BISBEE — As the Cochise County Board of Supervisors met with staff for an update on the budget situation Tuesday afternoon at a work session, County Administrator Mike Ortega shared good and bad news.

The good news is that thanks to the implementation of a hiring freeze for non-essential positions, lower fuel costs, an increase in federal lands PILT (payment in lieu of taxes) and money coming in from real property tax, the bottom line is holding steady at a $1.1 million shortfall in the general fund and a $454,000 shortfall in Highway User Revenue Funds.

“Overall, we don’t see any real issues right now, but next year may be a different story,” Ortega said.

Early on in the budget talks, the supervisors took steps to prevent a crisis as the true nature of the state’s deficit unfolded. A hiring freeze was implemented for all non-essential positions. That has paid off with a $1.5 million savings by year’s end. There are still six months to go until the end of the fiscal year.

Though the supervisors have approved a dip or two into the contingency fund that now stands at $15.475 million, the required $15 million to meet payroll in a prolonged emergency situation remains.

The supervisors — Pat Call, Ann English and Richard Searle — were concerned state legislators would consider such funds as fair game and attempt to force counties and municipalities to use them in place of state funds.

“That would be ludicrous for them to think we’d drain those funds,” Ortega added.

Knowing the budget troubles, department heads agreed to defer several capital projects to future years, which saved $250,000, Ortega added.

The bad news the special election the state is considering to offer voters a voice on taking money out of reserved state funds, will cost the county $70,000 to $80,000.

Then there’s the judicial branch of government. The state swept $17 million from it and now the courts are passing the loss down the line to the justice and superior courts.

In a document provided by Ortega and reviewed by the supervisors, the Administrative Office of the Court of Arizona has ordered an examination of expenditures and revenue sources to identify where cuts can be made “without jeopardizing public health, safety and welfare.” Adult and juvenile probation cases are to be reviewed for lower levels of supervision or early termination from the probation system.

Each probation department has to comply with the standard ratio of probation officers to probationers and meet statutory compliance through probation fees and local funding sources.

And it’s not just probationers that will get an early “release.”

 The Administrative Office of the Court wants to develop a plan to reduce sentences to jail and revocations to prison by 5 percent in the 2010 fiscal year, “if reasonable.”

Even county law enforcement may see cuts. Ortega may consider extending the hiring freeze to the Sheriff’s Office and county jail.

Bennie Young, the county’s highway and floodplain director, gave the supervisors a rundown of changes in his department’s plans for county roads.

To avert a negative fund balance at the end of the year, he proposes to keep staff vacancies unfilled since reduced funding means less work for crews. Some of the county’s paved roads that do not carry much traffic may not see any new asphalt for quite a while as the cost for road materials remains high. County dirt roads will see more maintenance and shaping.

Though a stimulus package of $600 million from the federal government has been proposed by the state, whether that money trickles down to local governments remains undetermined, added Patricia Morris, a county engineer with the department.

Ortega and County Financial Director Lois Klein will present a six-month review in a few weeks to the supervisors.