San Juan County directs $4 million in proposed cuts, schedules extra budget sessions as staff weigh revenue options

San Juan County Council on May 26 directed staff to develop a 2027 budget scenario that reduces current‑expense spending by $4,000,000 and scheduled additional June meetings for department‑specific deliberations.

The council heard from County Auditor Natasha Mormenhofen and budget staff, who said the county faces a structural shortfall driven by higher liability and property‑insurance premiums, an anticipated contract negotiation for deputy sheriff pay and continued cash consumption from prior years. Dr. Molly Foote, the county budget analyst, told the council that the current‑expense fund is projected to consume roughly $3.3 million and that an additional $2.1 million in insurance costs is likely, putting a multi‑million‑dollar gap between projected revenues and required reserves.

Why it matters: The council must meet a statutory operating reserve target equal to 10% of budgeted expenditures. Staff warned that relying on carryover cash or volatile interest earnings risks future shortfalls and that personnel reductions or other structural changes will likely be necessary to balance future years.

Staff outlined two revenue options that could offset shortfalls if the council chooses to pursue them: a public‑safety sales tax (estimated to raise about $800,000) and a new property tax option for public‑health clinics (projected to generate about $1.1 million). Both options carry statutory filing deadlines to be effective on Jan. 1, and staff urged the council to signal whether to include either in budget scenarios.

Council action: After extended discussion, staff summarized the council’s direction: build a one‑year 2027 budget that assumes $4,000,000 in reductions; add three June meetings (June 15, 16 and 24) for department‑level review and direction; do not start from last year’s cut list by default; and defer formal councilmanic tax action while continuing to evaluate revenue options. The council also declined to enact an immediate, county‑wide hiring freeze, favoring an ad hoc hold on some vacancies by departments.

Voices in the debate: Council members voiced different tolerances for the depth of cuts and for possible revenue measures. One council member said the electorate’s recent rejection of a levy lid lift weighed against raising property tax and favored a sales tax that spreads cost to visitors; another urged a larger reduction to avoid repeated cuts in future years.

Next steps: Staff will prepare detailed departmental worksheets reflecting the $4 million target, analyze the impacts of possible revenue options, and return to the council for targeted June deliberations and follow‑up presentations. The auditor’s office will also provide guidance on one‑ versus two‑year budgeting and the tradeoffs of using carryover cash.