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Budget hearings end with more than $1.7 million in reserve

In the end, the balance shown in Mono County’s budget could have given Olympic Gold Medalist Gabby Douglas a run for her money on the beam.

Even after doling out $100,000 in unencumbered funds to the June Lake community, allocating $85,000 to the air service subsidy and an extra $22,000 to the Tourism Department from its contingency, the Board of Supervisors was still left with $471,000 in that pot.

On Wednesday, as it ran through policy discussions and settled on final numbers, the Board decided to act conservatively and add $111,000 of that contingency to its reserve, bumping it up from approximately $1.6 million to more than $1.7 million.

A 5% reserve for the County would be $1.8 million. Supervisor Hap Hazard was willing to take the contingency down even further to $300,000 in order to put more in the reserve, until Mono County Finance Director Brian Muir reminded him that it was Board policy to keep 1% in contingency, which would be $360,000.

Supervisor Larry Johnston was in favor of keeping the contingency above $400,000 because of expected volatility in the upcoming fiscal year, but the Board ended up unanimously approving keeping $360,000 in contingency and putting the rest in reserve.

“We’ve accomplished everything we wanted in the budget,” commented Hazard.

“By putting more in the reserve the onus will be on us to be very careful,” added Supervisor Byng Hunt.

Over the course of the three-day budget hearing, the supervisors heard from every County department. Many budgets remained status quo with some shuffling of dollars from one Excel spreadsheet to another.

Items that garnered further discussion were: Economic Development and Tourism, Sheriff’s Dept./SAR, Solid Waste, and the Tax Administration Fee Report.

Under policy discussions, air service and the money earmarked for June Lake were also discussed in depth.

Economic Development/Tourism

The Board agreed to bring intern Jeff Simpson on as a full-time employee since the money was already in the budget for the position.

It also earmarked an extra $18,000 for a new intern to come on board to help with economic diversify within the county.

With an expected shortfall in Transient Occupancy Tax (TOT) in the upcoming fiscal year, the Tourism Department was asked to cut its budget back from $203,000 to $191,000, which meant cutbacks across the marketing board, according to Economic Development Manager Alicia Vennos.

After making cuts, the department and the Tourism Commission felt that there were $22,000 worth of unfunded critical projects and asked the Board to consider making up the difference from the General Fund.

Supervisor Vikki Bauer was hesitant at first since Board policy states the budget should be 1% of the projected TOT. Commission Chair Jimmy Little, however, explained that there were a lot of things that Tourism chose not to do in an effort to reach its budget limit.

“We are living within our means and we reduced a lot of other projects,” Little said. “These pieces didn’t fit into the foundation, but are still important.”

The two areas that the $22,000 would be used for are needs for the Mono County website, and contributions to the partnership at the Eastern Sierra Interagency Visitor Center in Lone Pine.

The Board ultimately approved the $22,000 during policy discussions.

Sheriff’s Department/SAR

The biggest elephant in the room, as Supervisor Johnston described it due to the large portion of the budget allocated to it (15%), was able to live within its budgeted allotment by using a little common sense.

“We cut the amount of hours for boat patrol,” explained Undersheriff Ralph Obenberger.

“For awhile the patrol boat would be the only boat on the water at lakes such as Topaz, so what was the point?” added Sheriff Rick Scholl. The department has now scheduled boat patrol based on public need.

Lieutenant Robert Weber also pointed out the benefits of the volunteer Search and Rescue Department that is run through the Sheriff’s Dept.

With the volunteer contingency, search and rescue bills stay modest. According to Weber, SAR doesn’t bill for its searches in order to keep other counties from billing Mono County.

“In other words, if a Mono County resident were lost in San Bernardino County and their air force were launched for three days, it would be a $700,000 bill,” Weber explained. “If you receive a bill, you have to pay it.” So, Mono County SAR refrains from billing the cost of its searches for out-of-county individuals, which Weber said were more like $7,000.

“We try to collaborate with other counties just to control the billing,” Weber said.

Solid Waste

Ultimately the Board chose to approve a loan of $225,000 to solid waste now, and defer the second half of the loan to the mid-year budget review.

Supervisor Larry Johnston, however, was adamant that the Solid Waste Enterprise fund has to be solvent and not keep getting bailed out by the General Fund.

What this likely means is another rate increase, one which Hap Hazard suggested he should do on his watch before leaving office so as to spare next year’s Board the political fallout.

The gate fee was $50/ton. A consultant suggested raising the rate to $99. Last year, the Board raised the rate to $68.50/ton. It appears the Board is leaning towards raising the rate at least another $10.

Tax Administration Fee

With property taxes going down in the past year, Mono County’s special districts, such as fire districts, have seen their tax administration fees from the County stay stagnant or increase, while the return they receive from the taxes collected have gone down.

Representatives from several fire districts throughout the County showed up during budget discussions to discuss this issue.

County Assistant Director of Finance, Roberta Reed, explained to The Sheet that just because revenues are going down, doesn’t mean costs are, too.

“The work has to be done even though property taxes are going down,” Reed explained. “People’s salaries haven’t changed.”

Since fire districts can’t charge for their services as some of the other types of districts can, the smaller departments are struggling to pay the fees when their returns are shrinking.

In an effort to lighten their loads, the Board approved $20,756 in the budget to directly reimburse the six smallest fire districts for their tax administration fees.

The Board also increased the budgeted $133,000 for first responders to $150,000.

“That $17,000 increase was allocated to help reimburse the larger fire districts for the services they provide to the smaller district, such as training,” Reed said.

Air Service Subsidy

The Board held this discussion off until its final policy discussions on Wednesday. As conversation kicked off, Supervisors Bauer and Hunt were both ready to approve the requested $100,000.

Supervisors Hansen and Hazard, however, were only willing to budge with $45,000.

“I feel it is inappropriate to support private business ventures,” Hazard said. “My constituents don’t want the County involved in air service, let alone an air service subsidy. However, I do recognize the benefit of air service to the County as a whole, so I could go back to the $45,000 we allocated in the first year.”

