Halfway through the fiscal year, Star Valley’s budget remains largely on target despite an economy that has sunk most other town budgets.
Star Valley, on the other hand, is charging ahead with a nearly million-dollar purchase of a water company in three months. With a little more than $3 million in the bank, the town has enough to buy the water company outright.
But not everything is rosy. Town sales tax collections have fallen for the past five years along with photo enforcement fines, according to a year-end financial summary released Tuesday. Photo enforcement, however, is still expected to bring in nearly a million dollars this year.
The financial summary shows town revenues have largely held steady for the past few years despite significant cuts in state-shared and sales tax revenues.
Town staff said a combination of wise spending and saving has kept the town in the black.
Chancy Nutt, town finance administrator, said staff successfully predicted a decrease in state-shared revenue, photo enforcement and city sales tax two years ago.
The town adjusted its spending and has since retained a positive cash flow. Nutt cautioned that revenues should continue decreasing due to the lagging economy.
Decreasing city sales taxes show that businesses, real estate and construction industries have yet to rebound. At the end of December 2011, total city sales tax was down 6 percent from December 2010.
“We are working with less money when you compare it with past years,” said Town Manager Tim Grier.
“In fact, dramatically, sadly — a shadow of what has been going on with our economy — when you look at city sales tax and retail revenues it is some $200,000 less than four or five years ago.”
Fortunately, the town has set a habit of spending conservatively, Grier said.
Doing so has built up enough money to cover large projects such as repaving nearly every street, repairing crossings and supporting senior citizen programs like Meals on Wheels and a ridership program to Payson.
“We provide day-to-day maintenance on streets and roads, law enforcement protection, services of the building department and many other services,” Grier said.
“These big projects … are real accomplishments of a town just over five years old to make and now with the purchase of the water company and the opportunities that provides to us as far as securing sustainable water.”
The town banks roughly $31,000 a month on average, due largely to revenue from photo enforcement cameras, leaving enough money to pursue new projects like the water company.
For the current fiscal year, the town has spent a million dollars, half of what it budgeted. With the purchase of the water company in May, spending should get back on track, although it is trending 3 percent under budget, Nutt said.
Nutt and Grier said although the town has managed to build up its bank accounts, the goal of a municipality is not to save as much as it can, but to provide services to residents.
“As a municipality, we are here as a service. I guess we don’t win at the end of the day if we have the most money in the bank, but instead our measure of success is … what services have we been able to provide to the citizens of Star Valley,” Grier said.
Buying the Payson Water Company from Brooke Utilities is one project that will offer long-term sustainability.
The town will take over the water company May 1. The 360-hookup system currently serves a small percentage of the town’s population.
The majority of residents are on private wells. The council says the water company is worth more than the system; the water rights will allow Star Valley to go after a share of Blue Ridge, hook up new wells and partner with Payson for a backup supply in an emergency.
These things further secure the area’s water supply, which is the reason the town incorporated in 2005, Grier said.
According to Tuesday’s financial report, the water system won’t drain town finances, but also won’t turn into a cash cow like photo enforcement.
The projected yearly gross revenue for the water company is $132,000.
Combine employee costs, supplies, maintenance and system improvements and the town expects to lose $528 a year on the water system.
The town cannot run the system as cheaply as Brooke did, which shared costs across 25 water companies and a calling center in Costa Rica, he said.
Hiring a full-time water operator, incorporating billing into staff duties and buying supplies all come at a cost. The town plans to bump water rates up some 20 percent for most users to cover these costs.
“As anticipated with those that have started a business, it is difficult to know all the expenses that you are going to have when you start up a business. We have worked diligently on this, but would not be surprised if there is still a 20 to 30 percent margin of error for expense that we have not anticipated,” he said.
The benefit? Better customer service with help available at town hall, not 3,000 miles away in Costa Rica.
“The biggest complaint that we hear regarding Brooke Utilities is not being able to contact Brooke Utilities. We hope that we will provide better service and with that comes a cost,” Grier said.