County hiring freeze ‘working’

 “The policies that have been enacted are working.”

County Administrator Mike Ortega told the county supervisors in the bimonthly budget session that staff vacancies, operational cuts, fuel savings and the postponement of certain decision packages have paid off saving the county around $1.28 million in the 2008-09 fiscal year.

The supervisors agreed to a hiring freeze of all non-essential positions last year when the state economy tanked.

With the national economy nose-diving as well, county officials tried to make every effort to save money.

Departments were asked to take another 3 percent out of operational expenses that were already reduced by 5 percent.

Many departments are working with reduced staff members and are managing to maintain county services without much complaint. Employees also are reducing work hours.

And the employees’ extra effort has not gone unnoticed. Supervisors Pat Call, Ann English and Richard Searle want them to know they are appreciated. So, the supervisors are trying to provide a financial “thank you” with another one-time cash disbursement at the end of the year, dependent upon stabilization of the economy.

“It’s important that this board send a message that we recognize the extra burden that’s on the employees. We should reward them for the extra work,” said English.

In the 2009-10 fiscal year, health care costs of $5,616 annually per employee may be picked up by the county due to the sacrifices employees are making, said Ortega. That $637,000 could come from a special trust contingency fund that still holds $2.5 million. The problem with that is another increase is expected in the 2010-11 fiscal year. Right now, however, he is planning to cover health care costs with general fund money with the possibility of dipping a bit into the contingency fund if necessary.

English wasn’t sure about using money from that fund and said, “Anyone knows in times like these, you need to have a savings account. It’s not the time to spend it ... “

Call wants to look at the health care program and discuss other options that could include a cap on the amount the county will contribute.

Ortega offered, “There are other concepts. We are looking at providing health care through the satellite clinics around the county. We could use those resources.”

Claims processing also could be done in-house since the county does have that expertise, Ortega added.

The economic plunge has affected state sales tax collection and created a $1.240 million shortfall for the county this year. Another $420,000 shortfall in the half-cent sales tax also is anticipated, he explained.

The only revenue that continues to climb in the county is that of property value assessments. Unlike the larger counties — Pima, Pinal and Maricopa — Cochise County land values are holding steady, emphasized Call. Homes are still selling at full value with only minor reductions of 3 to 5 percent.

“The 28 percent drop seen in Maricopa won’t happen here. It may drop 2 to 4 percent. We did see a lot of new growth and new building during the bubble, but we have not experienced significant reduction in valuation of properties,” said Call. “We’re in a fairly protected area with Fort Huachuca and the retirees. We certainly have not felt (property value decline) like everyone else has.”

Ortega added, “The difficulty we will see is people reading in the Tucson and Phoenix papers that properties have been devalued. Forty percent of the county’s assessed value comes from the Sierra Vista area and sales continue to occur. That is also true for Bisbee, Benson and some parts of Douglas.”

Property tax represents the largest contributor to the county coffers. Property valuations will provide an additional $1.4 million in revenue in the 2009-10 fiscal year.

Unfortunately, the same expectation may not be true when it comes to people spending money. State sales tax and the half-cent sales tax are predicted to continue to decline which could add up to a $2.3 million loss in 2009-10.

So, to deal with that revenue decline, Ortega has asked department heads to cut 10 percent in the coming fiscal year in salary costs. This could be achieved with reduced hours for employees or eliminating temporary help.

Department heads also will need to trim another 13 percent from expenses in 2009-10 and decision packages could be deferred until the 2010-11 fiscal year or even farther into the future depending on the state of the economy.

Another option to save money could come through offers of early retirement, said Ortega. There are around 50 employees who could take advantage of the county’s proposal to maintain health care until the age is reached for Medicare eligibility.

A review of county mandated, regulated and discretionary services also will be conducted and the results will be reported to the supervisors in a future work session.