Friday, January 30, 2009

Ketchum forecasts budget shortfall

Revenues could decline by $600K

Express Staff Writer

After a review of the first quarter of the 2009 fiscal year, Ketchum officials are predicting that revenue could be $650,000 less than anticipated.

Despite reducing the budget by $730,000 from the previous year, city officials are looking to make further reductions as a result of the national economic slowdown.

City Administrator Gary Marks said in an interview with the Idaho Mountain Expres that the city's income is down largely because of a sharp drop in local-option tax receipts. This revenue comes from a 2 percent sales tax on lodging and by-the-glass liquor sales, and a 1 percent tax on retail sales and building materials, with the goal of offsetting the impacts of tourism on city services and infrastructure.

City officials originally estimated that the tax would bring in $2.2 million this year, but have since revised that figure to $1.9 million, with first quarter receipts coming in almost $100,000 less than expected.

Marks said development revenues, including building permits and impact fees, could likely come in $300,000 less than initially budgeted.

As well, the state of Idaho told Ketchum that the city would receive $50,000 less than planned in state-shared revenue.

"We anticipated less income when we prepared the current general fund budget, but we have to be ready for a longer economic slide," Ketchum Mayor Randy Hall stated in a prepared statement Wednesday.

To that end, Marks said, the city has already been taking steps to lessen the impact of the economic slowdown.

"We're on track to spend less than planned," Marks said. "Right now, it looks like we will be saving around $350,000."

Marks said a large portion of this reduced expenditure is coming from a number of vacancies in the Police Department, including former Chief Cory Lyman's position.

Even without these expenditures, however, the city could still be looking at a deficit of $250,000 at the end of the year if it doesn't find other areas in which to reduce spending.

"We have to look at all possible options," Marks said. "This means analyzing our operating costs and perhaps asking our department heads where they could make 1 to 3 percent reductions. As well, a consolidation with the Blaine County Sheriff's Office is an option that has to be considered. Staff layoffs would be an absolute last resort."

Marks said he expects a plan to be developed over the next four to eight weeks.

"The longer we wait, the less of the fiscal year we have to respond," Marks said. "At the same time, we want to be methodical and deliberate without making any snap decisions. I like to think that we will get better efficiencies as a result while minimizing reductions in service levels."

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