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Mid-year budget adjustments for Yellowstone County will see little change except for some additional squeezing brought about by larger than expected tax protests from property owners in Yellowstone County this fiscal year.

Director of Finance Scott Turner said "The impact of the protested taxes and how long it will take to resolve these issues continues to be of concern."

Turner explained that they allowed for a $3 million impact based upon previous protest levels, but the impact was closer to $3.3 million. "That's a $300,000 hit," he told county commissioners on Tuesday as they reviewed budget balances and requests from department heads regarding adjustments and expenditures.

"Most county funds had sufficient reserves to absorb the impact without major budget revisions being necessary at this time; however, budget caution is advised as this problem is likely to grow over time," said Turner.

Turner said that he has been rather surprised at the fluctuations in totals the companies  protest from year to year— usually the percentage, remains relatively the same.

Conoco increased the percentage they protested in 2011 to 31 percent from 24 percent in 2010. They protested $2.24 million of their tax bill in 2011 and $1.61 million in 2010.

Bresnan also increased the percentage it protested in 2011 over 2010, from 77 percent to 85 percent, protesting $3.75 million compared to $2.75 million the previous year.

The impact of the increases would have been worse on the budget, said Turner, if it were not for the fact that the county included in their planning an anticipated tax protest from ExxonMobil, which didn't happen.

Commissioner Jim Reno noted that the county would be in good position going into union negotiations if it were not for the tax protests. "But for the tax protests we had some pretty decent growth," he said, "but we don't have that money available."

Protested tax revenues are held in trust and are not disbursed to taxing jurisdictions or districts until a resolution is reached, unless the district issues a special request for the funds.

County Commissioner Bill Kennedy cautioned that there is an erroneous assumption often held in talking about the protested tax monies that could prove to be a problem. "There is an assumption that they may get the protested money back, but that may never come." The courts or Department of Revenue could decide that this is the level of taxation revenues the county should have.

Turner agreed and said, "We need to educate them [department heads] that those dollars are speculative."

"We have budgeted at those lower amounts," said Kennedy.

"We have absorbed those reductions into the budget. We are absorbing it where we can," agreed Turner.

Turner explained that the protests could go on for several years because of the time it takes for the cases to make their way through the process. He noted that the refineries are protesting a different issue than the communication companies. The refineries are protesting the methodology, which the Department of Revenue has said they cannot negotiate over without violating state law, so the DOR is pushing those cases to the courts. The communication companies are protesting the fact that the DOR placed them in a different classification which raised their tax rate from 8 percent to 12 percent.

In other budget issues the Sheriff's Department shows a surprising trend that brings good news, while the Youth Services Department is suffering a trend that is hard on its budget but good news for society

The commissioners agreed to shift $150,000 into the Youth Services budget to shore up shortfalls in income the department is suffering because of a drop in youth crime. Val Weber, Director of Youth Services said that her $2.3 million budget has lost $189,000 in per diem revenue from agencies placing youth in the facility. There is a surprising reduction in Class 1 crimes among young people, she said. Those crimes are robbery, rape, homicide kinds of incidents.

There are also other new facilities available in the state, giving the Yellowstone County Youth Services center new competition.

But even without occupants the agency's costs to maintain the facility continue. The trend in crime levels could reverse but if it doesn't, Weber said that it may be wise to reduce the size of the facility. Otherwise, she said, she has no ideas on how to solve its budgetary problems. She said that she has focused on reminding other entities involved with youth issues, that the center is available and what great service they provide and the programs they offer for kids. That effort has netted some benefits, she said.

Weber said that she currently has three open staff positions and "I'm treating that as an opportunity." She plans on filling only one position, which will save her department $47,000 over the rest of the year.

Following several years of decline, the Sheriff's budget has suddenly generated unexpected revenues from per diem payments that were not anticipated, because of referrals from other counties and agencies. Overall billing has jumped to $650,000 so far this year, said Turner, and by year's end it could be $1 million. The Yellowstone County Detention Facility "has been stuffed to the gills," he commented.

The question Turner posed was how the commissioners and Sheriff wanted to use the funds. Turner recommended transferring it to capital improvements.

Sheriff Mike Linder agreed saying, "I would just as soon as it go to the capital improvement fund, so long as we can maintain what we have at current levels."

Turner noted that because of the size of the jail any improvements or maintenance always amount to a big ticket item, often starting at a half million dollars.

Turner said he wanted to wait until the end of the fiscal year (June 30, 2012) but at that time areas of capital improvement that were identified as a priority included replacing the HVAC in the Sheriff's building, and a "retrofit" for their lighting. Other areas being checked out for capital improvement include sidewalk reconstruction and a fire control system at the jail.

Turner expressed some concern about a decrease in reserves for MetraPark, but he said that MetraPark is "hopeful to improve on this projection with new bookings and managing costs.

MetraPark's "wish list" of capital improvement continues to exceed funding, however, the County should be able to allocate about $1 million per year to the Metra capital improvement fund, after funding its current debt load, said Turner.