Just because you have money, doesn’t mean you have to spend it.
That was the message Star Valley’s town manager delivered Tuesday night when he told the council not to draw on the town’s $2.7 million reserve as future revenues are predicted to decline.
“You as council have to continue being smart in these challenging times,” said Tim Grier, town manager and attorney. “You cannot provide more services or the same services with less revenue.”
This warning came despite the town banking nearly $600,000 this year while other towns, such as Payson, are surviving on borrowed funds.
The town also has enough reserve funds to cover operating expenses for nearly three years.
However, with a projected 25 percent cut in state and photo enforcement revenues, as well as a 15 percent reduction in town sales tax in 2010-2011, Grier implored the council to think twice before spending on any major projects.
Recently, the Water and Sewer Commission released a study on a sewage system for the town with a $46.8 million price tag. What percent of that the town might pay is unknown. Other commissions, including the Floodwater Task Force and Streets and Roads are also working on projects with unknown costs.
Last week, the town spent $275,000 to purchase a town hall and remodel it.
Although citizens expect the town to provide additional services, “responsible government demands conservative spending,” Grier said, adding the council’s challenge is to stay “true to the course, even when there are demands to spend.”
Councilor Barbara Hartwell said the council needs to know the projected cost of projects before it can plan for them. Grier said a list is forthcoming.
While the cost of projects is unknown, revenues will go down, Grier assured the council.
For the current fiscal year, the town expects gross revenue from photo tickets will drop by $300,000 to a million. In the next two years, it will fall to $750,000 in 2010 and $562,500 in 2011.
A brief breakdown of other revenue sources shows that the town expects a 16 percent decrease in city sales tax, a 3.3 percent drop in highway user funds and another 4.2 percent drop in auto lien funds in 2009.
In spite of a drop in revenues, the town’s total revenue is $1.56 million for 2009. Take away $972,000 in operating expenses and the town banks $591,000.
The town can spend this money without tapping into its rainy day fund of $2.7 million.
In fiscal year 2011, the town expects to bank $338,000 and in 2012, $202,000.
Unlike revenue sources, which are constantly replenished, it takes longer to stockpile reserve funds.
“Once reserve funds are spent, they are gone,” Grier said. Grier asked the council to consider how much it wants to keep in the reserve fund permanently and what projects it wants to fund in 2010.
“Where we are today is a result of smart spending,” he said. “Continued smart spending ensures a foundation for prosperity for our town and its citizens. If we make a mistake, we have no fixes for bad judgment. Wise spending is critical for our continued success.”
Grier pointed out that he has streamlined town hall operations by eliminating unneeded town vehicles and hiring a talented staff that performs multiple duties.
Grier holds the position of attorney and town manager, saving the town an estimated $100,000 a year. Town Clerk Stephanie Jones wears nine hats, saving the town $70,000 a year and Building Official Joe Janusz wears five hats, saving $65,000 a year.
Reducing administrative costs further would be impossible since the town does not have the option of instating furlough days or closing on Friday.
However, if the town continues to lose revenue, Grier worries what would happen to his staff.
“We need to be able to keep the talented staff we have,” he said. “We can’t make additional cuts in expenditures if revenues continue to decrease — there is no meat left on the bone.”