Hansen felt he had crossed the line with support to the private sector by supporting funding to June Lake and the Mammoth Dog Teams, and he wanted to rein himself back in on principle.

“The air service cost is constantly rising and it seems it is being used as extortion or the June Mountain situation,” Hansen said. “It is a service, so I support $45,000, but the County’s role should not be growing and extorted.”

Hansen also questioned a comment that Mammoth Lakes Tourism’s John Urdi had made during his air service subsidy presentation to the Board the week prior regarding a connection between the money the County would commit and the Town of Mammoth’s loan against Measure U.

Supervisors Johnston and Hunt were able to explain that the County money would not be used to pay back the loan, but would reduce the size of the loan that TOML would have to borrow against Measure U from the get-go.

“The Town committed the air service subsidy in full with the Measure U loan,” Johnston said. “The County money will reduce the size of the loan needed from Measure U.”

Johnston suggested a compromise on the amount the Board would consider committing to the subsidy.

“What if we went back to last year’s $85,000?” he asked.

Hazard was willing to allow that number, but Hansen was stuck at $45,000.

The Board approved 4-1 the $85,000 with the caveat that the monies in the subsidy pot would have an equal drawdown among partners.

June Lake support

While already approved prior to budget hearings, the $100,000 allocated to the June Lake community (to be distributed by the County Economic Development/Tourism Department) was brought up for discussion once again by Supervisor Bauer.

“We can’t leave it up to a group of volunteers to earmark the money,” Bauer said of the funds that were handed over unencumbered. “We need to provide the group with more direction or we’re asking for nothing to happen.”

District 3 Supervisor-Elect Tim Alpers, however, felt that the concern was premature.

“Let them have a shot,” he said. “I don’t want the Board to de-incentivize the group.”

The rest of the Board agreed and the funds remained unencumbered.

With the latest budget advisories from Interim Finance Director Michele McClowry in front of them and a recent School Services of California report forecasting a slow economic recovery for the state, Mammoth Unified School District’s Board of Education adopted its 2012-2013 operating budget on June 28.

As previously reported, the Board is facing tough choices when it comes to offsetting both a projected decline in Mono County property tax revenue, and potential slashes in subsidies from the state. If a tax initiative package, put forth by Governor Jerry Brown and going before state voters in November, is not approved a raft of steep cuts awaits education line items in Sacramento that will have far-reaching impacts.

MUSD’s budget had to be approved by June 30, as required by law. The budget as it sits now, moved forward with projections of budget deficits and radically declining reserve percentages over a three-year period. McClowry said that so far the Mono County Office of Education has generally approved the budget. However, per a letter from MCOE, the Board needs to submit a plan to the County on how it will “address the bleed out,” as McClowry put it, and “earn acceptance for its multi-year projections” by Aug. 1.

Translation: no summer vacation for the BOE. Usually dark during July, MUSD Superintendent Rich Boccia called a special meeting for July 19 to begin work on revising the three-year shortfalls. McClowry strongly urged the Board to act soon on the problem, pointing out that if left unattended MUSD faces insolvency potentially by the 2014-2015 school year.

A UCLA forecast sent to School Services said that, while a double-dip recession isn’t foreseeable in the near term, “a subpar growth rate, largely attributed to an overbuilt housing market, which is still dragging down growth … will do little to push down the unemployment rate.” That in turn, the report, went on to say, means the state isn’t likely to reach the pre-recession employment peak of 15.2 million until 2015, and even then unemployment is still forecast to be around 7.2%.

In the short term, critics of Brown’s tax initiatives, which both boost the state sales tax and taxes on higher income earners, charge they would only keep the state’s budget deficit at the waterline, no higher, and do nothing to address huge spending, pension and entitlement messes.

Boccia told The Sheet he’s worried about passage of the tax plan, and fears it might be voted down. McClowry added that, based on revised figures from the state, an original forecast cut of $441 per student ADA has now been raised to $457, representing an extra hit of $16,800 to MUSD if the tax package isn’t passed.

McClowry pitched an idea to the Board to consider changing its internal reserve requirement from 17% to 10%, which he said might make things more palatable. She also mentioned the way the County makes its property tax payments could be problem for the District going forward. MUSD gets its tax revenue in June, but the County backdates the payments to April to avoid getting hit with late fees and interest. That she said, could impact payroll prior to June in more challenging economic years, and should be taken up with the County to arrive at a solution before it becomes a major issue.

McClowry also cited several key problems for the Board to put on its radar. “Healthcare alone is going to kill you, especially if the [federal] Affordable Care Act ends up costing more than originally projected,” she stated. “Your deficit spending is still phenomenally bad, right now at about $500,000 of a $12 million budget, but that’s going to only increase over time.” Class Size Reduction is also bad statewide, she pointed out. “Some school districts are sending in waiver requests for as many as 35-38 kids per class.”

Board member Greg Newbry took issue on principle with the budget’s spending forecasts as they currently exist. “If I wanted to buy a car, but knew I wouldn’t be able to make payments after six months, would I buy it? Probably not,” he posited. Newbry said he was grateful of the time and effort put into the spending plan, but had problems with passing a document that had such deficit projections still in place, casting the lone dissenting vote.

Gov. Jerry Brown and Democratic legislators late last week reached an agreement for an amended California’s fiscal year 2012-2013 budget. The deal reportedly targets the state’s welfare rolls, cuts back other social programs, allows the legislature to pass a state budget on time and Brown to shift his focus toward campaigning for voter approval of his tax initiative package on the ballot in November.

The budget also nixed a potential showdown between Brown and members of his own party, who sought to curb the steepness in some of his proposed cuts.

Democratic leaders and Brown spent this week negotiating their lingering disagreements, and agreed to “split the difference” on various budget-cutting proposals, though at least for now education has been left relatively untouched in the new budget deal. Brown has previously called for significant cuts to a raft of education funding that would hit in January 2013, assuming his tax package is flop at the box office.

