our Sheriff Officers to their ranks. In the future, we are also seeing opportunities to improve the capital infrastructure and add on to the building using outside funding or expanding to create more revenue for the County.
Capital Infrastructure and Maintenance. As buildings age, it takes more and more to maintain those buildings. We do have aging buildings that are publically owned buildings. In those buildings, we are required to meet the State and International Building Code. As a government agency, we do not get the luxury of waiting until a major remodel to become code compliant. Governments always should be current in meeting code, especially when we are the enforcer of said code. There are several areas where we are not meeting current code. We do not have the required reports to protect maintenance staff, nor are we compliant in protecting the health of our employees and the public. I am not going to tell on ourselves, but do know, there are several areas where we are currently deficient and negligent; which could equal more lawsuits if we are not in the process to correct.
Stabilizing our fund balance is also critical, continuing to use our fund balances or exceeding those balances is similar to you declaring bankruptcy. As a Government, we cannot have our General Fund Balance run at a deficit.
Staff wearing multiple hats. In several instances here in San Juan County, once a position is vacated, we would take the salary of that vacated position and assign a portion of the salary and full responsibilities to another existing employee. They like it for the added responsibility and most importantly the increase in salary. However, this created positions where several individuals wear multiple hats and in some instances employees wear more than two or three hats. This means you have one employee performing multiple duties, which is fine in small organizations when the tasks and duties are minimal and one can spend the majority of the time on the most important duties and less focus on those duties that do not require a lot of time. However, we also see positions that are needed to be full-time, full-service performing responsibilities, being performed by one individual who cannot dedicate the appropriate and needed amount of time that it takes to be efficient or overly productive due to the fact that our budgets are constrained. This is like going to your favorite restaurant, having the cook as the waiter and the dishwasher, all in preparing the same meal. How many times would they wash their hands and how much longer would it take to get your food?
Aging equipment with our television and radio services continues to be a concern. As we explore and look at our current systems for both Digital Television and Radio, several of these systems need to be upgraded as well as improved to offer services to areas still not receiving basic television services here in the County.
With the Library Fund, the additional taxes will cover the future costs of services, supplies, books, DVDs, audiobooks, and e-materials which continue to rise. The current tax revenue for the Library System no longer covers all of these costs; in fact, in 2018 San Juan County residents spent $34.78 per person in 2018 for their Public library system—about the cost of 1 book and 1 DVD. The cost of supplies and services, as well as of books, audiobooks and DVDs has increased over the last decade but the tax revenue has not. The Library Fund has diminished over the years so that any major repairs or construction to a library building may cause a cutback in services at all libraries. A patron survey done in 2018 showed that residents of San Juan County appreciate their libraries, and would like to see more services offered. Currently, with income from taxes being stagnant for so long, adding services is not possible.
What happens if there is no increase:
Without an increase in tax income for the Library System, it is unlikely that the current services at all seven county libraries can continue much longer. If one of the library buildings requires major repairs, it is possible that services will have to be cut. Improvements and growth of the Library System would not be possible.
For the Public Health Fund, similar to the General Fund, and Library Fund, we are slowly decreasing our Fund Balance.
This means we are spending more than we can sustain long-term. Keep in mind; we can increase this fund by spending less. Spending less means we receive fewer matching grant funds from our Federal and State partners. In some cases, this means, for the $1 that we do not spend, we miss out on $1 provided to us…Well, actually, it is even more in certain circumstances. That’s no big deal, right? Well, let me show you what that means in potential lost revenue based on the proportion of our revenue pie:
So in reviewing that revenue pie, for every 6% you provide to Public Health, we have the potential to receive 94% from our partners.
What services do we provide? Our services include: Environmental Health (Environmental Quality, Inspections and Permits, Food Handler Permits, Food Services Permits, if you like clean water, clean places to eat, and clean air, this is what Environmental Quality provides), Health Nursing Services, WIC, Health Promotion (includes Tobacco Prevention, Physical Activity, Nutrition, Injury Prevention, Suicide Prevention Resources and Poison Control), and Vital Records (includes certified copies of Utah records for births, deaths, marriages, and divorces).
Overall, we are charged with promoting the health of all San Juan County residents by preventing illness and injury, establishing and promoting healthy environments, advocating policy based on scientific knowledge of issues relating to public health, promoting services which address personal health and well-being, informing and educating the community regarding issues of public health, and providing a committed, educated and effective public health professional workforce. If there is a measle or other disease outbreak, we are the department you would call, with our services, more than likely, we are either preventing the outbreak or educating before it happens.
Part of the importance of this increase is also going towards our Behavior Health programs throughout the County. The County currently provides $110,695 that goes towards San Juan Counseling services. Those funds, similar to above, are leveraged to obtain more Federal and State funding. See the following chart for how we are able to leverage the County funds for more.
Of our entire Counseling budget, only 4% comes from County taxpayers. With those funds, we are able to leverage those funds to obtain 96% of our overall budget. With an increase, we are able to leverage more and obtain more in an area of service to the County which continues to increase in costs, we will be able to provide more services to those who need such services in an area where the need only continues to increase itself.