Wednesday, September 25, 2013

Government spending packs a punch

Capital expenditures up in south valley during recession

Express Staff Writer

It’s been five years since the national real estate crash brought Blaine County into a deep recession that resulted in government budget cuts, staff layoffs, steep reductions in capital spending and reconsideration of priorities.
    Even so, according to data compiled by local economic development group Sustain Blaine, the local economic picture is beginning to improve.
    Total assessed property values fell 34 percent in Blaine County, from about $12.25 billion in 2008 to the current bottom of $8.1 billion in 2012. The lower end of the county’s property market (concentrated in south-valley cities) suffered the most during the recession, with Bellevue seeing a 55 percent decrease.
    Sun Valley properties, generally at the high end of the market, saw only a 26 percent drop.
    The crash resulted in higher county taxes for some property owners because county and city leaders raised levy rates—the amount of tax relative to a property’s value—in order to provide enough revenue to cover expenses.
    County Treasurer Vicki Heuett said the county tax levy rate could come down as the recession abates and cities become more able to make ends meet.
    “All taxing districts have been affected [by the recession],” Heuett said. “But property values are starting to inch up.”

LOTs down but creeping up
    The tourist-based portions of the economy in the cities of Sun Valley, Ketchum and Hailey have increased steadily since hitting bottom in 2010.
    Only these cities can levy local option sales taxes, or “tourist taxes,” which take a percentage of revenue from sales of hotel rooms, rental vehicles and, in some cases, restaurant food, liquor and building materials.
    Combined LOT revenue peaked for all three cities in 2007 at about $4.3 million, dropping to a low of $3 million in 2010. Ketchum profits most from the LOT, which it uses mostly for general fund operating expenses, including law enforcement, fire departments and public transportation. The tax can also be used for property acquisition and roads, buildings and grounds, and marketing.
    The LOT is more volatile than the property tax.
    “The LOT in 2013 will probably be higher than 2012, but it could be less than expected due to the Beaver Creek Fire,” said Sun Valley Treasurer Angela Walls.

Priorities and coping
    The recession affected the cities and the county differently. The data shows that by 2012, police, fire and other emergency services remained top priorities, exceeded only by expenditures on water and waste systems. With steep declines in construction, spending on planning and building departments faded.
    Government general funds (operational expenses), totaled $48.35 million by 2012, including $8.9 million in expenditures for water and wastewater departments.
    General fund spending in cities that year ranged from lows of $240,000 in Carey and $1.65 million in Bellevue to highs of $10.73 million in Ketchum and $20.54 million in Blaine County.

“There is a lot of philanthropy in Ketchum.”
Gary Marks
City administrator

    The proportionally larger county spending includes district court, county fair, coroner, Sheriff’s Office and other expenses.
    Cities used various strategies to deal with constrained revenues.
     Ketchum, for example, relies upon property tax revenue for 56 percent of its general fund. The remainder of the city’s 2012 spending of $10.73 million (including water and wastewater expenses), was supplied by local option sales taxes, fund carryover from the previous year, state revenue shares, city building department services and other negligible resources.
    “Our general fund budget dropped from $9.8 million in 2008 to $6.6 million in 2011,” said Ketchum City Administrator Gary Marks. That was a 33 percent decrease. “We have been digging our way out ever since.”
    Marks said capital projects were deferred during the recession, including improvement of two blocks of Fourth Street and a section of First Avenue, and a widening of Trail Creek Bridge on Main Street, which would be completed in partnership with the state highway department.
    Before the recession hit, the year 2008 was a big spending year in Ketchum, with $2 million used for the Fourth Street Heritage Corridor project, about half of which was funded privately through a loan, and paid back through a city bond.
    In 2010, about 50 percent of the $500,000 Ketchum Town Square project was paid for with private donations.
    “There is a lot of philanthropy in Ketchum,” Marks said. “The Town Square came at a good time because it gave a new focus to economic development during the depths of the recession.”
    The more populous city of Hailey saw a less precipitous drop in general fund spending during the recession, from a peak of $4.8 million in 2008 down to $4.1 million 2011, a 14.5 percent drop.
    The city’s capital spending actually increased dramatically from 2009 to 2012 for a new rodeo arena, skate-park expansion, road construction and city parks development.
    This capital spending was accomplished thanks to a successful grant program that brought in several million dollars, including $3.5 million in federal stimulus funding for rebuilding 2.5 miles of Woodside Boulevard.
    Matching funds for the Woodside Boulevard project were spent out of a capital fund budget that had been saved over many years from annexation fees and development-impact fees.
    “We have no ongoing levies to replenish our capital fund,” said Hailey City Administrator Heather Dawson. “To have this would require voter approval.”
    Hailey leaders have future plans to ask voters to allow the city to bond for about $5 million to upgrade the sewer plant.
    The smaller city of Bellevue also moved forward with capital spending during the recession, replacing water mains, fire hydrants and installing water-meter vaults in an ongoing effort to establish per-gallon water rates in the city. The city also purchased a fire truck and moved into a new fire station.
    Bellevue built a $7 million state-of-the-art wastewater treatment facility just before the recession struck, sending sewer rates higher than expected. City leaders have said they will have to “build their way out of” the increase with new development.
    Bellevue Planning Director Craig Eckles said 40 percent of the city’s recent capital expenditures have come from grants.
    Sun Valley’s capital spending dropped by about 75 percent after 2008, and by 2012 was still low relative to its peak.
    Sun Valley City Administrator Susan Robertson said the city has been looking to improve roads, and find funding to extend the Trail Creek path from the city limits to the Boundary Creek Campground. The city has plans to buy a fire truck this year and to update its transportation master plan, which could lead to a number of capital projects.
    Carey, the least populous city, saw an increase in capital spending in 2011, for a pavilion and sewer plant upgrades.

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