Council reviews budget policy items without FAA grant money included
In the face of tough economic times, the Town of Mammoth Lakes just can’t seem to catch a break. At a special Town Council budget workshop on Monday night, it was made clear that the budget presented that evening did not include the $1 million grant money from the Federal Aviation Administration for reaching 10,000 enplanements.
“We have reached the 10,000 enplanements, and then some,” explained Town Manager Rob Clark, “but we reached them in 2010. The FAA does not award the money until the year after the enplanements are reached and they award it in their fiscal year, which begins in October.”
This means that the Town will not be able to budget the money until 2011-12. The money is eventually suppose to help pay back the General Fund for the money that was borrowed to upgrade the terminal building to meet FAA standards so that air service could begin.
Besides that, Council spent some time playing a game of chicken and egg as it decided whether or not it should determine the total budget amount before starting to discuss which budget policy items to approve. The number suggested by Finance Director, Brad Koehn, was $17.5 million, a $1.2 million increase over last year’s budget at $16.3 million. Koehn was basing this number on the trending actuals from 2009-10 budget, which as of the Monday night meeting had come in at $17.5 million, but the final numbers will not be known until early fall.
Council member John Eastman felt the estimate was too high.
“It’s a waste of time to go through the policy decisions before we are sure what we want to budget,” Eastman said. “The projections are overly optimistic and staff needs to be directed to reduce the estimate.”
Eastman felt that the budget should be projected at $16.3 million, the same as last year.
“Staff will have to come up with the cuts and come back to us in three weeks with their suggestions,” he added.
Mayor Pro Tem Jo Bacon felt whether they chose a budget number first or began discussing budget policy items was arguable, but agreed to send staff off to reduce the budget number if they took the $1.2 million out of Transient Occupancy Tax, TOT, estimates. Council member Rick Wood agreed with her.
Wood had numbers from Mammoth Mountain Ski Area that he said showed the Mountain was $12 million below budget as of July 11, which he used to prove his point that the economy is still unstable and the Town should budget conservatively.
So Council came to the consensus that they would begin to go through each budget policy item, except those dealing with tourism, recreation, and the police department, so that members of the public who had come to speak on the items would have a chance, but would not make any actual decisions until staff came back with a new budget based on $16.3 million. Tourism, recreation and police department discussions are being held back until the new Mammoth Lakes Tourism Executive Director, John Urdi, as well as the Interim Police Chief, Dan Watson, return to Town. The recreation discussions will include whether or not to continue to fund the operation of the ice rink.
Several notable items in the budget policy discussions were:
Bacon was concerned with the large portion of the budget is based on grant money that had not actually been awarded yet, including a $75,000 grant for the Town’s urban greening planning project. Community Development Director Mark Wardlaw explained that they put the grant assumption into the budget so that they do not have to lay off an employee now. Wardlaw claimed that they would know whether or not they received the grant this fall. Later in the discussions it came to light that a large portion of the Community Development Department is budgeted with grants that have yet to be awarded. When Bacon asked what would happen if the grants were not received, Wardlaw stated that staff would have to be reduced, the Town would not have the projects that were budgeted for with grants, or Council and staff would have to find the money elsewhere.
Wood asked if this type of budgeting with grants that had yet to be determined was normal and Koehn said yes.
“You heard me screeching two years ago when we were counting on Developer Impact Fees that weren’t there,” Wood said. “This is the same issue and it gives me heartburn.”
No one had suggestions on how to change this, they just voiced their concerns.
Eastman then expressed his feelings that the Town had already spent too much on the performance-based budgeting experiment and called to completely drop it. Wood agreed, stating that he did not find it useful. Council agreed 4-1 that it wanted to drop performance-based budgeting. Bacon, who has been the advocate for performance-based budgeting, along with former Council member Wendy Sugimura, disagreed on dropping it completely but was outnumbered.
Council agreed that replenishing the Reserve for Economic Uncertainty, or REU, was an important and symbolic goal, but was not hung up on getting it all the way back to 25 percent this year since there are several other accounts that need to be replenished. Currently the REU sits at 17 percent, or $2.8 million, according to Koehn. The Town wants to get back to the REU level of 25 percent that it was maintaining before the economy caused it to dip in and use part of its reserves.
During the general budget review, where each Town department describes what they do in order to justify the amount they are requesting in the budget, Council member Matthew Lehman, who seems at ease on the dais even though he has only been seated for a few weeks, expressed his discontent that Town management was requesting a 15.5 percent increase, finance was requesting an 18 percent increase, and personnel was requesting a 20 percent increase. Town Manager Rob Clark told Lehman that these increases reflect the discontinuation of furlough days as well as increases in rates for medical benefits and PERS. Clark then told Lehman that further discussion of these items should be held in closed session.
Lehman also requested a breakdown of the $429,000 price tag for the contract with Mammoth Lakes Housing. MLH Executive Director Pam Hennarty explained that the actual contract price is $385,000 and it covers staff, overhead, operations, and down payment assistance. It also allows the organization to go after grant funding. The remaining $44,000 balance of the $429,000 is for Town staff costs to work with MLH on workforce housing.
Budget discussions will continue throughout the month, including at tonight’s Town Council meeting and at a special meeting on July 29.