County officials warn of $3.8 million sales-tax shortfall, find $450,000 RDA revenue error

County executive Dirk and County Auditor Matt Ponk told the Cache County Council at a budget workshop that staff has identified two errors and other risks in the 2025 and 2026 revenue projections that together could widen this year's shortfall by several million dollars.

Dirk said staff believes a $422,000 RDA (redevelopment agency) line in the 2026 requested budget was an error and will be removed. He also said a $450,000 RDA revenue item shown in the 2025 requested budget appears to be incorrect and should not be counted as revenue. "RDA agreements don't bring in revenue to the county. RDA agreements cost the county revenue...we'll be removing that $422,000 from the 2026 requested," Dirk said.

Auditor Matt Ponk and staff reviewed initial sales-tax collections for the new local sales levies that began in April and reported the two-month average for April and May was about $641,000 per month. Using that small sample as an indicator, Dirk said, multiplying by nine months yields an estimated $5,769,000 for the partial year; the county had budgeted about $9.6 million for those tax lines. "Based on that small sample size...youre looking possibly at a shortfall of $3,800,000 in 2025, plus that $450,000 of RDA money that's not coming in," Dirk said.

Dirk said the county's requested 2026 revenues on the draft spreadsheet totaled $78,913,901, but that figure assumed use of $17.6 million in fund balance and included a $15 million new senior center expenditure that he said is unlikely to remain in the tentative budget. "I think that that $15 million expenditure is unlikely to survive strict scrutiny coming from the council," he said; staff said they will remove or reclassify large, unvetted capital requests before the tentative budget.

Officials discussed timing and process: county staff described the three-stage internal budget development framework commonly referred to in the meeting as level 2 (department request), level 3 (executive/tentative budget) and level 4 (final budget adopted by the council). Dirk and the auditor urged the executive team and departments to work now to produce a level-3 tentative budget or a reliable worst-case expenditure estimate so the council can set a truth-in-taxation notice by the late-August deadline if necessary. The auditor said statute requires the auditor to give the executive a report after eight months of expenditures and revenues; staff said they plan to provide a more complete tentative package earlier than in recent years.

Participants also discussed distribution of the new sales tax among transportation and public safety. The county designated a 25 percent/75 percent split for the tax this year because only three quarters of the year were collected; if the split remains unchanged for a full year it would increase the public-safety allocation over last year's intended amount. Dirk said the council will need to decide whether to change the percentages with the state tax commission by September to keep annual distributions aligned with the councils intent.

Members emphasized the need to find budget reductions and plan for midyear "budget openings" observed over recent years. Dirk said he is looking at about $400,000 to $500,000 in possible budget cuts to discuss next week and recommended planning on $600,000 to $800,000 of additional midyear costs when projecting next year's numbers. Staff and council members discussed personnel-cost scenarios, the compensation committee's upcoming recommendation, and options such as hiring freezes and targeted cuts to slow budget growth.

No formal votes were taken; staff will remove the identified RDA revenue lines from the requested budget and return updated revenue projections and a proposed tentative package to the council at the next meeting.