News from Hughes: Critical Details of the 2014 Budget

— by Margie Doyle —

Council Member Rick Hughes

Orcas Council Member Rick Hughes described the progress made toward stability and accountability in discussing the 2014 budget with Orcas Issues’ editors:

Hughes points out that, with the County Charter’s modifications approved by voters in 2012, the county budget is now formulated by County Auditor Milene Henley, with assistance by County Manager Mike Thomas and County Health Department Director John Manning.

The 2014 County Budget, passed by the Council on Dec. 3, is reduced two percent from the 2012 and 2013 budgets. Hughes notes that the reductions in the number of employees in the Council and in Orcas Solid Waste employees partially accounts for the reduction, even with the addition of 1.5 FTE (Full-time employment) in staffing, and with increases in staff salaries and benefits.

In formulating the budget of $54,469,654 expenses/revenues, county government administrators were intent on maintaining but not exceeding the current levels of service. All department heads came in to the budget process with “solid, ‘hold-the-line’ budgets,” said Hughes.

And while the General Fund is “flat,” Hughes hopes that the Council will be able to allocate another $500,000 in reserve funds (as they did in 2013). The County Reserve funds were established in 2009. They are divided into an emergency, “rainy day” fund; capital reserves; and grant reserves to cover the gaps between funds being spent and grant dollars coming in.

The Lodging Tax fund is success story of the grant reserve fund; it illustrates the progress from “pre-spending” to full funding: this year it is 100 percent funded out of reserves — the 2014 budget states that this fund will be spent only out of the reserve, and ends reliance on future funding.

Hughes also noted that, for the first time in recent Council history, the 2014 budget contains provisos that restrict the County Assessor’s budget funding until performance of specific duties regarding:

1) current use farm and agricultural program
2) new construction

The first proviso is a holdback of $75,000 until the Council and Manager receive a written report on current use farm and agricultural program, including criteria, notification of possible non-compliance process, acknowledgment of receipt of materials; range of time between requesting information and making a determination of compliance, and an analysis of the period between Jan. 2007 and Dec. 2013 detailing 1) the number of parcels in the current program, 2) the number of parcels that have left the program, and 3) the number of parcels that have applied for or transferred to another current use program.

The second proviso calls for a quarterly verbal and written report from the assessor regarding the status of new construction valuation, including information regarding the number of parcels valued, the number of parcels known to have new construction, the increase in value of new construction and information on factors that may affect new construction valuation.

Through the provisos, the Council is exerting “the power of the purse,” says Hughes. He explains:

Who’s in and who’s out of the current use farm and agricultural program? The Assessor is responsible for interpretation of farm/forest and agricultural current use designations, which allow tax waivers to those properties.  About 50 percent of San Juan County land is not taxed, including the State Parks and National Monument lands.

But if farm/forest or agricultural lands are determined not to be used for active commercial purposes, their designation can be revoked, and the property owners can be assessed back taxes for seven years prior.

Many county residents with these designations have complained of not being able to receive a determination of their properties’ current usage from County Assessor Charles Zalmanek’s office.

Hughes says, “I want to see farming here, for example haying to fee local livestock. Also the agricultural tie to tourism is significant.”

New construction figures heavily in the county’s revenue streams. There is a backlog for assessing the value of new construction, Hughes says. A number of parcels, known to have new construction, have not received the assessment for their properties, nor have they heard back from the assessor’s office that their “prodigious application” has been received.

The point of the provisos, Hughes says, is that people deserve a response as to whether their appeal is being heard and their case is being considered.

The Council has not been provided with information from the Assessor, Charles Zalmanek, in a timely manner, Hughes says.

(To read the full ordinance regarding the 2014 budget, go to sanjuanco.com/council/ordinances.aspx and scroll down to the budget ordinance, 25-2013.)