Back on St. Patrick’s Day 2020, Tim Grier and Chancy Nutt came to the Star Valley Town Council with grim predictions about revenues in the age of COVID-19.
While the town was in good financial shape at the outbreak of the pandemic and its accompanying lockdowns, Mayor Gary Coon warned, “Tax revenues are likely to decrease and that will impact council actions in the future.”
To Grier’s surprise, the predictions of a lean, mean year or two regarding town finances did not pan out — at least so far.
At its April 6 meeting, Grier, Star Valley’s town attorney/manager, told the council staff is projecting $7.4 million in the town’s fund reserve at the close of the 2020-21 fiscal year. Sales tax revenues are up; CARES Act money has bolstered the coffers; and the staff is seeing a budget surplus. On average, the town is $80,000 in the black each month.
At the beginning
Nutt, the town’s finance administrator, summarized the town’s perspective of the COVID-19 economic situation.
She said the state-shared revenue makes up 55% of Star Valley’s general fund. Interest on town CD accounts equals 9% of the general fund.
State-shared revenues include vehicle license taxes (VLT), fuel taxes, sales taxes, and income taxes. Nutt said it is likely the VLT would decrease as new car sales drop; the fuel tax revenue would drop because of the lower oil prices and the decrease in travel, the tax comes not only from gasoline sales, but also jet fuel purchases.
Sales taxes were expected to decline because of purchasing behaviors and the limited opportunity to shop as more businesses close or limit hours, Nutt said.
Those same factors would also impact the amount of income tax the state collects and distributes through the shared revenue program. She explained income tax distributions are on a two-year cycle. Income taxes collected this year won’t be distributed until 2022. It’s called the shadow effect, she said.
That shadow effect could also be reflected in the Community Block Development Grant money the town receives from the federal government. Used for capital projects, such as the ongoing improvements for the water department, the town has received about $140,000 for each year it has been eligible.
Grier said the federal government might reshuffle budgets to fund the various stimulus packages planned in response to the COVID outbreak. The most recent CDBG project in Star Valley is connecting the PW1 and PW2 wells to the water system. The work is nearly complete, so there should be no problem.
“Star Valley’s conservative spending has given us a significant fund reserve. We can operate for many years with no funds coming in,” he said, at the time.
Grier said he thought the town could continue with projects in which it had already invested, but should hold off on moving forward with any others and be very careful when considering future requests for donations.
Nutt told the council on April 6, the town is receiving three different CARES Act infusions: the first was $265,000; a second, which should arrive later this year, is for $275,000; and a third, expected in 2022, is for another $275,000.
Additionally, it is anticipated the town will also benefit from the proposed infrastructure stimulus plan.
Grier said that money most likely will require shovel-ready projects, so he suggested the council consider some of the town’s infrastructure needs. One he pointed out — some of the water system pipes are 60 years old and need to be replaced. He said he is working with one of the water operators used by Robert Hardcastle when he owned the system. Grier, along with the town’s contracted engineer Dale Miller of RICK Engineering Company, and the water operator are working to identify the oldest parts of the system.
Another potential infrastructure project could be a sewer system for the town. Several years ago a master plan for a system was developed, but the cost was so far out of reach of the newly incorporated community it was put on a shelf in storage. Grier said they have brought the plan back into the light and dusted it off to take a look at it.
“Sewer is a huge expense, but it would do more to pull in commercial development,” said Councilor Bobby Davis. He said he’d like to see staff bring in ideas, and then the council could go from there.
“Infrastructure money is still an unknown. But we need to find out what we need to do to be in a position to be ready for it,” Grier said.
Additionally, the town can start building an improvement fund for the water system. Grier said it is in the black now.
The town manager stressed one thing he hoped the council would seriously consider — retention of staff with better compensation. He said the town is standing on its solid financial ground due to the willingness and abilities of its staff to do multiple jobs providing services to Star Valley’s residents. “Secure the employees you have or it will cost you if you don’t,” Grier said.
While there was an extended discussion about how much the council valued the employees, no details were suggested regarding compensation.
“We’re at a place where we can ask, what are we going to do next. There is so much opportunity ahead of us now. Choose good projects. Let’s put everything on the table,” Grier said.