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For the week of July 23 - 29, 2003


Ketchum struggles to balance budget

With $900,000 cash reserve gone,
city eyes cuts

Express Staff Writer

Ketchum City Council members struggled this week to make cuts in the city’s draft 2003-2004 fiscal year budget, after hearing that the city’s revenues will drastically fall short of proposed expenditures.

Meanwhile, council members and city staff contemplated the impacts of the expenditure of $918,000 in cash reserves as part of the current budget approved last year.

Some city officials said they did not intend to spend the enormous sum of reserve cash, while the former city administrator—who drafted the 2002-2003 budget—said the budget process he employed in 25 years at the post ensured that cash reserves were protected.

Mayor Ed Simon said Tuesday the city’s revenue and cash-reserve shortfall could be attributed in part to a lack of clarity in the presentation of previous budgets. "We didn’t really realize the reserves were being depleted as quickly as they were," he said.

However, Jim Jaquet, city administrator from 1977 to June 1, 2002, said he routinely carried over a cash reserve of $600,000 to $900,000, and kept track of city revenues to ensure the money was not depleted. "If you don’t have the revenue, you don’t spend the (reserve) money on capital projects," Jaquet said.

Ketchum City Councilwoman Chris Potters said she was unsure how the majority of the city’s reserves were spent in a time when certain tax revenues are sagging. "I guess this really blindsided all of us," she said.

The debate over the handling of the 2002-2003 budget began in earnest Thursday, June 17, as City Council members began their review of proposed department budgets.

The sum of the proposed budgets for all city departments—except the water and wastewater departments—totaled just over $9 million. Projected revenues for the city for the 2003-2004 fiscal year are just over $8 million, prompting city officials to scramble to make approximately $1 million in budget cuts.

Ron LeBlanc, Ketchum city administrator, told council members that the city must also contend with an estimated $500,000 shortfall in local option tax revenues, as well as the loss of the $918,000 "carry-over cash balance" that is slated to be spent this year to cover a range of general expenses.

The dire situation is mitigated somewhat, LeBlanc said, by $500,000 in unanticipated revenues to the city this fiscal year from property taxes.

LeBlanc said Tuesday that the council in the previous five days had cut nearly $600,000 from the proposed budgets issued by city department heads. He noted that the extra $400,000 in cuts needed to make the budget figures roughly balance will likely be sought by the council in two upcoming budget discussions on July 24 and July 29.

The city could also seek to increase fees or taxes to increase its revenues and offset the budget shortfall, the city administrator noted.

LeBlanc said the $918,000 reserve scheduled to be spent in this year’s budget was part of an overall $1.1 million cash surplus the city had at the beginning of the current fiscal year. However, the balance of that cash-reserve sum will likely be spent to balance the 2003-2004 budget, he said.

After a budget for the next fiscal year is approved, the city will seek to implement a plan to rebuild its cash reserve to approximately $500,000, LeBlanc said.

In the meantime, LeBlanc said the city might be able to recover a portion of the $918,000 that was put in the budget as a carry over and spent after Jaquet retired.

LeBlanc—who started work as Ketchum city administrator last July—said several factors have played a role in the city finding itself facing an imbalance. The primary factors, he said, were the city’s use of an outdated computer accounting system and an overall lack of detail in the budget documents.

For his part, Jaquet said he always closely monitored the city’s revenues and expenses to ensure that the city’s finances were kept in order. He said he intentionally overestimated the city’s LOT revenues to guarantee that all of the money stayed in city coffers; excess LOT revenues by law must be doled out to the public as property tax relief.

In his tenure as administrator, Jaquet said, he closely reviewed monthly reports of city spending and how it related to the cash carry over.

Jaquet also noted that salaries for many city staffers have increased in the last year under Simon, causing city expenditures to increase since the 2002-2003 budget was drafted.



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