With an eye on the weak national economic picture, Pitkin County is budgeting for a 3 percent drop in sales tax revenue in 2009 and a 20 percent drop in building and planning fees from its community development department.

“Our community is not immune from the current downturn in our national economy,” wrote County Manager Hilary Fletcher in an Oct. 14 budget letter to the county commissioners. “How severe and how long the downturn will last remains unanswered.”

The county expects to spend $22.9 million in its general fund, road and bridge fund and social service fund in 2009, down from $30.9 million in spending this year.

The last downturn in local sales taxes was in the wake of 9/11, when sales tax revenue to the county fell by 3.8 percent.

For 2009, the county is budgeting for a $210,000 drop in sales tax revenue, from $7.09 million to $6.88 million.

“That’s a pretty big hit for us,” Fletcher told the commissioners Tuesday in a work session on the budget.

Fletcher said staff does not anticipate having to drop the levels of service it provides to county residents as a result. Instead, it is cutting spending in areas such as road improvements.

The biggest single decline in sales tax revenue in the last 30 years was in the no-snow year of 1977, when sales tax revenue dropped 10 percent. Sales picked up dramatically the following ski season, though, and there have not been two years in a row of sales tax decline in Pitkin County in those 30 years.

Property tax revenues to the county are expected to increase 6.6 percent in 2009 and then soften by about 1 percent in 2010 and drop another 1 percent in 2011, as property tax revenues are typically slower to fall in response to an economic downturn.

The county expects to collect $5.8 million in property taxes next year, up from $5.7 million in 2008. (While the county collects tax revenue for many local taxing districts, such as the schools and the hospital, it merely processes the revenue and sends it back out to the various districts. The current budget figures also do not include revenue and spending for the county’s open space and trails program, which has its own dedicated property tax revenue stream.)

Another key area of revenue for Pitkin County — fees from building permits and land-use applications — are budgeted to drop 20 percent in 2009. Those fees dropped 15 percent after 9/11.

Building and planning fees are expected to bring in $1.5 million in 2009, down from $1.9 million in 2008.

The number of building permits in the county is down 30 percent year to date compared to the same time frame in 2007, according to Community Development Director Cindy Houben. However, fees from building activity are keeping pace with last year because the county is now applying more accurate valuations to projects and has raised some fees.

When it comes to weathering a financial storm, Fletcher said the county is in much better financial shape than it was in the wake of 9/11.

Today, the county has $3.4 million in an undesignated fund that it can use to cover budget shortfalls.

It has $6 million tucked away in a building and facilities fund and a $4 million contingency fund, which can be drawn down by $3.6 million if necessary. And it also has $9.1 million set aside in a housing fund, which the current board of commissioners considers “untouchable.”

“Despite the changing national economy, the County is in a sound position to address fiscal changes in a planned and thoughtful manner,” Fletcher said in her letter to the commissioners.

Fletcher and senior managers at the county have been working to minimize 2009 supplement budget requests from the county’s different departments.

On Tuesday, the commissioners did endorse about $76,000 in new ongoing spending to increase child welfare staff and to add a new detention officer at the jail. It also approved about $210,000 in one-time spending requests, including $6,370 to pay GrassRoots TV 12 for televising all of the county work sessions in 2009.

Another $752,000 in potential spending, however, was left out of the budget request, including an across the board cost-of-living adjustment for county employees. The new spending was identified as desirable, but not critical, by county department heads. 

The 2009 county budget also does not include any spending on county roads beyond $400,000 for surface maintenance. This year, the county had budgeted $1.3 million for road improvements. The cut means that planned road improvements at the Aspen Business Center across from the airport will likely be scaled way back.

Revenue projections for the 2009 budget do not include the potential $5.4 million in new property tax revenue that county voters could approve on Nov. 4 to create a dedicated funding source for road improvements.

It also does not include a potential $1 million a year in sales tax revenue that voters could approve for a new healthy rivers and streams fund.

The county reviews five-year projected budgets every year and Fletcher also presented to the board two alternative drastic budget scenarios with either a 7 percent or a 10 percent projected decrease in sales tax revenues.

 Those scenarios are in case the national economic picture gets worse over the long run. In the meantime, the county also plans to “aggressively monitor” revenue streams, especially sales tax over the coming months.

bgs@aspendailynews.com