Star Valley Finances Are In Good Shape

Town has more than $1 million in the bank; questions how much will be left at year’s end

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Andy Towle/Roundup - atowle@payson.com

The Town of Star Valley is budgeted to collect nearly $1 million from traffic tickets this year, but officials expect the number of tickets will drop now that people are aware of the photo radar stations.

After taking more than a month to sort through bizarre budget numbers, including a half million contingency fund and inflated expenses, Star Valley’s financial consultant reports the town is doing surprisingly well.

According to Glenn Smith, the town’s financial consultant, Star Valley has more than a $1 million in the bank, but with state-shared income tax and sales tax revenue expected to decline and photo enforcement tickets already rapidly decreasing, how the town will finish off the year is still up in the air.

Smith said Friday that while the town is doing well today, without a reserve or rainy day fund in place, the town could find itself up a creek like so many other towns in Arizona.

Smith was hired several weeks ago to analyze the town’s budget and current standing. Council members worried that the town could be heading for trouble without a clear snapshot of where they stand today.

At a Dec. 16 study session, Smith presented a brief summary of where the town stands as of Nov. 30. According to Smith’s pre-audit records, the town has around $1.3 million sitting in the bank unreserved, as a result of bringing in $1.14 million for the first five months of the fiscal year and spending just $540,000.

Former Town Manger Vito Tedeschi budgeted for the town to spend most of the $1.3 million reserve for land purchases and a police contract, which would have left the town with a deficit around $167,000.

But with a new, permanent town hall and police station crossed off the to-do list for now, the town will likely spend half of what was budgeted.

Another $640,000 was budgeted for a contingency fund, which Smith said is used for unexpected expenses.

Smith said Tedeschi was over budgeting when he put half a million into the contingency fund.

“I have no idea what that money was meant for,” Smith said. He would like to see the town take some of its unreserved funds and put it into a rainy day and reserve fund.

Smith said revenues would not come in as expected due to the state’s billion-dollar budget shortfall and declines in sales tax revenue. As a result, the town could need reserve funds in a few years.

Town Manager Tim Grier said the town needs to create a rainy day fund soon.

“Star Valley is going to have some problems, the same as other cities, with reduced revenue,” Grier said. “We will have to make smart decisions.”

The biggest drop recently is in photo enforcement tickets.

The town is budgeted to make a million dollars in revenue off the tickets by year-end, but with a 52 percent drop in ticket revenue in the last month, the town could come in under that projection.

“Tickets should drop for six months with tourists being away and people now seeing them on all the state highways,” Smith said. But if ticket revenue continues to drop, the town will have to reevaluate the system as a reliable revenue source.

“We have to figure out how much it is going to go down,” Smith said.

Several more months of data should show what the system could bring in annually.

When the town created the 2008 budget, Smith said Tedeschi had limited photo enforcement data.

“It was a shot in the dark when he set the budget to a million because they only had 2.5 months of history,” Smith said.

When the cameras became operational in April 2007, revenue increased 28,000 percent, from $200 in March to $56,000 in April and has continued to grow every month until November, making it a key source of revenue for the small town.

Revenue numbers do not take into account operating expenses, such as employees, paying Redflex Traffic Systems, which owns the two cameras and reviews each ticket and accompanying photo for accuracy. How much the town is actually making off the tickets is a priority in calculating the new budget, Smith said.

The town’s major sources of revenue, besides the photo tickets, are sales tax, income tax and various state grants including highway user funds.

Surprisingly, the town’s sales tax revenue has remained steady and well over budget, even in recent months when other towns, such as Payson, have seen huge drops.

The town budgeted for sales tax to come in 31 percent under last year, but has only seen a 14 percent drop. Smith said Tedeschi budgeted very conservatively for sales tax, which is going to benefit the town in the rough economic times.

Expense categories for the town include personnel and operating costs, such as electricity and rent, which are coming in well under the 2008 budget.

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