|
Town: The budget is balanced |
|
|
Thursday, 29 May 2008 |
By Stacey Powells
Mammoth Times Staff Writer
“The budget proposed tonight is balanced,” said Brad Koehn, Mammoth Lakes' finance director.
In the first of what might turn out to be three separate and additional council meetings on the town budget, Town Manager Rob Clark sat back and let Koehn take the floor for an hour's worth of projections, adjustments and statistics at Town Council's May 21 meeting.
“The revenues are equal to the expenditures,” Koehn said. The revenues the town have estimated for next year are less than the estimates for this year because the building activity in and around town is not what everyone had hoped.
According to Koehn, revenues actually exceeded the initial revenue projections by an amount of approximately $1 million. Since the town had projected the revenues so conservatively, they still have an excess of revenues at year end.
Because none of the anticipated development projects moved forward, permits were not pulled, resulting in a current financial shortfall of approximately $1.2 million in the Community Development Department.
Had any of the projects moved forward, it would have more than paid for the revenue shortfall. Presently it seems likely that the town's year-end budget “Revenue Surplus” of around $1 million will come close to matching the projected Expenditure Overage in Community Development of closer to $1.2 million.
Unlike Mammoth Mountain Ski Area which is a “For Profit” business, Mammoth Lakes does not operate to generate a profit. In an Email from Town Councilman John Eastman, he states that Mammoth Lakes is a municipal government whose purpose is to provide services to the residents of our community.
“We operate to provide services, mainly associated with public safety,” Eastman says. “Be it town roads, drainage and snow removal, police protection or the administration to run a variety of departments, “Public Safety” is the single most important objective of a town government like Mammoth Lakes and therefore the largest expense segment of our annual budget.” Approximately 60 percent of the services provided by the Town relate to Public Safety.
The financial challenges that Mammoth is currently facing have nothing to do with how they projected their expenditures for the budget year but are the result from two specific areas that were not anticipated. The first was mentioned above regarding the lack of development in the community, which means no Development Impact Fees.
The second was the amount of money the town has spent in the lawsuit brought on by Hot Creek Aviation against the Town and Mammoth Mountain CEO Rusty Gregory. The town did not budget for the legal costs because their liability insurer normally pays all legal expenses. To date the legal expenses are $1.3 million and the town's insurer has made no payments. This was an unforseen expense the town must plan for.
Mammoth was able to allocate $750,000 for the legal fees but there is no guarantee the town will be reimbursed. Eastman asked if they were able to assume that the town's insurance carrier will pay the legal fees.
“This could go a variety of different ways,” Clark said. “I don't think it would be prudent to spend the money until we know for sure if we are getting it back or not. If we don't have to pay because we prevail on appeal or because the insurance carrier covered the fees, then we can bring the $750,000 back to council, but right now we have to be conservative.”
To help curtail expenditures, there will be a slowdown on town paving projects and the current vacant employee positions will probably not be filled in order to help balance the budget. Capitol improvements will be drastically reduced and since Town Council authorized a loan from the general fund, which came from the land sale proceeds from the North Village and is no longer being used for a parking garage, it has allowed the town to use that money for other necessary expenditures.
The town has $4,417,319 in its Reserve for Economic Uncertainty fund, which could be drawn down at a minimal level if necessary. That works out to the town setting aside 25 percent of its annual budget into the Reserve Fund. “The Town of Mammoth Lakes is not in a financial crisis,” Eastman said.
|
|
Last Updated ( Friday, 06 June 2008 )
|
