Star Valley Council Bucks Deficit Trend

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Star Valley bucked the deficit trend Tuesday as it unveiled a projected $9.3 million budget, which included $2.9 million in carryover and a plan to a start a reserve fund despite a 15-percent decline in operating revenue.

“Anybody that turns on the news — ‘The Today Show’ — knows that there is a long line of cities, towns, counties in bad shape,” Town Manager Tim Grier told the council.

The projected $9.3 million in total expenses includes allocating the $2.9 million in carryover, which the town may not spend. With $1.6 million of leftover money projected to infuse the capital projects fund, and another million in a rainy day fund, the town would have money available for possible future projects.

However, if the town does not allocate the money, it cannot spend it. Grier recommended that the council place restrictions on the money, namely that spending it require a majority council vote.

The town’s operating income is expected to dwindle to $2.4 million, down from this year’s $2.9 million.

That includes declining state and local taxes and a projected slowing of photo enforcement tickets, offset only slightly by projected small increases for zoning and subdivision fees, as well as building permits.

The town’s draft budget calls for $1.25 million in grants and one-time revenues that must be budgeted for, so that the spending ceiling is high enough. Once a spending ceiling is set, a municipality cannot exceed it.

Last year, the town budgeted for nearly $6 million in expenditures, but spent just $2 million.

The capital projects fund accounted for $1.4 million left unspent — the town spent $62,000 of a budgeted $1.4 million. Also, the town left $1 million in its $1.1 million contingency fund.

Total revenue, which includes operating revenue and other money like potential grant funds, is projected at $6.5 million. The budget calls for spending $6 million, not including the $1.7 million capital outlay fund that consists mostly of carryover money and the $1.6 million contingency fund, where the rainy day fund would lie.

The young town’s three commissions — water and sewer, streets and floodwater — are identifying potentially expensive projects that the town will need, Grier said.

“We may have some very big expenses to solve the town’s problems, which we have yet to identify,” he said.

Councilor George Binney said those projects would probably require bonding. “I almost believe we’re never going to have the money to do that out of pocket,” he said.

Another wild card is the potential $60,000 the town could lose if council rescinds the 2-percent rental tax, which it has repeatedly said it wants to do. The question could arise at the next council meeting.

Councilors called the tax “unfair” because it forced some residents to fund services that all residents use.

Binney said the best to way to limit government is to restrict its income. “If the money is not there, the temptation is not there.”

Financial consultant Glenn Smith, who helped shape the budget, said that if the council chooses to eliminate the tax, it would either need to cut spending or find a new source of revenue.

Resident Ray Lyons, who owns a local trailer park, said that although everyone hates taxes, the income from the rental tax hedges against unpredictable sales taxes.

“I know we need the revenue,” said Councilor Gary Coon. “We always need the revenue.” If the town needs the revenue, he said the tax should be spread equally and not just among renters.

Declining city sales taxes accounted for nearly $88,000 of the $125,000 projected hit in general fund revenue.

Star Valley projects a $36,000 cut in money received from state shared revenue, which includes income and sales taxes.

Income from photo enforcement tickets is projected to fall by $100,000, to $900,000. However, administering the program is expected to cost $438,500, which would make it a net $462,000 winner.

Nearly 55 percent of the town’s $2.3 million general fund emanates from speeding tickets and court fines.

For the first time, the town will start a reserve fund. It expects to save $180,000 through the year, which will function essentially as overdraft protection for bills that come before checks.

Also new this year, the budget differentiates between carryover and new income. Grier said the previous town manager categorized carryover as income, which he said is incorrect because revenue streams renew every year while carryover vanishes once spent.

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