Another shoe has yet to drop.

But in the meantime, the San Juan County Council backed reluctantly into the history books last week by giving a unanimous — though tentative — embrace to cutting $1 million out of the 2009 budget so that its foundering financial plan stands a chance to be balanced by the end of the year.

In a 6-0 decision, the council on June 16 endorsed a recommendation by Administrator Pete Rose which allows for layoff notices to be delivered to a half-dozen employees whose jobs would be eliminated as a result of the proposed spending reductions. That $1 million in cost savings, achieved by a $933,121 slice in general-fund expenses and $67,000 infusion from projected end-of-the-year cash-on-hand, is slated to be back before the council for final approval July 1.

It may, however, be just the beginning.

Still, according to Auditor Milene Henley, it would be the first time that anyone can recall that a county council or commission reduced an annual budget midway through the year. She noted San Juan is not alone, however, and that counties across the state are making similar, and in some cases even deeper, cost-cutting moves.

“I think we’re making history,” Henley said. “I don’t think in San Juan County, at least nobody can remember, a time when we’ve had to reduce the budget.”

If approved, the cuts would affect nearly every department and program, in varying degrees, that are supported by the general fund. The general fund covers the bulk of day-to-day county expenses, including payroll.

“I don’t think we have an alternative,” council Chairman Rich Peterson, North San Juan, said of moving ahead with the layoff notices. “I think we’re at a point that we need to begin to make the movement necessary.”

Necessary, according to county officials, because even though two-thirds of general fund’s projected 12-month revenue, an amount generated by property taxes and sales tax, is to date in-line with projections, that’s not the case with the other third. Revenue from licenses and permits, fines and forfeitures, charges for goods and services, and interest on investments and cash, has fallen far below what had been anticipated over the first six months of the year. Earnings on investments alone, according to Henley, are expected to fall $300,000 below projections by year end.

In addition, Henley cautioned that more cuts may be needed if business stalls during the summer months and sales-tax revenue plummets as a result.

“The $1 million revenue reduction proposed today (June 16) represents revenue shortfalls which we can clearly identify and project,” she said. “The great unknown, which is sales tax revenues from both summer tourist season and the summer construction season, may demand that in three months that we do this again, to the tune of another $200,000 to $400,000.”

The county began the year with a general fund of $13.9 million, and an overall budget of $51.8 million, which includes separate funds for road, parks, public works, the fair, the Land Bank and state and federal grants. Though the general fund is targeted for a $1 million cut, roughly $250,000 in savings are already in place via the layoff of five employees at the Community Development and Planning Department earlier in the year. That department is slated for an additional job loss and an overall budget reduction of nearly $267,000 for the year.

Administrator Pete Rose noted the package of spending cuts does not include workforce furloughs or reduction in employee hours. He said cost-cutting moves such as those must be negotiated beforehand with the union, but that they will be considered when a second phase of spending cuts are crafted over the next several weeks. He submitted a request to the council for approval of several days of unpaid leave for himself, and noted that the rest of the non-union employees in his department intend to follow suit.

In addition to $1 million in immediate cuts, the council’s budget subcommittee and the administrator are preparing to reduce the overall cost of county government by as much as another $500,000. Known as Phase 2, that cost-cutting proposal is expected later this summer and would allow the county to maintain an operating cash-balance equal to 10 percent of general revenues beginning in 2010. Without additional cuts or additional revenue, Henley estimates that the county would have to begin borrowing sometime within two years to be able to pay its bills each month of the year.