7/2/09
Rio Arriba County’s oil and gas revenues continue to free-fall, County Comptroller Mary Louise Martinez said.
The County faces a projected $6.5 million shortfall for next fiscal year, Martinez said.
“We received $12 million in oil and gas revenues for fiscal year 2008-2009,” Martinez said. “For the final fiscal year 2009-2010 budget, we’re projecting only $5.5 million. That’s a $6.5 million drop in revenues.”
The County’s oil and gas revenues dropped $50,000 in June alone, from $511,000 in May to $461,000 for June, Martinez said.
The $5.5 million gas and oil revenue projection for fiscal year 2009-2010 is based on the assumption that monthly revenues for the coming year will match June’s $461,000, Martinez said.
The projected shortfall means new equipment purchases will have to be put off in the coming year, $1 million will be cut from the County’s capital projects construction budget and another $1 million will be cut from the operating budget, Martinez said.
County employees will receive only $400 cost-of-living step raises next year, Martinez said.
“Over the past five years, we’ve given each County employee a $1,940 per year raise,” Martinez said. “They will not be hurting because the County’s always been very generous with salary increases over the years.”
Despite plummeting revenues, the County will not have to cut services in the coming year, Martinez said. That is because the County can make up for the projected $6.5 million shortfall with money it’s not spent over recent years, she said.
“We have accumulated $16.2 million in healthy fund balances over several years and can use that to make up the difference in next fiscal year’s budget,” Martinez said. “It’s (still) kind of a crisis because we don’t know where (revenue declines) will end. We’re preparing a budget blind and have to be very conservative.”
In fiscal year 2008-09, oil and gas revenues represented about 60 percent of the County’s total budget, Martinez said.
The County’s operating budget for fiscal year 2008-2009 was $18 million, Martinez said. Martinez is projecting a $17 million operating budget for next fiscal year, she said.
The County’s senior programs, Roads Department and subsidies to the North Central Solid Waste Authority for garbage service are funded entirely with oil and gas revenues, Martinez said.
As gas and oil revenues soared ahead of last autumn’s free fall, Martinez worked to keep the additional money out of the County’s general funds and operating budgets, out of fear the County would become reliant on what she believed all along would prove to be a temporary windfall, she said.
“We avoided putting windfall oil and gas revenues into recurring expenditures,” Martinez said. “We segregated it, restricted it to one-time expenditures — capital projects.”
As gas and oil revenues went up over recent years, the County’s capital projects fund ballooned from $4.4 million in fiscal year 2006-07 to $14.7 million in fiscal year 2008-2009, County documents show. The County’s $14.7 million fiscal year 2008-2009 construction budget neared the County’s $18 million operating budget, Martinez said.
If revenues continue to fall, additional budget cuts would come at the expense of the County’s construction funds, Martinez said.
The County will not tackle new construction projects in the coming year, County Manager Lorenzo Valdez said.
The County’s gas and oil revenues peaked at $4.9 million during the first quarter (representing July, August and September) of fiscal year 2008-2009 but had declined to just $2.1 million by the third quarter (January, February and March), well below third-quarter revenues for the previous two fiscal years, County documents show.
“We had a historic peak followed by an extreme drop, all in the same fiscal year,” Martinez said.
The County’s final fiscal year 2009-10 budget is in preparation and is due to the state Tax and Revenue Department July 31, Martinez said.