This budget tightens work requirements and time limits for welfare recipients, a feature Brown wanted. But monthly checks would not be reduced, and there could be exemptions made for those close to finishing job training programs.

“This agreement strongly positions the state to withstand the economic challenges and uncertainties ahead,” Brown said in a statement. “We have restructured and downsized our prison system, moved government closer to the people, made billions in difficult cuts and now the Legislature is poised to make even more difficult cuts and permanently reform welfare.”

The final, amended spending plan will probably be slightly smaller than the $92.1 billion actual budget approved by the Legislature last week. Passing the budget last week along strict party lines allowed lawmakers to meet a June 15 constitutional deadline and, more important it would seem, continue receiving their paychecks. Mono County’s State Senator Ted Gaines (R-Roseville) was one of the entirety of legislative Republicans who voted against that budget.

“This budget is not balanced, not honest and not what the people of California deserve from their government,” Gaines said in a statement. “It is a phony, gimmicky document that does nothing to address chronic, structural overspending.”

Needless to say, the budget is far from a cure-all, and still leaves the state facing numerous financial challenges. The spending plan hinges on voters approving more than $8 billion in tax increases. Brown’s initiative, which qualified for the November ballot Wednesday, would raise the state sales tax by one-quarter of a cent for four years and hike income taxes on California’s wealthiest residents by one to three percentage points for seven years. If voters reject the taxes, billions of dollars would be cut from California schools, and the academic year could be shortened by three weeks.

Another factor: how money from defunct local redevelopment agencies (RDAs) is spent. Brown wants to use $1.4 billion in leftover property tax money that used to fund the RDAs to help close the current $16 billion deficit. Legislative Analyst Mac Taylor said in a Department of Finance review that there’s “considerable uncertainty” as to the amount of tax revenue projected, and expects it to be lower, raising the deficit by almost an additional $1 billion, essentially canceling out any help the RDA money might provide.

Taylor added that some of the RDA money could be siphoned off before it reaches the state because of defunct redevelopment agencies’ previous obligations, such as construction contracts or bond payments. Lawsuits threatened over recent dissolution of the agencies could further complicate matters.

The budget also assumes California will rake in $1.9 billion in tax revenue related to Facebook’s public offering. But that calculation is based on a $35 share price, and the stock stood more than $3 below that on Thursday.

Meanwhile, the fate of several critical programs — welfare, childcare, college scholarships and healthcare (such as the state’s Healthy Families program) — still hangs in the balance.

One of the education provisions of note in this budget calls for stricter standards for Cal Grants, the state’s college scholarship program. Newly awarded Cal Grants would be valid only at colleges that graduate a certain percentage of their students.

Gutting the gridlock

It’s been a dream for as long as many California residents can remember: a Sacramento legislature free of gridlock. But for as long as many can also remember, running for office as a Republican meant essentially standing on a “no new taxes” platform, one that was rickety at best when it came to having an ability to negotiate.

All that could change this election year, as the state’s political landscape, newly painted with redrawn districts and new election rules, has given several moderate candidates who are not staunchly anti-tax hope of gaining ground, at least in the Assembly. Electing enough of those to office could mean an end to an era of what’s devolved into purely partisan bickering and obstinate obstruction.

Going into the November vote will be at least five viable Republican Assembly contenders, who refuse to sign a no-tax pledge that has, they think, only led to bad budget deals and gimmick-laden spending, as the state watched its fiscal crisis grow and grow.

In a state where voters constantly seek some sort of balance between extreme liberal and extreme conservative districts, creation of more centrist districts along with the new open primary electoral system, has opened the door to a major political shift toward the middle. Even business groups that typically back GOP candidates have turned away from the usual dyed in the wool conservatives, and begun supporting pledge-free Republicans.

Peter Tateishi, one of two GOP candidates competing for a seat in the Assembly who didn’t sign an anti-tax pledge, told the LA TImes he thinks his party missed a chance to win big policy victories, such as changing the state’s public pension system, by walking away from tax negotiations with Brown. “There are very few opportunities in which the minority [party] can advance the ball…and negotiations are one of them,” he said. “I’m not running because I think we need more taxes. But if the governor or the [Assembly] speaker want to have a conversation with me, I need to have everything on the table.” –Addl. Sources: LA Times, California County News

Suite Z was the site of a mixed bag of blessings and budget balancing during Wednesday night’s meeting of the Mammoth Lakes Town Council.

First up, however, was the peaceful transition of power, with recognition for outgoing Mayor Jo Bacon. Plaudits came from Councilmember Rick Wood, who praised her leadership style. “A good mayor makes it easier on the rest of us, and a great mayor makes us look great, too,” Wood enthused. John Eastman went on to add that she was “always there for us when we needed her,” calling her a “go-to” mayor.

Councilmember Matthew Lehman, next in the rotation, was quickly elected Mayor, but John Eastman, also next in the rotation, deferred his nomination for Mayor Pro-Tem another year, with Rick Wood stepping in to take the post.

The balancing act

After a short presentation by Assistant Town Manager Marianna Marysheva-Martinez, the revised budget balancing measures were passed unanimously, with no public input during the hearing portion and no Council discussion. Councilmembers only made brief reference to how difficult the cuts were to make and the amount of work that staff and Town management put in. There was some lamentation from Wood, who said he’s done 10 budgets and “never seen anything like this,” about the amount of cuts made during the past three fiscal years: $1.7 million in 2010-2011, $2.7 million last year and another $2.8 this year.

The balancing plan submitted by Marysheva-Martinez seeks to close a 14% or $2.8 million shortfall in the $19 million General Fund budget. Virtually no line item was spared, though some funding was added back into Airport line items such as maintenance and fuel contract reconfiguration. Savings would be realized by elimination of the Airport Director position and a Public Works position, which have already taken place.

