San Juan County Commission presented with interim budget of more than $174 million

San Juan County Commissioners were presented with an interim budget of nearly $175 million for Fiscal Year 2025 during a workshop on Tuesday in Aztec, an increase of less than 1% from the FY 2024 budget.

The proposed 0.84% increase is the smallest increase in the county’s interim budget in four years. The FY 2020 budget was only 0.82% more than the FY 2019 budget. The FY 2024 budget approved the commission was $173.3 million.

The interim budget increased more than 17% in FY 2023 and more than 13% in FY 2024.

Commissioners took no action on the proposed budget during the May 7 meeting. They will meet Tuesday, May 21 in Aztec to vote on whether to accept the document. The county has until the end of May to send an interim budget to the New Mexico Department of Finance. The county must approve a final budget by the end of July.

County Manager Mike Stark prefaced a presentation by Kim Martin, the county’s chief financial officer, by describing the interim budget as “our most educated best guess of what the next 12 months are going to look like.”

He compared the budget to a “living, breathing document” and noted it will change constantly throughout the year even after a final version is approved this summer to account for changes in revenues, expenditures and new grants.

The commission typically is asked to approve a budget adjustment each month, Stark said.

“This is just the start of a very long and continued process, but, really, it never ends,” he said. “We’re always in budget mode at San Juan County.”

Early in her presentation, Martin went over the budget highlights, which included a 4% increase in gross receipts tax revenue over FY 2024. In the property tax category, county officials are showing an increased valuation in residential property of 5% to $12.9 million. But nonresidential property is showing a valuation decreased of 4% to $14 million.

Martin said a San Juan County Assessor’s Office official told her that decrease is the result of the decommissioning of the San Juan Generating Station.

Stark explained that officials from the Assessor’s Office have told him that even though the decommissioning of the plant has begun, it still has remaining value and will until it is declared functionally obsolete. He said demolition of the plant is expected to be finished in the middle of 2025, and the facility will come off the county’s tax rolls at that time.

A total of $137.7 million is being budgeted for revenue for FY 2025, only slightly more than the $136.8 million that was budgeted for FY 2024, a hike that Martin categorized as relatively flat. That ends a three-year period of significant increases in that category. The county budgeted $98.3 million in revenue in FY 2021, $111.2 million in FY 2022 and $123.3 million in FY 2023.

The lion’s share of county revenue, 37.7%, comes from gross receipts taxes, while another 27.9% comes from grants, Martin said. Property taxes are third on the list at 21.7%. The remainder is split between other taxes (6%), fees for services (5.8%) and other sources (0.9%).

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Oil and gas production in San Juan County is budgeted at a 15% increase over the FY 2024 budget, but Martin noted the proposed number would represent a 53% decrease over the FY 2023 actual figure.

“That kind of tells you how volatile it actually is,” she said.

On the expenditures side, county officials are proposing a 3% merit pay increase for most county employees and a 1% cost-of-living adjustment, part of a multiple-year effort to bring county salaries in line with the market. The budget also includes a 10% hike in employee and employer health care costs.

Stark told commissioners that the county is in very good shape in regard to its capital expenditures, with very little deferred maintenance being required on county facilities. That’s not a position shared by many other agencies across the state, he said.

“It just goes to show our capital planning has paid off,” he said.

The county manager asked commissioners to heed the recommendations included in a recently completed survey of the county’s employee compensation rates, a document that led to the recommendation for the 3% merit increases and the 1% COLA hike.

Stark noted that government employees know that they typically will make less money working in the public sector than they would in the private sector.

“But you do expect you’re going to be paid a market rate, have good health benefits … ” he said. “We want to make sure we don’t get way out of market. That happened to us historically.”

Between 2010 and 2020, when revenues fell sharply, the county was not able to pay many of its employees a competitive wage, and that impacted the quality and size of the workforce, Stark said.

“We got way behind, and it cost us dearly,” he said. “In fact, it cost us dearly with employees who were leaving, and we don’t want to be in that situation.”

With regular pay increases in recent years, the county has closed the gap, Stark said, but there are three areas in which it still trails the market rate — detention center employees, San Juan County Sheriff’s Office employees and licensed counselors and therapists. He noted that, not coincidentally, nearly three-fourths — 72% — of the county’s open positions are in one of those three areas.

The interim budget includes a $1.7 million expenditure to bring compensation for those positions closer to the market level, he said.

“It’s a big investment,” Stark said, but he said he believes it is a necessary one.

This article originally appeared on Farmington Daily Times: Proposed San Juan County budget sees little growth