Wednesday, February 25, 2009

Sun Valley holds on to cash in rough economy

LOT down, but reserves piled high


By JON DUVAL
Express Staff Writer

On Monday, Sun Valley City Council member Nils Ribi explained that a conservative approach to the budget has left the city in a healthy financial situation during a declining economy. Sun Valley is on schedule to have about $2.4 million available for contingencies at the end of the fiscal year. Photo by Willy Cook

While cities around the Wood River Valley look to bring expenditures in line with shrinking revenues, Sun Valley has managed to operate as usual, thanks to conservative planning at the beginning of the year.

With a fiscal 2009 budget of $7 million, $1 million less than the previous year, the city is still holding on to nearly $2.5 million that could be made available should revenues fall further.

Projections for the end of the fiscal year, which runs through Sept. 30, show $328,000 in the city's contingency fund, as well as a balance totaling $783,000 in its general, street, workforce housing, land acquisition and capital improvement funds. When combined with the $1.29 million 16-week reserve, held for absolute emergencies in the case that the city receives no revenues for an extended period of time, the city could have $2.4 million in cash at the end of the year.

The figure for unreserved funds is over half the $4.58 million budgeted for expenditures, well above the 5 percent to 15 percent recommended by the Government Finance Officers Association.

"We've shifted our focus to essential services and infrastructure," Mayor Wayne Willich said during an interview. "We're plowing the streets, and have good police and fire protection. The city isn't supposed to be wandering around jousting at windmills."

To help keep the city in good shape financially when many others are facing staffing and budget cuts, the mayor and council maintained a conservative approach last summer when looking at potential expenditures.

That meant a delay in the repair of some secondary roads throughout the town, as well as cuts for recreation, the Sun Valley-Ketchum Chamber & Visitors Bureau, professional training and a large reduction in attorney's fees.

Four months later, that frugality seems to be paying off, especially with local-option tax receipts down 11 percent for the first quarter of the year. With $211,632 collected from October through December, receipts are about $25,000 less than the amount originally projected for that time period.

Sun Valley's local-option tax charges 3 percent on lodging and liquor by the drink, as well as on restaurant meals and intangible goods such as golfing greens fees, and 2 percent on hard-good retail sales.

Though the city anticipated only a 3 percent drop in LOT revenue, City Council President Nils Ribi was not too worried at this point in the fiscal year.

"Being down now is a concern, but it's not too significant because the bulk comes in the summer," Ribi said during the same interview.

Historical data show that LOT receipts from October through December make up around 16 percent of annual LOT revenue, a smaller percentage than the month of July.

"If July and August, our two biggest months for LOT, tank, we have the contingency in place," Willich said. "The numbers could fall again, but we'll make the necessary adjustments."

Willich said that that could mean taking money out of the contingency fund or perhaps delaying another road project.

"However, I'll burn through the contingency and won't pave streets in order to hang on to (city staff)," Willich said. "If we do this, then we won't have to look for highly qualified people when this turns around."

While both Willich and Ribi noted that the reserve figures would be quite high under normal circumstances, they said the uncertainty in the economy is enough to justify the size of the fund.

"Someone could look at the numbers and think, 'God, you've got too much money sitting there,' but the economy is horrible right now and '09 could be worse, so we'll likely have to use some of those reserves," Ribi said.

While that might cause the city to hold on to cash before pumping it into street repairs, Willich said some roadwork could be done anyway.

Willich said the city proposed $664,000 in transportation projects eligible for federal stimulus funding. Those included creating a number of bus turnouts and shelters, extending the bike path from Trail Creek Cabin to Boundary Creek, and rebuilding portions of the bike path.

"We decided not to be pigs at the trough and hopefully this will give us a better shot at receiving the funding," Ribi said.

Jon Duval: jduval@mtexpress.com




 Local Weather 
Search archives:


Copyright © 2019 Express Publishing Inc.   Terms of Use   Privacy Policy
All Rights reserved. Reproduction in whole or in part in any form or medium without express written permission of Express Publishing Inc. is prohibited. 

The Idaho Mountain Express is distributed free to residents and guests throughout the Sun Valley, Idaho resort area community. Subscribers to the Idaho Mountain Express will read these stories and others in this week's issue.