Mammoth Town Manager warns on ‘13-’14 budget. An unnecessary fire drill?
“None of these [balancing] options are good options,” said Town Manager Marianna Marysheva-Martinez (MMM) at Wednesday’s workshop to discuss the Town budget; “they’re bad options. We can’t think of good options.”
MMM helmed the first of three scheduled budget meetings with Town Council, beginning with an explanation of the apparent discrepancy between a $1 million General Fund surplus for Fiscal Year 2012-2013, announced in early April, and a projected $562,527 shortfall for this coming Fiscal Year 2013-2014, announced last week. MMM noted that the $1 million surplus for the 12-13 fiscal year was “one time in nature,” not structural; the first $700,000 came from General Fund expenditures, which were below amended budget projections due to the return of $350,000 in MLLA-related legal retainers, and higher revenue and lower spending in the Gas Tax Fund. The additional $300,000 came from Mammoth Lakes Police Department savings that MMM said were the result of several police officers’ early departures from the force.
The $1 million surplus from FY 12-13 will not be applied to the $562,527 shortfall for FY 13-14. Instead, $307,000 of the $1 million went to the Police Department with the intent to spread out the funds over two years to hire back an entry-level police officer, while the remaining funds were transferred to the Reserve for Economic Uncertainty (REU), bringing the REU to $1.8 million. “It’s a very small amount,” MMM said of this sum, “simply insufficient given the size of our town, and the composition of our revenues.”
To some in the audience, this use of the $1 million surplus seemed as though the Town was putting $1 million in savings before paying the bills. The projected $562,527 shortfall for FY 13-14 which remains will require one of several balancing options, which include suspending hiring for vacant positions by 6 or 12 months, as well as delaying the Police station remodel, potentially reducing Road Rehab funding from $750,000 to $500,000, and shifting 50% of fishing enhancement, 4th of July fireworks, and Chamber of Commerce costs to MLT over 6 or 12 months.
“Our preference was given to avoiding layoffs and not interrupting existing services,” MMM said. The current budget balancing options would potentially over-balance the budget shortfall by about $75,000, in the case of 6 month options, or by about $99,000 in the case of 12 month options.
Three of the vacant positions that would remain unfilled for 6 or 12 months are positions opened up by the elimination of the Assistant Town Manager position, Community and Economic Development (CED) Director, Second TOT (Transient Occupancy Tax) Specialist, and Budget Management Analyst. In addition, the new police officer position for which $307,000 of the $1 million surplus has been set aside would also remain unfilled for 6 months or 12 months.
Councilmember Michael Raimondo responded to this news with concern. “TOT collection should be our number one priority, especially given we’re trying to find new money, and we’re collecting a lot of new money [through TOT enforcement],” he said. “I think the same thing with the CED; we’re trying to get ready for development and say we’re open for business.” MMM agreed, but argued no choice other than suspending hiring for the vacant TOT Specialist and CED Director positions had come to light. “The largest expenses in any department is personnel-related,” she said. “At this point, we can’t really think of better options.”
Much of the tension at the meeting came from the apparent discrepancy not only between the $1 million surplus and $562,527 shortfall, but also between the FY 13-14 budget as projected by the Town’s 5-Year Plan, and the budget as projected by MMM. The 5-Year Plan, completed Dec. 5, 2012 with budget projections through FY 16-17, had calculated a $3,408 General Fund surplus for FY 13-14. However, after reviewing and analyzing revenue and expenditure line items, MMM projected the $562,527 shortfall instead. “We fully expected changes [between the 5-Year Plan and current budget projections], said MMM. “What is disappointing is that all the changes are negative. This is not surprising, however; we cut ourselves down to the bone and into the bone.”
“Actuals change, and therefore the line items change, and second, once you start going through the line items you discover things you did not see at the high level of detail,” MMM said of the changes. She pointed to sales tax as an example: the consultant for sales tax assumed a 2% increase based on sales tax growth assumptions from September to December. “Having looked at the receipts again, they think revenue will remain flat,” MMM said.
Overall, sales tax and franchise fees will be $120,857 lower for FY 13-14 than projected by the 5-Year Plan. Airport revenues will be $91,186 lower, and because of another dry winter, gas tax revenue will be $106,898 lower than 5-Year Plan estimates.
MMM explained that part of the decrease in airport revenue came from an assumption made when developing the 5-Year Plan of 7 flights In the winter, when the Town ended up with only 6. However, Tourism Director John Urdi pointed out that the seventh flight had been cancelled before the creation of the 5-Year Plan. “What frustrates me more than anything is it sounds like we could have been aware of these shortfalls before Wednesday,” he said.
Meanwhile, Teri Stehlik voiced confusion about the sales tax discrepancy. “You’re projecting a lower sales tax this year than last year,” she said, “but everyone I’m talking to says this year is better than last year.” MMM explained that sales tax actuals are received on a quarterly basis, thus the sales tax projection for FY 13-14 are currently based on actuals from December 2012. “This might be a premature panic, if you took into account January, February and March,” Stehlik said, pointing out that business in town gains momentum after December.
“There is no panic, no emergency,” MMM countered. “We have the information, and we have two months to work on it [before the budget is adopted on June 19]. I will not increase the sales tax projection based on some assumed revenues. I’m not willing to balance the budget based on what we think will happen.”
Councilmember John Eastman expressed an overall frustration with the continued discrepancies between various calculations of the Town budget. “I’m tired of the continued misjudgment of our budget,” he said.