The balancing measures held firm to other cuts already proposed. Mammoth Lakes Trails and Public Access’s subsidy of $170,000 was eliminated, as was a $14,500 contract with High Sierra Energy Foundation. When the balancing plan was first rolled out, the Town deferred that funding to Southern California Edison, but SCE has since written to HSEF Director Rick Phelps saying it would not step in to cover the loss.

Also given the ax was a $65,000 contract with Mono County for the Whitmore Animal Shelter, though that move might come back to haunt the Town once the County evaluates its agreements with Mammoth Lakes vis a vis the Whitmore Ballfield, etc., and its obligations to the state for keeping the shelter open, which might mitigate its closing.

Mammoth Lakes Police will lose School Resource Officer and Traffic Enforcement Officer positions, and eliminate special programs requiring overtime, including the Community Police Academy, Hispanic Advisory Committee, and any honor guard or mounted unit details for celebratory use. Additional officers will be available for a variety of major community events, but the events will have to pick up the tab for police service. The Town will not.

Most of the overtime being cut by the Town will come from within the MLPD.

In addition to $1 million in employee pay concessions, according to Marysheva-Martinez’s overview, also in the plan are changes to union contracts that mean employees will now pay for their share of retirement plans, which had been previously covered by the Town. Civilian employees will pay 8% and sworn employees 9%.

Editor’s note: Not like the 100% most of us in the private sector pay, but it’s a start. 

Handout happy

It wasn’t all budget blues on the dais, however; Council was all smiles, having no problems handing out money that had nothing to do with the General Fund.

Council approved the 2012 Measure R spring funding recommendations. The funding also includes a final $46,000 payment to MLTPA for projects approved in December 2010, and approval of a recommendation by the Mammoth Lakes Trail System Coordinating Committee for $25,000 to Friends of the Inyo for its Summer of Stewardship trails maintenance program.

Outgoing FOI Executive Director Stacy Corless told Council its first outing on June 2 (National Trails Day) yielded 48 logs removed, more than one log removed per volunteer, and that additionally the FOI volunteers helped “log out” the entirety of Duck pass, with more work in the offing.

And Council also passed two additional Measure U funding recommendations for the Mammoth Lakes Foundation ($45,000) and the Mammoth Lakes Events Coalition ($25,385), both of which were shorted in the first round of asks in the pilot version of the new funding source, derived from utility taxes, earmarked for Mobility, Recreation, and Arts & Culture.

Up, up and away to the FAA

The controversial Airport Layout Plan Update Narrative was deemed fit to fly to the Federal Aviation Administration. The ALPUN went through the hands of 2 consulting firms, and 1 peer review, as well as evaluation by both the Airport and Planning commissions. But it has also been the target of considerable public criticism for not adequately addressing numerous issues that at least two vocal citizens — Stephen Kalish and Owen Maloy — think could be problematic for the Airport and dealings with air service carriers going forward.

Nonetheless, Council seemed content with its status to this point, and reached consensus that members want to hear comments from the FAA before going any further at this phase of the Airport Plan.

Transportation Commission parked

Finally, Council opted to put the brakes on a proposed merger of the Mobility and Airport commissions. Mobility Chair Sandy Hogan supported the merger into the 5- or 7- person hybrid body, but Airport Chair Pam Murphy asked Council for at least six months to a year of more time for that commission to complete some considerable work looming on the horizon, and shore up its members. “I’m very concerned about any loss of expertise,” Murphy told Council.

New Councilmember Michael Raimondo cited recent management changes at the FAA, the ALPUN comments to come, and other pressing matters at the airport as reasons to keep the two separated, at least for the time being. Wood agreed, adding he’s wary about “diluting the strength of the Airport Commission.” Eastman said simply he doesn’t see the benefit of the merger. Both commissions have a lot of work ahead of them in their respective areas of expertise. “If it’s not broke, don’t fix it,” he suggested.

There are three current Airport Commission members who have been waiting until a resolution was reached on the merger to reapply for their seats, and one open Mobility Commission seat left vacant in light of the possible merger will be need to be advertised.

In other Council news … Council awarded a pair of contracts to Spiess Construction, one for construction of an ice melt project on the Lakeview Boulevard connector to Lake Mary Road. Some locals refer to this short, but hazardous piece of road as the “Voodoo Chute.” During winter, its steep grade can get very icy and has led to several auto accidents. A mix of Measure U and grant funds will pay for the project, which will start with propane, but is to be converted to geothermal later. Construction is slated for a fall start.

The second project will finish as section of sidewalk on Sierra Park and Sierra Nevada roads, adding a length all the way down behind the new Mono County Courthouse to Hwy 203. Grant funding from the Safe Routes to Schools, which Eastman said was originally spearheaded by Kathy Cage, will be augmented with a $120,000 contribution from the Administrative Office of the Courts for the section behind the courthouse.

School board tasked with tough choices to avoid fiscal catastrophe

Recently, Mammoth Unified School District said that three teacher positions would not be returning next school year. Those, however, could be the first of many serious changes facing the district’s Board of Education. During a budget workshop session Monday evening, Interim Finance Director Michele McClowry outlined the urgent need for addressing shortfalls in next fiscal year’s budget and beyond. In no uncertain terms, McClowry told the district to get ready to make some very hard choices by no later than January 2013, and that hesitation will only make things worse.

And by worse, we could be talking insolvency within three years’ time.

Several factors have contributed to the dire circumstances: the first and most obvious being cuts and deferrals being made to the schools from the state legislature.

Those cuts are causing increased deficit spending, much of which has been backfilled to date by tapping the district’s General Fund. Consider that the state’s Class Size Reduction program, for example, is only being funded by Sacramento at a little more than $200,000 of program’s $1.7 million line item.

“We’re paying to make underfunded programs whole,” Board member Jack Farrell noted. He also took issue with the state’s use of the word “contribution” by the district, arguing that it is simply a politically correct way to describe an “encroachment” on the General Fund.

