By GARY MARKS
Sun Valley resident James Donoval contends that the city of Ketchum is "broke" (letter, Feb. 3). He is simply wrong. The city added $912,701 to its bottom line during fiscal year 2008-09 and doubled its liquidity from 400 percent of current liabilities to 800 percent. There simply is no way that such facts can be attached to the term "broke." When the city asked its independent auditor if it was "broke, he dismissed the question, stating, "If the city of Ketchum, Idaho was broke, I would have disclosed this in my reports and in the financial statements."
Nevertheless, Mr. Donoval tries to prove his claim by alleging that the city "raided" the Ketchum Urban Renewal Agency by taking $600,000 and using the funds to improve the city's cash reserves. The word "raided" implies that money was inappropriately taken. Here are the facts:
· During FY2008-09, the URA repaid the city's general fund about $290,000 that the city had spent on startup costs on behalf of the URA in FY2006-07. This was money that the URA owed the city. Clearly, the URA should pay its debts—which it did—and any assertion that doing so is the equivalent of "raiding" its funds is wrong.
· In FY2008-09, the URA also repaid the city's capital improvement fund $350,000 it owed it for the 2008 Fourth Street project. The money was used to reimburse the capital improvement fund for costs incurred by phase 2 of the Fourth Street improvements. Any suggestion that the money somehow made its way into the general fund to improve the fund balance is simply false.
Next, Mr. Donoval writes that I "ignore" that the city's street maintenance fund has no fund balance. He further contends that this situation is in "violation" of "fund balance standards" set by the Government Finance Officers Association. Here are the facts:
· The street maintenance fund is a new fund created to segregate dedicated gas tax funds from the general fund. State law requires that these funds be spent only on the city's transportation system. The new fund creates increased transparency in the use of restricted funds and is a well-established practice utilized by local governments throughout the United States. As a new fund, the beginning balance started at zero. This is not an unusual circumstance. Yet, after the first four months in use, the fund has already built a balance of over $65,000 (as of Jan. 31). As the fund matures, the city's management will continue to work to build the balance. Saying that I somehow "ignore" the street maintenance fund is incorrect.
· Contrary to Mr. Donoval's assertions, the GFOA does not establish "standards." Rather, the GFOA is a private, nonprofit organization that seeks to assist local governments by recommending "best practices" and "advisories." There are no legal requirements for compliance with this group's recommendations. But even so, GFOA has not made any recommendations concerning fund balance levels for a street maintenance fund. Claiming that the city is in "violation" of accounting standards for fund balances is incorrect and misleading.
Finally, Mr. Donoval claims that the city's auditor has found its financial information to be unreliable. He relies on a boilerplate statement in the city's audit report that essentially says the city does not have on staff a certified public accountant or finance director to assemble its annual financial statements. We outsource this task to an independent auditor. It is common for small towns throughout the country to do this as it saves money. It is important to note that the auditor's statement on staffing applies only to the annual financial statements used to prepare the city's annual audit. It does not apply to the monthly financial reports generated by the city's standardized municipal accounting system, which itself is designed in accordance with generally accepted accounting standards. The public can be assured that the auditor has tested the city's financial information and has produced an audit report certified to be reliable in all material aspects.
Contrary to the picture Mr. Donoval tries to paint, the city's independent auditor has expressed affirmation and strong praise regarding the city's robust financial performance. He reported to the City Council, "I did the test, I looked into it and the numbers are there." He went on to commend the city for its "Herculean efforts, miraculous decision-making and unbelievable results" in addressing the financial challenges presented by the current recession.
If Mr. Donoval wants to continue saying that Ketchum is broke, he needs to talk to our auditor. He would welcome the call.
Gary Marks is Ketchum city administrator.
