La Plata County’s finances are on an unsustainable path, County Manager Joe Kerby and Finance Director Diane Sorensen told a small group of community members Wednesday evening at the La Plata County Courthouse.

The preliminary 2015 budget anticipates $71.06 million in total expenditures and only $60.87 million in revenue with the shortfall covered by dipping into reserve funds.

The county’s three main budget categories are general government, road and bridge, and human services. Each gets property-tax revenue, with the overall tax levy at 8.5 mills. The focus was on the first two categories.

General government revenue has fallen 30 percent since 2009, Sorensen said, and road-and-bridge revenue has fallen 45 percent. “Road-and-bridge spending has only decreased 9 percent,” she said.

Most road-and-bridge spending goes for road maintenance, so it’s hard to decrease spending without cutting maintenance, Sorensen said.

Road-and-bridge operations have been drawing down the budget fund balance, with revenues at only 80 percent of spending, she said. Along with property-tax revenue, road and bridge gets revenue from sales taxes and state gasoline taxes.

The road and bridge fund balance was $7.37 million at the start of 2013. It was down to $4.67 million at the end of 2013 – below budgeted spending commitments.

Total county revenue decreased by $850,000 last year, Sorensen said. Property taxes accounted for 39.5 percent of total revenue, while sales taxes accounted for 26.5 percent. Declining revenue from property taxes largely comes from decreased natural-gas production in the county.

For 2014, property-tax revenue will be down to about 25 percent of total revenue, with sales tax at 24 percent. The highest revenue source this year (29 percent) is intergovernmental such as state and federal transfers. Sorensen called that scary, citing limits placed on federal spending.

Unlike road and bridge, the fund balance for the general fund increased during 2013 from $53.97 million up to $57.7 million. But Sorensen noted the county is facing undetermined costs from the State Line Fire in 2012, and for remediation of ground pollution dating to the 1980s at the county jail.

The 2014 budget has about $71 million of spending and $60.8 million in revenues.

For 2014, fund balances are expected to go down in all three of the main budget categories, Sorensen said. Property-tax revenue is projected to fall to collections levels last seen in 2005, after hitting its high point of $29.7 million in 2010. This year it is around $15 million.

Sorensen and Kerby showed a graph of sales-tax and property-tax revenues since 2002. In 2002 they totaled just under $25 million. This year they total $30 million, down from more than $40 million in 2010.

Kerby said he keeps a copy of the chart on his office door as “a constant reminder of challenges we face.”

This whole discussion was part of the start of the county’s budget process for 2015.

“Not everything is doom and gloom,” Kerby said, “We’re beginning to see some real positive signs in terms of the economy.”

The county assessor is predicting property-tax revenue will increase by about $1.4 million next year, but at that rate, it will take a long time to recover the $15 million decrease that happened over four years, Kerby said.

The big drop was attributed in large part to falling assessed valuations for natural-gas production and prices, and next year’s projected increase also is tied to fortunes of natural gas.

“We feel we are at the bottom of that valley” for assessed valuations, he said. Sales-tax revenue has been growing since 2012, but not enough to make up for the drop in property taxes.

“This year, we had to allocate an additional $800,000 of sales tax from the general fund to road and bridge to keep it on life support,” Kerby said. “We anticipate having to do that again in 2015.”

The joint Durango and county sales-tax fund balance also is on track to be down to zero by around 2018, he advised. The joint sales tax funds the Durango Public Library and the La Plata County Senior Center.

Financial sustainability is one of the priorities during the 2015 budget process.

“Over the last six months, we’ve developed a capital-improvements plan for facilities and road and bridge” for the next 10 years, Kerby said. He wants to hand that off to the county’s long range finance committee to make recommendations to the county commissioners.