The state has been shorting many school programs at about twenty-two cents on the dollar, and Basic Aid districts, which are largely funded by property tax revenue, are also having “fair share” reductions imposed on them to equalize them with Revenue Limit districts. McClowry said that, given the state’s financial mess, she doesn’t expect those deferrals to be made up anytime soon, if at all. “Realistically, you’ll probably never recoup any of those dollars,” she told the Board.

Exacerbating the situation is an estimated 4- to 4.5% decline in property tax revenue, so far projected by Mono County, lowering revenue from $9.4 million to $8.9 million, where it is projected to stay for at least the next two fiscal years. While that figure is still not final, McClowry said she had to take the County’s best estimate so far to start making projections.

All told, the current 2011-2012 budget will end up with a $470,000 deficit, but the upside so far is that the reserve percentage will likely end up at about 29%, well above the district’s mandate of 17% and the legal state requirement of 3%.

Much is being predicated on Governor Jerry Brown’s tax initiative package that is set to go before voters this November, but even passage of that won’t solve MUSD’s entire problem.

Next year, however, assuming no changes in tax revenue or the state’s budget quagmire, McClowry’s deficit forecast grows to between $800,000 and $900,000. This factors in property tax reductions and salary/benefit increases, and lowers the reserve percentage to 22%, and that’s assuming the tax initiatives pass.

If the initiatives don’t pass, the district would have to take another $463,000 out of reserves.

The following years’ projections, however, are the real tell of how bad things could get. By 2013-2014, the deficit balloons to as much as $1.3 million, dropping the reserve to roughly 13% (10% if the initiatives don’t pass).

And when we get to 2014-2015, the deficit spikes to $1.75 million and reserves plummet to 0%, or -3% if the initiatives don’t pass, essentially meaning the district would face insolvency.

It didn’t take long for most in the room to conclude that even the state minimum for the district of 3% reserves isn’t enough to cover payroll, at least not for very long. And technically the County can disqualify any budget that falls short of the state reserve minimum.

McClowry’s advice: make addressing the 2012-2013 deficit of $800,000 a priority. “Waiting longer only destroys everything you value here. The loss keeps multiplying as you go further out in time,” she warned. Pink slips and program cuts taken into account, she suggested that saving $1 now amounts to saving $3 later, which could likely avert the “parade of horribles” looming just a few years down the timeline.

All school districts in California have some very serious issues,” Superintendent Rich Boccia commented. “We are once again being asked to do more with less! How does the state expect us to support the development of competitive global citizens when we keep reducing funding for public education?”

MUSD, however, isn’t alone in its predicament. According a state report on school fiscal solvency as reported in the Los Angeles Times, 110 districts either qualify for or are already in bankruptcy. In the northern rural area of Shasta, for instance, two school districts are facing potential bankruptcy for the first time in the county’s history, according to Adam Hillman, Shasta County Office of Education Associate Superintendent. Both Pacheco and Cottonwood Union School Districts, tiny districts struggling with the added problem of declining enrollments, have opted to increase class sizes. Former MUSD Board of Education member Shana Stapp mused to The Sheet that very idea might be a good place for this district to start looking for ways to trim deficits.

In her presentation, McClowry said there are provisions that allow MUSD to take out short-term 1-year cash flow loans, or Tax Revenue Anticipation Notes, but said those can be “expensive” and are typically evaluated based on a district’s cuts and deficit spending, which can make them tricky to get.

The state report did, however, note that 57 districts are in sound financial condition, one of those being MUSD. In regards to the teachers, Boccia said two of the teachers, Jim Barnes and Dierdre Buchholz, are making life transitions. “It will be difficult to fill their shoes but we have advertised and can hope that we have some strong candidates,” he said. Regarding the other positions, Boccia said that, based on the budget conversation last evening and the level of deficit spending, “any open position at this time will remain unfilled and we will have to make do with what we have.”

Translation: Kevin Worden will not return.

According to an e-mail Boccia received just prior to the workshop, off the table during state budget talks is the so-called “weighted student” reduction formula, which would reroute more money to districts with a heavier concentration of English learners and low-income children.

MUSD is expected to sign off on a final 2011-2012 budget on June 28.

Next year’s budget is projected to generate $550,000 in available cash and the Town expects to generate that amount annually going forward. The Town may use that cash to leverage a bond to settle the judgment with Mammoth Lakes Land Acquisition. On Wednesday night, June 6, Marysheva Martinez said that was only one of several possible scenarios, and that while the $550,000 surplus is to be wholly dedicated to the MLLA judgment, how it will be used is yet to be determined.

A public hearing on and adoption of the proposed budget is planned for June 20 in Suite Z at 6 p.m.

In other news, Council voted 4-1 (Wood dissented) to hike the Medical Marijuana Cooperative permit application fee from $300 to $1,209. Police Chief Dan Watson cited underestimating the amount of hours required to process permits as the reason.

The initial grading contract was awarded for beginning work on the Whitmore Track Project. Still $193,000 short of being fully funded, hopes are that a Measure R application being reviewed by Council, and other measures being evaluated by High Sierra Striders and Town staff can be worked into the next phase of the project to make up the deficit.

Council delayed eliminating the Airport and Mobility Commissions, and merging them into a single Transportation Commission pending a clearer picture of who will reapply for any open seats on the 5- or 7-member body. “There’s lots of talent [on the Airport Commission] and I’d hate to lose that,” commented Mobility Commission Chair Sandy Hogan.

Councilmember Rick Wood mentioned the delays in getting the Lakes Basin trash and restrooms, and some of the camping open sooner, given the early summer season. Wood said he is working with the Forest Service to bring control of those facilities back to Mammoth. Currently, reservations, and restrooms, trash and barricade openings are dictated by schedules set in either out of county or out of state locales.

Governor Jerry Brown now has more riding on his tax initiative package passing in November then ever. Brown is counting on voters to pass the package to close a rapidly growing deficit, which as of his May revised budget now sits at a whopping $16 billion, far larger than the $9 billion he predicted in January.

