Wednesday, July 23, 2014

Ketchum’s lopsided budget

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    There are winners and losers in the proposed Ketchum city budget. City employees are clear winners. Clear losers are the Wagon Days celebration, which generates tax revenue, and Mountain Rides, whose services are utilized by both residents and visitors.
    Ketchum needs to explain to businesses, residents and taxpayers why it’s inflicting cuts on both programs and why it’s ranking increases for employees over infrastructure, services and revenue-generating events like Wagon Days.
    The budget is becoming lopsided.
    The budget contains raises that next year will be between 2 percent and 3.8 percent for employees, the city’s picking up wages for at least two and possibly three more firefighters, more parks and planning personnel, and 15 percent increases in medical insurance benefits for all employees.
    The increases are slated even though city revenues are down. This means that the city plans to shift money that should go to other programs and infrastructure in order to afford wage and benefit increases.
    This is not to pick on city employees who work hard for their money. However, in the last few years local public jobs have offered better wages with better benefits than comparable local jobs—and they come with no market risk.
    Local businesses—the very organizations that pay property taxes, and generate and collect local-option sales taxes—were battered by the economy last year. The city’s LOT revenues suffered as a result.
    Businesses lost two weeks of peak-season revenue because of the Beaver Creek Fire. Then, a poor snow year piled on poor winter business. And, there was also the ongoing drain of unfair competition from untaxed Internet sales.
    Unlike the city, when businesses suffer revenue losses three things generally happen. First, employees don’t get raises, even if the cost of living rises as it has by 2 percent since last year. Second, jobs aren’t added. Third, products or services that generate revenue or are key operations are not cut.
    In continuing to increase wages, the $14.2 million Ketchum budget also shorts basic repairs to sidewalks and buildings.
    The budget lists no plans to restore the cuts if revenues improve. Instead, the city’s wish list contains money for acquiring open space. Unbudgeted, but also on the city’s radar, is a new city hall.
    The budget wisely maintains $450,000 for the Sun Valley Marketing Alliance. That said, the city should keep an eye on its investment and take its measure by eventually comparing SVMA’s costs to skier-day counts and the number of passengers arriving at the airport annually.
    Without a well-marketed and well-attended Wagon Days celebration, August business used to drop off radically. Without proper support, that could happen again—and whack LOT revenues hard.
    The city budget needs a healthier balance among labor, investment in the local economy, services infrastructure and pet projects—and a lot more debate.

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