Clearer Council budget; tough new fiscal year
Often the truth hurts, but at least by telling the truth you can get to the root of the problem and begin to fix it.
“Hey town, we’re in trouble,” exclaimed Mayor Pro Tem Jo Bacon at Wednesday night’s Mammoth Lakes Town Council meeting. “I’m glad we can say that, now let’s look forward.”
Bacon was referring to the budget report from Interim Town Manager Marianna Marysheva-Martinez and the rest of the Town department heads. The document clearly summarizes the Town’s financial situation to date and prepares the Council for the tough budget decisions it will have to make for the upcoming 2011-12 fiscal year.
The results of the budget audits and predictions, while not very comforting, were at least spelled out in layman’s terms. The Town ended fiscal year 2009-10 with a surplus in the General Fund, and an overall fund balance of $14 million. That balance, however, is comprised largely of assets and loan notes that may take years to pay back. The majority of the loan notes are made out to the airport, and while the Town will start seeing some return on its investments at the airport when the FAA starts paying enplanement subsidies, the majority of the notes will remain outstanding.
The General Fund reserve is only $1.3 million, representing 7 percent of the General Fund budget, coming in below the 25 percent goal set by the Council. Again, a loan note for the airport is what sits in the coffers to show the 25 percent reserve, not actual cash.
These notes came as a shock to several council members, including Rick Wood, who was under the impression that the reserve contained $4 million in cold, hard cash, not $1.3 million with the remainder in notes.
“Basically a note was made for the airport terminal, and that’s what is in the REU,” Wood exclaimed. “I’m reeling. It seems incomprehensible that this would have happened without Council knowing about it.”
Staff explained that an agenda item had come before Council specifically spelling this out, but Wood admitted he must not have understood it or did not know the right questions to ask.
“This is the most understandable budget agenda bill I have ever seen in my time on Council,” Wood said. “We need to do business with transparency and openness and we’re there.”
Celebrations, however, were short-lived as the functioning new budget format made it easy to see that Council has a very hard task ahead of it in the upcoming budget cycle. While fiscal year 2010-11 is projected to end $2.3 million above what had been budgeted due to the staff cuts that the Council implemented plus a heavy snow year and therefore a Transient Occupancy Tax surplus, budget expenses increased by approximately $2.1 million.
The expenditure increases were due to three main factors, according to the staff report. “(A) Higher Transient Occupancy Tax receipts led to nearly $0.8 million in additional transfers of this revenue to Tourism, Transportation/Transit, and Workforce Housing; (B) the original FY 2010-11 budget contained erroneous revenue assumptions and/or unrealistic savings estimates in a couple of departments [Community Development and Public Works], with year-end actuals likely to be nearly $1 million higher than the budgeted estimate; and (C) higher than expected spending in the airport due to litigation costs, and in police due to staffing changes and corresponding payouts.”
When all is said and done, Council will end the 2010-11 fiscal year approximately $400,000 in the black.
“However, you have numerous unfunded needs,” Marysheva-Martinez explained. “The next fiscal year will be challenging. I am predicting a baseline shortfall. If you continue operating as you are you will have a shortfall because your revenues are going down. And then, of course, there is the $30 million judgment against you.”
Council will begin its 2011-12 budget discussions in May. In the meantime, the body voted 3-2 to fund the removal and replacement of the playground equipment at Mammoth Creek Park from the 2010-11 General Fund. It will cost $5,500 to remove the equipment and an additional $131,050 for the replacement. Council member Matthew Lehman and Mayor Pro Tem Bacon voted no.
In other Council news …
Steve Searles’ contract with the Town was approved unanimously by the Council and included everything he had requested. Searles will be allowed to use the Town pumps to fill up his gas tank while on duty, as well as receive a stipend for health insurance beginning May 1. The remaining changes to his contract will go into effect July 1.
The contract with new Town Manager Dave Wilbrecht, however, did not go as smoothly. At the eleventh hour, Town staff flagged two issues with the contract in its current format. Both issues related to PERS, with the most pertinent being that Council had passed a resolution last November stating it would no longer pay new employee’s share of PERS’ contributions. Town Attorney Andrew Morris was unaware of this resolution and had written into the contract that the Town would pay Wilbrecht’s share. According to Morris, Council has the option to rescind the resolution from 2010 if they want Wilbrecht to have the benefit. Council planned to meet Friday, April 22 in closed session to resolve the issue.