Earlier this week, Brown released a plan to close California’s rapidly growing deficit by switching state offices to a four-day week, slashing welfare benefits and healthcare for the poor, along with a variety of short-term fixes — all in the hopes that voters would give the state some breathing room by raising taxes in November.

Critics of the tax initiative, including virtually all Republicans in the legislature, say this amounts to scare tactics to raise more tax revenue, but needlessly pummels education and does nothing to restructure spending and reform entitlements.

Even with the world’s ninth-biggest economy, California has lost more than 1 million jobs since the recession started in 2007, reducing the most populous U.S. state’s revenue by 24 percent. Brown’s plan would “temporarily” raise the statewide sales tax, already the highest in the U.S., to 7.5 percent from 7.25 percent. It would also boost rates on income starting at $250,000. Those in the Kardashian bracket making $1 million or more, now taxed at 10.3 percent, would pay 13.3 percent, the most of any state.

His $91.4 million revised budget does, however, fly in the face of interests that are supporting his tax campaign. Public labor unions are liable to push back at proposed reductions in the state workweek and a related 5% cut in payroll costs. And Democratic legislators have so far refused to accept steep cuts in social services.

Can’t afford to buy-in to Facebook’s Initial Public Offering? No worries, you might soon own a piece of it as a taxpayer. Brown’s plan is also predicated in part on a $1.5-billion boost from Facebook’s Wall Street debut, which the state’s buying into. Also a sharp uptick in new home construction, and (hope you’re sitting down for this one) the sale of $3.5 billion in voter-approved bonds to fund the first segment of a bullet train linking Southern California and the Bay Area are part of the plan. “We’re going to have high-speed rail,” Brown said.

Facebook also came under the microscope this week, the target of a Wall Street Journal editorial suggesting its current advertising model is highly overvalued and overrated. General Motors, for example, questioned the intrinsic value of its placing ads on the social media site, and pulled its advertising. Speculation posits that new shareholders could be in for a dividend disappointment unless Facebook uses its IPO revenue to revamp its advertising approach, add more media outlets and diversify its marketing platforms.

U.S. Congressman Kevin McCarthy (R-22nd District), who represents Kern, San Luis Obispo and Los Angeles counties, told Fox earlier this week he’s concerned about yet another mass business exodus to other states with more favorable tax environs, pointing to thousands of job and small business losses logged between 2008 and 2009.

Mono County Supervisor Hap Hazard said he’s dismayed with the state’s “hold the line, it will all come back” mentality and a lack of political will. He went on to criticize the various unions and special interests that are not willing to allow any changes, and politicians in Sacramento who cave to them.

“Things ARE improving, just not at the level we need,” he said. “Keep in mind that this is politics.”

The Legislature must pass the budget by June 15 so it can go into effect at the start of the new fiscal year on July 1.

Council, public hear budget reduction plan; Harvey speaks his mind

The Town of Mammoth Lakes, which managed to balance its budget this fiscal year, but faces a $2.8 million projected shortfall next year, rolled out its budget reduction plan on Tuesday night.

During a Special Meeting of the Town Council on Tuesday in Suite Z, Assistant Town Manager Marianna Marysheva-Martinez talked about specifics of the plan, which her presentation said balances the Fiscal Year 2012-2013 budget, creates a surplus fund to satisfy debts and obligations currently owed, including the $43 million Mammoth Lakes Land Acquisition judgment and puts the Town on a sustainable path for future budgets.

Clearing up between $2.5 million and $2.7 million of the shortfall, the plan’s 40 actions and initiatives were designed to avoid an across-the-board 14% cut to all departments and all personnel. Probably the largest single reduction would come from salaries. Employees will be asked for pay concessions that amount to more than $1 million in cuts … 10% from civilians, and another 24% from police, the latter of which could, if necessary, be asked for position reductions.

Property leases would be negotiated down 10%, for another $50,000 in savings. Another $1 million in savings would be realized through myriad of cuts to nearly every department, including some Town contracts with outside entities, such as High Sierra Energy Foundation’s modest $14,500 stipend, all the way up to Mammoth Lakes Trail and Public Access, which will need to look more toward Measure R and Measure U awards to backfill its $170,000 eliminated subsidy.

Several positions will be eliminated, including at least one in Recreation lost through attrition that won’t be refilled, the duties of which have already been divided among remaining Rec staff.

Marysheva-Martinez’s proposal does increase funding in one area: road rehabilitation. While the road budget is still deemed unsustainable to maintain roads in the long term, she said the Town should fund $750,000 of the desired $1.5 million for roads.

This past year, the Town spent just $500,000 on roads.

The plan also counts on revenue enhancement through Transient Occupancy Tax enforcement, which hopefully will add $500,000, some of which will be split between Mammoth Lakes Housing, Eastern Sierra Transit Authority and Mammoth Lakes Tourism. That’s the good news.

The bad news is that those same agencies are going to get hit with 5% net reductions, and 10% if TOT enhancement isn’t realized. This  didn’t sit well with MLT Director John Urdi, whose presentation earlier in the evening stressed not cutting back on marketing during tough times.

A sense of Urdi-gency

During his pitch to Council, Urdi was diplomatic, but blunt. “Mammoth is [comrpised of] one industry: Tourism,” he stated. With no agriculture or other industries to fall back on, and surrounded by public land in all directions, Urdi also charged it’s also unrealistic to expect anything to replace it.

“No one in this town is untouched by tourism,” he added, pointing out that 60% of the workforce is directly related to tourism. According to Urdi’s figures, visitor spending pays for almost 70% of town services; “It’s not from me buying a pair of ski boots.”

Every household in Mammoth would pay an additional $3,052 to make up for visitor spending, if tourism went away or never existed. That’s the highest per capita figure for any municipality in the state.

Brands that increase advertising during economic downturns typically fare better than those that cut back, and ultimately spend less overall,” he said. Urdi pointed to Colorado, which in 1992 was the #1 summer destination. Tourism was then seen as an “unnecessary tax.” The state basically gutted the entire $12 million tourism budget, using the argument, “The Rocky Mountains were here long before tourism, and they’ll be here long after the marketers have left.”

