It appears that there are misperceptions in the community about the status of the Town budget. Over the past two years the Town Council acted quickly to make a series of policy decisions to deal with the financial impacts of the recession. As a result of these decisions the Town’s operating expenses continue to be balanced and the Town has been able to undertake $42 million in capital improvements using $34 million in grants.
Operating expenses are the ongoing costs of the employees, supplies and equipment necessary to provide police protection, street repair, snow removal, parks and recreation, planning, and other Town services Over the course of the recession the Town Council has reduced staffing by 18% (not counting furloughs) in order to keep expenses in line with reduced revenues. As part of this, all of the Town employees from the Town Manager down to the lowest paid employees agreed to a 15.7% reduction in pay to help balance the budget.
The current and past Town Councils have always used conservative estimates of revenues. As a result, revenues have exceeded the amount necessary to cover operating expenses in every one of the past ten years except in FY 2007-08 when funds were drawn down from the Reserve for Economic Uncertainty (REU) to cover the Hot Creek litigation. Since that time all litigation expenses have been built into the budget.
The REU is money that the Town Council saves in good years to cover unanticipated expenses. The REU has been used three times in the history of the Town. A draw was made in FY 2000-01 to cover redevelopment litigation. That draw was paid back over a period of several years using subsequent year’s excess revenues over operating expenses. A draw on the REU was also made in FY 2000-01 to cover a soils contamination problem, which was repaid in a subsequent year by insurance. The draw for Hot Creek is expected to be repaid through insurance coverage (which is disputed) or by subsequent year’s revenue surpluses.
Once again this year, the Town Council used very conservative revenue estimates when it approved the budget for the current year. As of January revenues were running about $250,000 above projections and expenses were somewhat below budget. The Town has over $8 million cash in the bank
One of the first actions taken by the Town Council in winter 2008 when the slow down in building became apparent was to determine which capital projects should be continued and which should be delayed. The availability of grants for certain projects was a major consideration in that determination. Over the course of the recession the Town Council has kept $42 million in capital projects going, using $34 million in grants. Money not provided by grants had been either saved in advance or was funded with internal borrowing. The borrowing included use of $3.2 million proceeds from the sale of surplus right-of-way and internal financing of a $2 million to fund the airport terminal. The Town Council also applied $1 million that had been saved because of their decision to delay purchase of replacement of vehicles. The Town Council chose to borrow this money rather than cancel the projects and/or return the grant funds. These projects also created local construction jobs.
Projects such as the police station, ice rink cover, and the extension of Airport Road have been delayed until funding becomes available. Also, changes in State funding time frames have delayed the reconstruction of Meridian Blvd., installation of traffic signals on Main St., and other drainage and road improvements.
We read daily in the papers about cities such as Reno and Los Angeles that are on the brink of bankruptcy because of the recession. There are many more cities that have not adjusted to the new reality. However, the Town Council of the Town of Mammoth Lakes stands out for taking immediate action to keep its operating budget balanced.
Certainly there are those who would second guess the decisions to use the right of way money and vehicle fund surplus to keep important public works projects going. However, I think it is fair to ask what projects they would have abandoned, what grants they would have returned, and if they there was some more important use for that money.
The Town Council of the Town of Mammoth Lakes has made the difficult decisions necessary to keep our government solvent, maintained public safety, and provided funding to keep capital projects and construction jobs working for our community.