NAVAJO COUNTY — Facing a $2.5 million budget deficit on the near horizon, the Navajo County Board of Supervisors passed a resolution Tuesday in support of the creation of a new sales tax to help pay for the operation of the county’s existing jail.
A proposed Navajo County jail district will come before the voters in this November’s general election. The proposed third-cent sales tax would be county-wide.
Navajo County officials say they have cut all of the fat from their budget since the Great Recession, and that any further cuts to the county’s general fund will begin to affect the services county residents expect and depend upon. And now the county is facing the loss of $2.5 million in tax revenue from the decline in coal plants.
Navajo County has already cut $2.5 million from the budget since 2008, most recently by eliminating the juvenile detention center and the child support services department. Other departments sustained cuts as well, including juvenile probation, administration and public fiduciary. Sixteen percent of the total county workforce has been eliminated over the last few years.
That’s the message Assistant County Manager Bryan Layton and Sheriiff K.C. Clark brought to the Navajo County Board of Supervisors on Tuesday.
The way the decline from coal plants will hit the county’s pocketbook is with a one-two punch.
The first hit will come from the Kayenta Mine. Located on the Navajo Nation in northern Navajo County, it is the sole source of coal for the Navajo Generating Station power plant, which is slated to close in 2019. When the power plant closes, so will the mine, and the county will lose $1.6 million in combined revenues from county sales tax and state shared sales tax.
The second hit will come from the planned closure of the Cholla Generating Station, located in Joseph City, which is scheduled to be shuttered in 2025, creating a loss of $925,000 in property tax revenue. Cholla shut down one unit in 2015.
“When these coal power plants go offline, we go out of balance by $2.5 million,” Layton said.
Layton said that the county has been considering what to do about this fiscal cliff so that that they don’t tumble off.
“This is the continuation of a discussion we’ve been having for a while,” he told the supervisors.
Layton then took the supervisors on a detailed tour of the county’s finances and sources of revenue.
All major sources of new income for the county are limited by state statute, Layton explained. Property tax rates were set by the voters in 1980, and can only go up by two percent per year — they were increased this year. The county expects that only another $290,000 in additional income would be netted by another two percent increase — a far cry from the $2.5 million needed.
Similarly, state law set the county sales tax rate at one-half cent, so it cannot be increased, and the county’s portion of state sales tax is also controlled by the state.
Plus, the county cannot eliminate state-mandated services.
An analysis of other county revenues, from Recorder’s fees to fees paid by cities and towns to house inmates showed that either the income from these sources was not reliable, would not be enough, or would be too burdensome on the public to fill the gap.
The county is making efforts to develop and attract new business and industry, but attracting industries large enough to fill the shoes of coal is a smokestack-tall order.
Which led Layton back to the creation of a jail district and its sales tax.
“It would fill the gap,” Layton said, noting that it will simply make up for the loss of funds, not generate any additional funds. The tax will plug the $2.5 million hole.
The biggest ticket item in the county’s budget is public safety — the Sheriff’s Office and the jail, at about $12 million annually — $5 million of which is jail operations.
Layton and Clark said that the Sheriff’s Office would have to cut $1.5 million from their budget if no new revenue sources are implemented. That would mean cutting about eight deputies and 10-18 detention officers from the staff.
The public would feel the cuts in response times for calls for service, and the effects of the cuts would eventually be felt in the court system and would trickle throughout law enforcement, county officials noted.
Law enforcement would not be the only county department hit by budget cuts if a jail district is not approved. A 20-25 percent cut in staff across the board was predicted by Layton.
“We all make tough decisions as leaders. This is one of the toughest I’ve had to make,” Clark said. “I ask that you dig down deep and think about it,” he told the supervisors. “We’ve come in on budget every year since I’ve been sheriff,” he added.
“None of us like taxes, I sure don’t … (but we’re) not gonna get rich by it,” he continued.
The benefits of creating the sales tax, said Clark and Layton, is that the cost will be shared by visitors to the area, not just residents. Also, the funding from the tax would eliminate the need to charge towns and cities to house inmates, allowing them to direct those funds to other needs.
“Let the voters decide, that’s how democracy works,” Clark said. “I believe the citizens want the services this county provides,” he added.
At the conclusion of their presentation, the supervisors spoke. They praised Layton and county staff for the detailed information presented.
“I do support this … one of these days, coal is not going to be there,” said District I Supervisor Lee Jack.
Eliminating jail fees was an important plus to District III Supervisors Jason Whiting, who said it was not a trivial expense. “That was a pretty big deal when I was on the town council in Snowflake,” he said.
Vice Chair, District V Supervisor Dawnafe Whitesinger asked how soon the county would feel the budget pinch if the jail district is not approved, and what the long-term impacts could be.
Layton said they could be felt next year.
“We don’t know what the future will look like,” Layton replied, noting that creating new industries to replace coal will take time.
In the meantime, Whitesinger said, “… we are obligated as supervisors to provide these services.”
On a motion by District II Supervisors Jesse Thompson, seconded by Whitesinger, the resolution in support of a jail district sales tax passed unanimously.
The county plans to schedule a public hearing on the matter in 30 days.