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Star Valley spent a chunk of last Tuesday’s town council meeting patting itself on the back for a financial condition many other towns can only envy.

The town of 2,310 has about $5.4 million in various funds — but spends less than $2 million annually — much of that in the form of grants from other levels of government. In fact, the annual carry-forward balance this year amounts to about $500,000 in its three funds.

The secret to success?

Star Valley has just three full-time employees — a finance manager, a town manager and someone to keep the office running. It contracts out for all its other services. The Gila County Sheriff’s Office provides police protection. The Hellsgate Fire District provides fire protection. The Town of Payson provides building inspection and plan review services. Star Valley has even hired a contract worker to run its booming little water department. Instead of a street maintenance department, the town contracts out all the work to a local firm.

As a result, Star Valley has one full-time employee for every 770 residents — give or take.

Contrast this to the fact the 150 town workers in neighboring Payson amounts to one for every 107 residents.

Star Valley has therefore avoided many of the short- and long-term costs incurred by full-time employees — from health care to pension plans.

For instance, about half of Payson’s $17 million general fund budget goes to cover the costs of the fire department and the police department. The two departments have roughly 50 employees. The town pays an average salary with overtime of about $70,000 for each officer and firefighter. The town pays maybe another $46,000 for each officer into the state’s public safety retirement system. And even at that, the most recent state summary on the public safety retirement system shows Payson has underpaid by about $20 million — which it must make up in coming years.

So Payson pays roughly $8 million annually for police and fire protection in a town of 16,000 — perhaps $500 per resident.

In Star Valley, the Gila County Sheriff’s Office provides coverage for about $423,000 annually. That works out to about $183 per resident — with no worries about pension underfunding.

Star Valley’s preference for contracts over employees therefore transfers a good deal of the stress and expense of hiring and keeping employees to other units of government. Hellsgate is struggling in the face of rising costs and the firefighter pension crisis. Payson is struggling, despite a far stronger sales tax base than Star Valley, mostly to cover the salaries of the town workers — including the building inspectors Star Valley relies on for its building services. Gila County is struggling to pay those deputies and cover their pension liabilities — with a debt to the pension system of some $12.5 million. Moreover, Star Valley has plenty of backup in case of a major incident, since the 30-man police force in neighboring Payson has a mutual aid agreement with the sheriff’s office and with Hellsgate — so Star Valley will never lack for manpower in an emergency despite its low per-resident spending on law enforcement.

Overall, the budget summary brimmed with good news.

The $4.5 million general fund has a carry-forward balance of about $367,000, a cushion against future needs.

The $1.2 million road maintenance and construction fund has a $452,000 carry-forward balance. Most of that money came from state-shared gas tax and the town benefited this year from a one-time bonus paid into the fund by the state.

The Water Enterprise Fund provided the only faintly worrisome note, spending $310,000 more than the town had budgeted. This put the fund $270,000 in the red — which the town will have to pay from the reserves from other funds. However, the overspending stemmed mostly from one-time projects to further increase the long-term water supply, so it represents a one-time shortfall, said Tim Grier, Star Valley town manager and town attorney.

Grier said the town took advantage of assorted grants to cover unanticipated costs and continue to overhaul the water system the town bought several years ago from a private company. The town has dug new wells that doubled and redoubled the long-term water supply. The town’s water system serves about one-third of the residents in town — with most of the reset relying on private wells.

“We’re spending money now to ensure water for generations to come,” said Grier. That’s pretty good for a town that incorporated in large measure to guarantee a future water supply, he added.

In the meantime, the general fund subsidy of the water fund helps keep water rates low. Grier said the town charges $28 to $35 per household, about half the going rate in other nearby communities.

So, it makes sense the Star Valley staff and council spent a certain amount of time during the budget summary complimenting one another.

Grier commented, “We figure if you don’t have the money, you don’t get to spend it.”

He said the decision to contract out as much of the work as possible has enabled the town to build up a surplus, which means the town can use grants and cash to pay for capital projects.

“I think this is what government misses so badly at all levels,” said Grier of Star Valley’s minimalist approach to hiring combined with its cash-and-carry approach. Not even the loss of the healthy revenue stream from photo enforcement tickets on Highway 260 several years ago put a crimp in the town’s finances.

“We’re doing it without debt service. Most towns, the federal government, the state government rely on debt. What is so overlooked by politicians is that the cost of debt is crippling,” said Grier.

In fact, the financial summary included $138,000 in added income from the 3.2 percent annual return from the investment fund where the town stashes its surplus.

Star Valley Budget: By the numbers

General Fund

Revenue: $1.3 million (actual)

Taxes & fees: $1.1 million

Grants: $21,000

Interest: $129,000

Expenses: $900,000

Personnel: $221,000

Operating: $159,000

Services: $465,000

Capital: $174,000

Surplus (carry forward): $367,000

HURF/GRDS revenue (state gas tax and federal block grants)

Revenue: $612,000

Gas Tax (HURF): $451,000

County road tax: $151,000

Interest: $9,000

Expenses: $159,000

Personnel: $115,000

Operating (HURF): $35,730

Operating (Gila road tax): $9,000

Surplus: $452,000

Water Enterprise Fund:

Revenue: $454,000

Operations: $176,000

Grants: $278,000

Expenses: $756,000

Personnel: $88,000

Operating: $51,000

Services: $26,000

Grant: $515,000

Deficit: $270,000

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