County unveils capital improvement plan

The Daily Inter Lake

Flathead County soon will implement a new capital-improvement plan that could bring additional rigor to its historically haphazard spending practices.

The draft plan was presented Wednesday to the county commissioners. It was created during the past four months by Bozeman consultant Miral Gamradt, in cooperation with county staff and department leaders.

The plan identifies more than $20 million in capital expenditures during the next five years. It clarifies that the funding exists to meet most of these needs, with a few critical exceptions.

After projecting revenues and operating expenditures, Gamradt and the county staff came up with a long list of capital needs for each department, including vehicle replacements, new or replacement equipment, and major projects.

The next step was to match the financial data with the capital needs, scheduling specific expenditures so that the county doesn't spend all its cash reserves.

"The fact that you're implementing a 5-year program for each department, without dropping your fund balances, is unprecedented," Gamradt told the commissioners. "If you're really able to accomplish this, you should be complimented."

County Administrator Mike Pence said the capital plan assumes a 5 percent annual growth in county revenues and 4 percent increase in costs. If the results vary, then the timing of future capital expenditures would be adjusted accordingly, to ensure that the county maintains adequate reserves.

"Our reserves are pretty healthy right now - typically 20 [percent] to 30 percent for each department," Pence said. "We don't want to lose that."

Altogether, the plan identifies about $10 million in capital needs for the county landfill during the next five years, plus another $10 million or so for other departments.

Money should be available for most of these projects, assuming the revenue growth projections are achieved. However, the capital plan indicates that the landfill will have to raise its fees in the near future to pay for all of its improvements; the Flathead County Planning Office will also need a cash infusion to pay for some of the management plans listed in the new growth policy, such as a water quality management plan.

The two most significant capital needs that weren't addressed by the plan were buildings and roads.

The county is facing about $40 million in building needs, including a new main library, an expanded jail facility, a gymnasium for the Parks and Recreation Department, and a new administration building to house the departments that currently are in the old courthouse and courthouse annex.

These projects would be paid for through a combination of debt, savings, grants and voter-approved bonds. The commissioners still are trying to determine which project should get priority.

The Road and Bridge Department is facing an even greater deficit: Unless the county comes up with new revenue sources, the capital plan estimates that $40 million in road maintenance, paving and construction needs will go unfunded during the next five years - and when that's extended out during the next 20 years, the deficit grows to about $270 million.

"We aren't talking about any paving or new construction with this capital improvement plan," Pence said. "That doesn't mean we aren't going to address those issues. It just means we'll have to attack them through other means. Really, the only way we can address it is with new funding; it will take a combination of RSIDs [rural special improvement districts], road maintenance districts, impact fees and other options."

Road Superintendent Charlie Johnson said this capital plan also represents "a major change in philosophy."

"What it doesn't include is equally as important as what it does include," he told the commissioners. "You won't see a replacement for our [asphalt] plant; you won't see a replacement for our gravel crusher or the bulldozer. We're going to be switching from a maintenance/construction Road Department to more of a maintenance department. Eventually, we'll be out of the paving business entirely, including overlays. Some of this stuff is going to have to be contracted out."

Johnson and the commissioners have discussed this possibility in previous meetings. Incoming Commissioner Dale Lauman said Wednesday that he thought it was a good move.

Ultimately, this new plan doesn't allocate more money to capital projects. Instead, it helps the commissioners and department leaders focus on their needs and address them in a methodical manner.

Historically, the county commissioners approved capital requests on a year-by-year basis, during an annual budget scrum in which the department leaders competed against one another for limited funds. In good years, more requests were approved; in lean years, some items were pushed into the future - but there was never a clear understanding of how big a deficit the county was facing.

This new plan forces the commissioners and department heads to itemize all their capital needs. It also ties the expenditures to annual revenues, so that each department lives within its means.

"I don't know of another large county in Montana with this kind of disciplined approach to spending," said Ken Weaver, leader of Montana State University's Local Government Center, who attended Wednesday's meeting.

Copies of the draft plan can be found under the commissioners' link on the county's Web site, at http://co.flathead.mt.us/index.html

Reporter Bill Spence may be reached at 758-4459 or by e-mail at bspence@dailyinterlake.com