Budget crunch

Posted 1/14/10

Sales tax collections — which make up about a quarter of the city's general fund — have been “awful” so far, in the words of Powell Mayor Scott Mangold.

Collections for November and December, which reflect October and …

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Budget crunch


Governments face uncertain funding in upcoming yearAs governments across the state begin preparing their budgets for the 2010-2011 fiscal year, they know it's going to be painful.“All indicators are not good,” said Powell City Administrator Zane Logan on Wednesday.Property taxes, sales taxes and state funding aid all are expected to drop significantly for the coming fiscal year, which begins in July.

Sales tax collections — which make up about a quarter of the city's general fund — have been “awful” so far, in the words of Powell Mayor Scott Mangold.

Collections for November and December, which reflect October and November sales, were up from 2008 totals.

However, overall, sales tax collections across Park County are down roughly 9 percent since the start of the current fiscal year.

“I think that I've been pleased that they weren't lower,” said city of Powell Finance Director Annette Thorington last month. “I think the downturn in the economy took a little bit longer to hit Wyoming.”

The state, riding record-high oil and gas prices and booming development, enjoyed a record $29.2 billion valuation in 2008. But since then, prices and development have plummeted; the Wyoming Consensus Revenue Estimating Group is projecting that the state's value will fall about 30 percent from last year's budget to this year.

That has created the need to cut spending. For the coming biennium, Gov. Dave Freudenthal recommended the Legislature approve a budget that's $300 million less than the past two years.

But city and county officials across the state have taken issue with the governor's recommendation that state funding to local governments be cut by roughly 60 percent — a larger cut than most state agencies.

“As far as the cities and counties are concerned, we're certainly aware there's less money,” said Mayor Mangold. But, he added, “We don't want to be the only program that's seeing any cuts.”

The state does have money saved up, and it should be used now, rather than waiting for a rainy day, Mangold said at a city council meeting last week.

“The communities that are really suffering are arguing that it is a rainy day right now,” he said.

The city of Cheyenne may soon require its employees to take unpaid furlough days and cut pensions as part of an effort to resolve a projected multi-million budget deficit, and the Rawlins City Council recently approved $1.89 million in budget cuts to deal with a projected $2.8 million deficit by the end of the fiscal year, the Associated Press reported.

The city of Cody recently enacted a hiring freeze in preparation for the coming budget crunch.

Mangold said things aren't that bleak in Powell.

“We haven't come to that (a hiring freeze), and haven't discussed it yet,” Mangold said.

The city currently is hiring staff for the new Powell Aquatics Center. Administrator Logan said the timing is unfortunate, but he noted that, without employees, there'd be no way to open the facility, which has been in the works for years.

In general, in order to justify an expenditure in the coming fiscal year, “it's going to have to be — especially with equipment — an absolute need that we can't do without,” said Logan.

He said city staff have been directed to take a close look at every item to make every effort to make the budget balance.

“We've kept the budget pretty lean even in the better times,” said Logan, adding, “There just aren't any big chunks of money in the budget that we can just say, ‘We won't spend that any more.'”

At a meeting with Big Horn Basin legislators last week, Park County Commission Chairman Jill Shockley Siggins said the county's decision to stop maintaining its television translators network was an example of the tough decisions that will have to be made as budgets tighten.

“It's not popular to take things away when you've been providing service for 30 years,” she said.

In general, however, the county appears well-prepared to weather the economic storm.

Commissioners took advantage of a record $1 billion valuation last year by putting $6.8 million into reserves.

With amounts socked away in prior years, the county is expecting to enter the 2010-2011 fiscal year with a total of more than $12 million in cash and operational reserves.

The county budget for the current year is $33.8 million.

“We'll have a third of hypothetical next year's budget sitting in reserves,” said Park County Clerk Kelly Jensen. “That's pretty good.”

In a conversation last month, Commissioner Dave Burke noted that Park County's assessed valuation — which determines the county's property tax base — soared from $624 million in 2005 to over $1 billion this past year.

A 30 percent drop would put the county's valuation back where it was approximately four years ago, something Burke described as, “a return to normal years.”

“I'm confident we'll be fine,” he said.

Exactly how long the bad times will last is unclear.

“Many believe that perhaps the biggest concern is not (fiscal year) 2011, or even 2012. The forecast for 2013-14 is also bleak,” wrote Joe Evans of the Wyoming County Commissioner's Association in talking points distributed to local legislators last week.

But, Evans added, “we also hope the (Legislature) doesn't save too much.” He noted that capital projects — like building upgrades and road repairs — become much more expensive if they are put on hold for too long.

“At some point, deferring maintenance costs you a lot more money than it saves you,” said Evans.

Mangold said the city is looking at all possible funding sources to fill the void left by shrinking revenues — including lobbying legislators for money.

On Wednesday night, at Mangold's request, Powell, Cody and county officials were scheduled to discuss the possibility of seeking a juvenile justice grant to provide for youth services in the county.

Citing concerns with the strings attached — namely, requirements that the county comply with federal juvenile detention standards that it believes are unnecessary — county commissioners declined the grant last year, after years of receiving similar funds.

That decision forced governments in Park County to make up the lost funding — in Powell's case, an increase of $12,500.

Lodging tax revenues stay constant

The implications of lower tax collections are bigger than just lower government revenues.

Put another way, a 9-percent dip in sales tax collections means that people are spending 9 percent less money in Park County — bearing consequences for local businesses.

The past summer did bring plenty of tourists to the county — for example, Yellowstone National Park had a record-breaking year, and East Entrance visitation rose 13 percent from 2008.

But tourists apparently were “much more conservative in spending their dollars” once they arrived in the area, said Claudia Wade, the marketing director of the Park County Travel Council.

For the 2009 calendar year, lodging tax collections — which are collected at hotels and campgrounds around the county — essentially were even with 2008. Last year brought in $1,465,317 in lodging tax revenue, down by about $11,000 from 2008 — or, stated another way, less than 1 percent.

With the economic turmoil across the nation, “I'm very pleased with being a level year,” said Wade.

She credited the travel council's last-minute advertising push last spring for helping to keep the area's tourist traffic steady.

While the economy is supposed to be picking up again, much like last year, the travel council is being conservative with its 2010 budget and “concentrating every available dollar on marketing,” said Wade.

The hope, she said, is that summer 2011 will be better.