As Urdi illustrated, while the Mountains remained, fewer visitors came to admire them. Visitation plummeted and cost the state hundreds of millions of dollars in lost revenues and visitor spending. To this day, Colorado still hasn’t recovered fully.

Urdi reinforced that message by also highlighting Wisconsin’s lack of promoting itself, which has only racked up losses to the tune of $700 million, and Washington state, which cut its tourism budget completely this past year, and could be headed down the same road as Wisconsin and Colorado.

Michigan, however, doubled its tourism budget to fund the “Pure Michigan” ad campaign, generating 1.5 million additional visitors, almost half of which are considered new. The state has enjoyed massive increased visitor spending and revenue, paying for more police and teachers, and creating 10,000 new jobs. Montana took a page from that same book, and has seen a boost in tourism.

During a brisk public comment period, Leigh Gaasch advocated no further cuts in police positions, citing what she indicated were increasing public safety needs in the Sierra Valley Sites area. Warren Harrell thought there should be more spending on roads. Ruth Harrell talked about contracting out law enforcement and considering disincorporation.

And Tom Cage suggested taking the estimated savings (five year, and year-to-year thereafter) and applying those to marketing. He also talked about PR campaign to clean up the MLLA mess. “The sky is falling mentality … is hurting us as a community,” he said. “Get it wrapped up and done with. The rumors are killing us, as are the time and the interest accruing on the judgment. Push the button; get it done.”

Council remarks were brief and mostly restrained. Mostly. Councilmember John Eastman pointed out that MLT is slated to get back almost $100,000 in recovered TOT funding. Councilmember Matthew Lehman mentioned the impact on jobs. “MMSA had to lay off 75 people … our unemployment rate went up 1% in one day,” he said.

Mayor Jo Bacon said little, except conspicuously mentioning “strategies for future litigation,” which presumably involves the MLLA judgment, though no specifics were brought up.

“It’s difficult to argue anything people have said tonight,” Councilmember Rick Wood said. According to Wood, the Town had “begun a restructuring process long before what we’re going to do in next few months … we outsourced tourism and transit … we’re going down another 6 employees,” if MMM’s downsizing plan is adopted as part of the new budget in June.

“In 2009, we suffered from a structural deficit, which came to a head through dramatic decline in snow. We would still have some structural deficit if would have had a good year,” Wood opined. “I’m not suggesting we can’t make more cuts, or do business differently.”

Marysheva-Martinez, he said, eloquently stated [in her presentation that for this Council this is the third round of cutting, amounting to $7 million in three years. There will be more, Wood added.

Wood said it would be important to consider what role should government plays in the promotion of itself and its product, and what role the private sector plays, since it directly benefits from that.

Wood refrained supporting any significant changes to the budget plan vis a vis MLT’s reduced funding. He seemed to back addressing underfunded roads, wanting to avoid any perception of a bait-and-switch campaign. “We can see the mountains in the pictures … we have to provide the services when people get here,” he posited.

The Harvey speech

One person who held back very little was outgoing Councilmember Skip Harvey. “What a mess … it’s a total mess,” Harvey stated, adding Mammoth’s situation is a reflection of the times. “What’s really on peoples’ minds is the lawsuit and what’s going to happen with that. I owe everyone an apology in that it doesn’t appear it will be finished by the time I leave office. It’s something I wanted to accomplish, and I’m sorry … I’m truly sorry.”

Harvey further said he doesn’t want Mammoth to be known as the town that declared bankruptcy. “I would like to avoid that.” He agreed with the many comments supporting marketing, but also with [Wood] that Mammoth shouldn’t have “smoke-and-mirror” marketing.

“The Town has to take responsibility for its actions getting us into the lawsuit,” Harvey charged. MLLA is people, he added, not some big ugly monster. “They’re not the bad guys. They didn’t set the judgment amount, a jury in Bridgeport did. We were told by the judges that we were wrong, that we made mistakes. We have to find out what happened.”

He said that based on recent letters he’s seen, MLLA is mad … really mad, and issued an impassioned plea the company participate in mediation. “This could be our last chance to get this resolved,” he told those in attendance.

Harvey also lashed out at those running Mammoth Yosemite Airport, saying it’s been a victim of bad decisions and management, as well as several lawsuits that have yielded mixed results. “I’m tired of the airport being managed in a mediocre form,” he blasted. “We can plan for the future, but we have to change things, or we’ll be right back in it again.”

All but naming names, he aimed his remarks squarely at senior management, saying the airport litigation judgment “had barely cooled, when the airport tried to hire someone who had the feature of being related to someone.” He did, however, praise Marysheva-Martinez, who he said stepped in and made a course correction that averted another potential lawsuit.

“The experts in this town are the five of us. We know this town better than anyone. You need to lock this Council, MLLA and our town managers in a room and say don’t come out until this is wrapped up,” Harvey advised the constituency. “We need help from community … I know it irks you to pay for something you had absolutely nothing to do with.”

Though Marysheva-Martinez stated earlier that part of the balancing plan would be to address the MLLA judgment, no clear delineation was presented as to how that would be achieved. Yet to come are public hearings on the budget and public deliberations on Council’s take on the balancing plan. The 2012-2013 budget is required to be passed by July 1.

During its mid-year budget review on Wednesday, Mono County’s Board of Supervisors learned that it’s “so far, so good” when it comes to the bottom line. According to the Finance Department, spending is on track, and so far no departments are forecast to go over budget. In addition, the County is looking at $1.2 million in revenue wondfall, which includes a one-time influx of almost $800,000 in revenue from the finalization of the recent property tax reassessment of Mammoth Mountain Ski Area.

Board reserves were predicted to plunge below zero in 2012-2013, but Finance Director Brian Muir pointed out that current assumptions are likely to change, in that there won’t be as much drawdown needed next year to backfill the Solid Waste Enterprise Fund as with this fiscal year.

