Wednesday, July 26, 2006

Hailey adopts tentative $10.8 million budget

Total amount is now fixed

Express Staff Writer

The Hailey City Council Monday adopted a tentative $10.8 million budget for the city's 2006-2007 fiscal year.

The council's adoption of the tentative budget is a necessary first step the city must take to meet public noticing requirements prescribed by Idaho state law. Once a city adopts its tentative budget, line items and details can be changed, but the total amount of the budget cannot be increased.

The tentative budget, which cannot exceed $10,806,715, is a 4.3 percent increase over last year's budget.

During various meetings scheduled throughout the past month, Hailey City Council members have discussed various aspects of the city's proposed 2006-2007 budget, which contains a number of changes over previous years.

Perhaps the most notable of these changes is a proposal by Hailey City Clerk Heather Dawson to discontinue the practice of deficit budgeting for the upcoming budget year.

According to Dawson, deficit budgeting is a practice where a city's operating deficits are paid for with money that was carried over from a previous budget cycle. By doing away with deficit budgeting, Hailey would begin to conform its annual budget development to actual revenue streams.

"We're to a point where we can function on what we're taking in," Dawson said during a recent interview. "My goal is to stay within our revenues."

Deficit budgeting also tends to inflate the budget and creates continued reliance on increasingly higher fund balances and carryover each year, Dawson said. This leads to revenues being understated and expenses being overstated in order to meet the reliance on fund balance.

Hailey's operating revenues have exceeded actual operating expenses in every year since 1997, with the exception of 2004. When new budget practices are in place, Hailey will be able to rely on the actual revenue it receives to set its annual budgets.

In another key aspect of Hailey's proposed budget, increased expenses will be capped at 3 percent across the board as part of an effort to avoid the city's reliance on carryover from previous budget years. State law prohibits increases of more than 3 percent on property taxes, but other funds have been fair game, Dawson said.

On the revenue side of things, the passage of the local option tax by Hailey voters on May 23 has led to in-depth discussions by the council on how to allocate anticipated funds that may total up to $350,000 annually. Already a number of public and private entities have requested a portion of the LOT funds.

Until the first returns on the LOT come in, however, the city will be unable to commit to any of the funding requests, Hailey Mayor Susan McBryant said at a July 17 meeting. Entities that have requested LOT funds include the Blaine Ketchum Housing Authority and the combined KART/PEAK bus system.

City Council members will continue their discussions of the proposed budget at an upcoming Aug. 14 meeting and at a final meeting on Aug. 28, in which they will adopt a finalized appropriations ordinance setting Hailey's budget for the 2006-2007 fiscal year.

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