How Tooele County's boom economy went bust
Tooele • Last summer, the outdoor aquatic center at Tooele County's Deseret Peak Complex teemed with activity. A year later, the pools, water toys and slides sit unused, the site shut down due to massive revenue shortfalls.
"It's sad. Our kids really look forward to going every year," Grantsville resident Travis Anderson said.
The pool's closing is emblematic of Tooele County's boom and bust economy that led to a shuffling of government funds to keep the budget afloat for a time. But the juggling act is over.
More tough decisions face government leaders who have already laid off county employees and now must look at hiking taxes for the first time in 27 years while continuing to slash services.
Rolling the dice • Like their counterparts in other counties, Tooele county commissioners scrambled during the Great Recession to survive tight economic times.
But they took a big gamble borrowing millions of dollars from a variety of internal accounts, including road maintenance, transient room tax and solid waste management to keep the county's hallmark recreation facility operating.
The $18 million Deseret Peak Complex, which was never meant to operate at a profit, boasts one of the largest swimming pools in Utah, tracks for motocross, BMX, ATV and horse racing, soccer fields, softball diamonds, playgrounds, indoor and outdoor arenas, pavilions and two museums.
In 2009, county leaders began using funds from restricted accounts to help pay operating costs at Deseret Peak, Tooele County Treasurer Jeremy Walker said, a practice that continued into 2012, ultimately racking up a $6.5 million loan.According to State Auditor John Dougall, such transfers are allowed, but should be short-term and reimbursed.
These interfund loans come with two basic caveats, Walker said. First, officials should formally acknowledge that they're borrowing restricted funds and second, they need to identify a payback schedule.
To his knowledge, those steps did not occur.
"That's a problem," said Walker. "It would have perhaps prevented this loan from getting as big as it has."
Commission Chairman J. Bruce Clegg said the commissioners became aware of the situation in late 2012 after Walker brought it to their attention. Clegg declined to comment about how such transfers were conducted, leaving that to Tooele County Auditor Michael Jensen.
Jensen, who was out of town at a conference, emailed this response:
"As far as I know, there is not a state statute that requires a payback schedule for an interfund loan, for this reason, I assume, one was not created. However, it might be a good idea for the commissioners to create a schedule to help with future budgets and to have an ongoing knowledge of the balance of the loan." Jensen did not elaborate on who initiated the loans.
Along with the fund-juggling, county officials also hoped to attract new dollars, approving the creation of a $25 million jail that opened in early 2012. The plan was to bring in more federal dollars by housing federal prisoners within the 264-bed facility. However, "right now, we're about half-full," Sheriff Frank Park said, which led to 22 layoffs in his department last September.
No payoff • As commissioners made those choices, they were aware of the January 2012 closure of the Deseret Chemical Depot and the pending evaporation of two decades of robust revenue from the destruction of stored chemical weapons. They prepared for that loss by shrinking emergency management staff through attrition and folding remaining workers into the health department, Clegg said.
What they did not foresee was the recession's impact on mitigation fees from EnergySolutions and other west desert waste facilities. In 2005, $13 million flowed into county coffers, but by 2012 those fees dwindled to $4.3 million.
Since 2012, the county's revenue shriveled by $5.4 million, or 24 percent of its general fund budget.
Economic woes worsened in 2013 with federal sequestration, which trimmed grants, and Payment In Lieu of Taxes (PILT) dollars that Tooele County receives because close to 80 percent of its sprawling 6,930 square miles is federally owned.
The county's once-flush reserve, or rainy day fund, has now been depleted and needs to be replenished to the minimum required by state law.
Last November, Walker projected that the county would run out of cash by April 2013 and sent a memo to commissioners, the county auditor and county attorney about the looming crisis. In January, when Milne joined the commission, Walker said he alerted him to the problem and a budget committee was formed. Cold reality began to set in.
"I was out there in February, when we first became aware of some of the issues they have," State Auditor Dougall said, noting that county officials were then grappling with how tomeet their April payroll.
Dougall's advice: "We told them they had to deal with this and can't kick the can down the road."
Consequences • Since 2012, the county hasshed 28 percent of its staff through layoffs and attrition, dropping from 418 to 300 employees.
In March, the county laid off 23 parks and recreation and building maintenance workers, leaving only the two department heads in place. Those personnel cuts forced Deseret Peak to cease certain services. Within weeks, officials also canceled the county fair, an August event that had been held annually for more than six decades.
Then in May, the county handed off its Relief Services to Valley Mental Health, including the food bank, transitional housing and domestic violence assistance programs laying off another 11 employees in the process.
Alex Gonzalez, director of Valley Mental Health for Tooele County, said that many of the county's experienced workers were hired backbut at lower wages because the agency received none of the $184,000 the county previously provided for Relief Services.
Karen Kuipers, 45, had coordinated Tooele County Relief Services since its inception seven years ago and chose not to apply for her old job. However, she said clients still contact her, and she refers them to Valley Mental Health.
"With this demographic, it's very relationship-based and takes a long time to develop that trust," Kuipers said. "My biggest fear is that those who don't have a voice are silenced back into the shadows."
Since 2012, the county's general fund revenues dropped from $22.8 million to $17.4 million, signalling the need for further cuts.
So the county will spend $32,000 to grind up 11 miles of the old Pony Express Trail, using the pieces to gravel the road. That deteriorating stretch would cost $92,000 to temporarily repair, county officials say.
In addition to service cuts, people in the community are also suffering due to job losses. Jon McCartney, pastor of the First Baptist Church in Tooele, has seen some of those hardships.
"We have been asking the county commissioners for the 20 years I've been here to stop using mitigation fees â¦ for daily budgeting," McCartney said, "but they wouldn't listen to us." He even went so far as to ask for a tax increase.
"Ninety dollars a year is not a lot in the big scheme of things," McCartney said. "Step by step they could have raised those, and we wouldn't be behind the eight ball like we are today."
Glimmers of hope • In May, the county introduced its multi-year financial recovery plan, which, along with the property tax increase, includes further reductions in services, increased fees and the last-resort liquidating of assets such as Deseret Peak.
The proposed 64 percent property tax increase would boost the bill on a $150,000 home by $73 a year and $133 for a $150,000 business. An 82 percent bump had originally been put forward, but property values rose, causing that figure to decrease.
The tax increase would yield about $2.5 million per year, which would go toward restoring the rainy day fund; repaying restricted funds for loans to Deseret Peak; and creating a fund for major repairs, remodels and replacement of existing facilities.
Tooele County currently has the lowest property tax among Utah counties and would be fourth-lowest if the increase is approved, according to commissioners.
Commissioners will host a truth-in-taxation hearing on Aug. 20 to hear public comment and vote on whether to raise taxes. In the meantime, some economic indicators have improved.
The county recently received almost $3.2 million in federal PILT money, a slight decrease from the $3.3 million received in 2012 and enough to cover costs through December when property tax revenues arrive.
Mitigation fees also rose slightly. Over the past three months, the county received $913,094 instead of the expected $675,000.
"We've tried to be conservative and have gotten good news on almost every front," Walker said. "We'd hate to go back into reduction-in-force mode, which we declared to be over. We feel terrible that so many jobs have been lost."
Tribune reporter Annie Knox contributed to this story.