Muir suggested that the reserve fund should level out at least around $1.5 million to $2 million, and even with unknowns at the state level, it should be easier to balance the budget next year. He added that the goal, which he thinks is reasonable, is to build the reserves back to the roughly $6 million that the Board prefers. Board Chair Vikki Bauer recalled that when she and Supervisor Byng Hunt were first elected to the Board, there was no reserve fund, but after two years, money had been squirreled away to establish the first incarnation of what the Board now calls its Reserve Fund, even with normal spending and buying new snowplows. “That has made the economic downturn a lot more sustainable for this county as opposed to other counties,” Muir reminded the Board.

Supervisor Hap Hazard said he thinks Mono County has historically lived under conditions in which the County hits bumps in the road every three years or so. “We usually have a chance to see things coming at the state budget level before we get to our budget,” Hazard observed. “This one [the 2009 recession] came up on us rather suddenly … 27% of our revenue disappeared almost overnight.”

Meanwhile, he said, the County acted responsibly, putting projects on hold and not filling vacancies from attrition, among other measures.

“What we didn’t see was a turnaround [economic recovery] at the 3-year mark, but we should be able to get through the next year to 18 months,” he opined. “If everything remains the same, the County hopes to be able to dig back out. Assuming the County doesn’t face any 9/11 or gas crisis issues, we should be at bottom and in a 24-month recovery cycle.”

Hazard said he’s “thankful” for the $1.2 million revenue windfall, but indicated conservative spending and saving measures need to be the priority.

Hunt wasn’t as optimistic, saying he thinks the recession is still on, and doesn’t want the public to think the County is flush with cash. He did, however, agree in principle with Hazard that spending must remain frugal and services must be sustained, as well as jobs. “There are counties that had 35% or 40% in job cuts and reductions in levels of service, but we managed to avoid much of that.” Hunt was quick to point out that the extra cash should be saved for rainy days, and not viewed as a sign that happy days are here again.

Gas prices and their impact on goods and services are a big worry to Supervisor Tim Hansen. “You buy a couple of tomatoes and a head of lettuce and it costs you $20,” he said. “We got some good news here [with the contingency money], and we need to be frugal.”

Bauer said she’s concerned there could be a big crash coming in the California Public Employees’ Retirement System (CalPERS) fund. State projections indicate that CalPERS shortfalls will increase charges from 7-8% to as much as 20% or more. The County, meanwhile, has already taken steps to reduce its contribution to PERS fund by restructuring its debt plan. Muir also was skeptical of any crash, explaining that CalPERS typically has a 20-year “smoothing curve” when it has funding issues.

Johnston was wary of figures indicating the state’s economic indicators are showing a 1% to 3% growth rate, but Muir said he’s been seeing a trend toward some amount of growth. He did acknowledge that the public might not perceive it yet, but that could also be due to the County generally lagging behind the overall curve. Hazard agreed with Muir that it appears growth is occuring, but took Johnston’s point that a 3% growth rate isn’t very robust, and that any impact, no matter how minor, could send the County right back into recession again.

“We’re not out of the woods, and I wouldn’t suggest that we are,” Hazard said. Muir, however, is not as sanguine on the state of things. “There’s nothing in this set of numbers that gives me heartburn,” Muir told the Board. “We’re definitely spending well within budget.”

Bishop City Council met Monday night at City Council Chambers on West Line to approve the Fiscal Year 2012-2013 budget, discussed at a public hearing last week. What began as a simple issue of “Yay” or “Nay” took a turn into more complicated territory after Mayor Pro-Tem David Stottlemyre voiced his reservations.

“At the hearings, I had some concerns about the budget as presented,” Stottlemyre said. “This time around I believe, with the economic climate the way I read it, I’d rather not see us approve this budget just yet.”

He explained that he had done his own calculations to determine the FY 12-13 General Fund deficit, and projected an additional potential deficit of $318,000 to add to the existing projected shortfall.

By his calculations, the General Fund deficit of $516,930 as stated in the preliminary budget would be closer to $835,500. Therefore, Stottlemyre said, “I would rather err on the side of playing it safe.” He elaborated that he would prefer to wait until city accountants’ audited financial statements came back to the Council in several weeks, and perhaps even wait to complete labor negotiations before agreeing to a FY 12-13 budget.

“What if we adopted the budget with a stipulation that we’d come back and review it with the audited financials and labor negotiations?” asked Councilmember Jeff Griffiths. Mayor Pro-Tem Stottlemyre replied that he was worried if the Council adopted the budget as is, “some people tend to rely on those numbers” and would be disappointed if further cuts were made.

Councilmember Jim Ellis sided with Mayor Pro-Tem Stottlemyre on the issue. “We’re in such a rush to adopt [the budget] and all the pieces aren’t quite there yet,” he said. “There’s an audit, which is going to hurt, and then there is that big cloud hanging over us as far as what’s going to happen with negotiations and what that’s going to do to us 2 years down the road.”

However, City Attorney Peter Tracy pointed out that the preliminary budget “is not actually a binding document, in many respects,” and that changes based on future financial data were to be expected. “I think it’s just [an issue of] semantics,” added Councilmember Griffiths. “I really don’t have a preference on how we do this because I think it’s the same either way. My only worry is losing all the hard work we put in during the budget hearings.”

Mayor Pro-Tem Stottlemyre’s motion to continue consideration of the preliminary budget to Dec. 12 was not approved by the Council. Said Councilmember Griffiths, “I’m almost positive you won’t have the answers to your questions by then.” Instead, the Council approved the preliminary FY 12-13 budget and directed staff to bring the budget back to be re-agendized for further discussion at the Dec. 12 meeting.

“I hope I’m wrong, I really do,” said Mayor Pro-Tem Stottlemyre after the meeting. “I just felt we had more time to be cautious in our approach to this. We don’t have to do business as usual. I wanted to let the public know the city of Bishop is being more careful.”

The Council’s next scheduled regular meeting will be Nov. 14.