Basalt’s cautious approach pays off with 2002 budget
August 21, 2002
The Basalt town government has avoided emergency budget cuts so far this year because it accurately anticipated how much revenues would fall.
Now Town Council members want to take the same conservative approach to 2003 and assume the budget outlook won’t be any better and could be worse.
Council members directed their staff to piece together budget proposals assuming flat revenues, a 3 percent decline and a 5 percent decline next year.
Mayor Rick Stevens said conservative budget projections helped Basalt avoid the staffing and spur-of-the-moment service cuts that some governments in the valley had to make this year.
“I think they all failed to acknowledge what we acknowledged early on,” said Stevens. “I don’t know if we’re lucky, smart or what.”
Whatever the reason, Basalt nailed its projections for sales taxes – which make up the bulk of revenues. The staff and elected officials initially figured that sales tax revenues would drop by about 5 percent in 2002. After the Sept. 11 terrorist attacks, the board revised the 2002 figures to anticipate an 11 percent drop in sales tax figures.
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Through the first half of 2002, revenue projections by Basalt finance director Renae Gustine and Town Manager Tom Baker were about 3.5 percent higher than the gloomy forecast.
“While our revenue forecasts are good for the first half of the year, we expect revenues in the third quarter to be below our budget projections in the range of 1 to 3 percent,” Baker and Gustine wrote in a memo to the council.
“This assumption is based upon an expectation that visitation to the state and area was reduced by the wild land fires that the southwest experienced this summer,” the memo continues. “Additionally, there are no indications that the recession will end this year or that a recovery will be anything but very slow.”
Baker informed the board that the latest independent audit showed there was an additional $570,000 available for the reserve fund. The big wad of money came from anticipated expenses that didn’t materialize, according to Gustine.
The town’s total reserve was boosted to $2.1 million after the audit – the equivalent of operating revenues for eight months. A good rule of thumb is to have three months worth of reserves, according to Baker.
“We’re positioned to strongly deal with a downturn in the economy,” he said.
The town anticipates dipping into its reserve for $300,000 this year. About $80,000 worth of projects remain unfunded for the year.
Council members indicated they want to find a way to boost worker salaries sometime in the near future. Hourly workers received a raise last summer while salaries of department heads have been frozen.
The town is performing a survey of benefits with other governments to see how Basalt’s package stacks up.
[Scott Condon’s e-mail address is firstname.lastname@example.org]