(shown)  County Comptroller Bruce Brooks holds up a graph showing the county's expenses are increasing -- but revenue isn't.

WINNEMUCCA — The economic forecast for Humboldt County’s  2008-2009 fiscal year was clear with a chance of clouds.  Just one year later the clouds have rolled in and the forecast is gloomy.

After years of maintaining revenue sources above the cost of running the county, the two numbers are about to meet.  In other words, Humboldt County will soon be in a position where there’s just enough money to pay the bills.

This was the message for the Humboldt County Commissioners during the 2010 annual retreat where they met to discuss issues in advance of the March budget process. Addressing the commissioners were Humboldt County Administrator Bill Deist and County Comptroller Bruce Brooks.   

Deist pointed out that in the first four months of the fiscal year (July – October) taxable sales were down 1 percent, which is roughly $350,000 less in revenue, over the same four months the year before. 

At the same time revenue is decreasing – costs are increasing.  Although Humboldt County has yet to lay-off county employees or resort to furloughs, they exist as possibilities in the future as commissioners face the task of creating a budget in a bad economy.

The commissioners have two options:  1) raise revenue and/or 2) decrease spending.

RAISING REVENUE:  The Commissioners could opt to raise revenue either through a tax increase or a fee increase.  The commissioners agreed amongst themselves they would prefer not to raise taxes. 

DECREASE SPENDING:  In terms of a decrease in spending, there are few options open to the commission.  The power bill on public buildings must be paid.  Commissioner Garley Amos suggested they consider maintenance status and make no large purchases, such as equipment or capital improvements, for the time being.

As is so frequently the case, the largest expenditure for the county is staff.  According to Brooks, personnel cost represent approximately 70.5 percent of the general-fund budget.

There are certain functions within the general fund, such as the judicial function that includes justice court, child support, DA’s Office, and public defender, which range in the 90 percent because almost all costs associated with those functions are personnel.  That’s very different than the road department, which has low personnel cost but high equipment costs.

There are ways for the county to decrease personnel costs that do not include lay-offs or furloughs.  For example, the commissioners could be a little stricter on the attrition policy.  The county’s attrition policy requires each department in public safety wait 90 days and all other departments wait 120 days before replacing employees whose positions become vacant.  However, the policy includes a waiver for the immediate replacement of employees.  It was suggested the waiver either be removed or the commissioners uphold the policy.

Then there issue of salaries and benefits for existing employees.

Last year the commissioners negotiated with county employees (this did not include law enforcement) for a 2.5 percent cost-of-living increase -- but no merit pay increases.  This year county employees may receive neither.  Brooks commented, “The days of merit-pay increases on top of a cost of living increase are gone.  Long gone.”

Brooks said in addition to salary and benefits, the commissioners may want to look at reducing the work week from five days to four ten-hour days in order to save money and eventually jobs.  This policy has been successful in other counties attempting to reduce costs.

ON THE HORIZON:  In addition to the poor economy, which does not appear to rebounding, there’s a suit filed in Washoe County that may severely impact the county.  NVEnergy filed suit in December claiming it was improperly charged use-taxes for coal purchased outside of Nevada.

If NVEnergy wins that suit, and there’s some thought they might, it would cost the county entities millions to pay back the money the utility claims it’s owed. 

Another unknown for the county is what actions, if any, may be taken by the State of Nevada to shore-up the budget.  For example, during the last Legislative session state representatives changed the laws governing where revenue from geothermal plants ends up.  Humboldt County’s geothermal plant was not online until recently, so that change was not as severe an impact locally as it was for other places.

However, if the state government makes the same change for the NPM (net proceeds on minerals) tax, local government will feel the pinch.  Last year Humboldt County received to the general fund approximately $600,000 from the NPM.

That’s not a significant amount in a $14 million dollar budget.  However, it comes at a time when the county is losing revenue from multiple sources:  the closing of Bosch Motors, the relocation of a Newmont warehouse to Elko county, and businesses all over the county are tightening belts in case the economy doesn’t recover any time soon.  For example, mining companies aren’t making big purchases right now (haul packs, etc) because they’ve gone to wait-and-see mode.

Deist said figures from the impact of consumer spending – or the reduction of it – were not immediately available.  He said there did not appear to be an easy way to trend taxable sales in the future because one month it’s up significantly then down significantly the next month.

The budget hearings begin in March.