Significant budget cuts will be key to staying afloat next year, city staff and council members agreed Tuesday during an examination of Hailey’s draft budget for fiscal 2021.
While the city’s water and wastewater operating budget will not see any change, City Administrator Heather Dawson said, the general fund—consisting of three main branches—is projected to shrink by $1.8 million due to the financial impact of COVID-19.
The general fund’s three branches include the operations fund, on track to decrease by about $500,000; the bond fund, set to decrease by $400,000, or 100 percent; and the capital projects fund, projected to shrink by about $925,000.
Dawson said the bond fund will be cut down to zero because the city has already paid off its $3.5 million bond that built the rodeo arena at Wertheimer Park.
To trim the city’s operations fund, which supports all city departments, she said, each department has been tasked with decreasing its operating expenses by 6 percent.
“All departments have worked extremely diligently to meet that mark,” she said. “We recognize how hard our staff works, especially in emergencies and unforeseen situations.”
City staff will likely have to pick up a lot of the work that the city can no longer afford to outsource to outside parties. Both Dawson and Mayor Martha Burke said the fiscal 2021 budget, beginning Oct. 1, will need to place a high value on human resources.
“In the previous recession [of 2008], permanent city employees received no salary increases and very little training, and therefore we had a huge amount of capital loss and turnover,” Dawson said. “We’ve learned from the mistake. This year we’ll be focusing our budget principles on retention of quality staff.”
Dawson said that because the general-obligation bond will be reduced to zero, property taxes will decrease by $31 per $100,000 of taxable property value. Added to the city’s proposed 3 percent hike in property taxes—which represents an increase of $6 per $100,000 of taxable property value—taxpayers will actually see a net decrease of $25 per 100,000 of taxable property values, she said.
“For a couple of decades, we have been allowed to implement a 3 percent property tax increase. The city has never forgone this option,” she said.
Currently, Hailey is looking at a 35 percent decrease in local-option tax revenue—some of that due to less car-rental activity in town. Thus, city administrators have proposed a 25 percent decrease in funding to those who benefit from the tax, such as Mountain Rides and The Chamber of Hailey & the Wood River Valley.
While Mountain Rides has received federal CARES Act funding to offset that loss, the Chamber will face a $17,000 reduction in funding under the currently proposed city budget.
Chamber Executive Director Mike McKenna said that made him “very nervous” about the future of the organization.
“Our role is going to become even more critical as Hailey comes out of this pandemic,” he said. “We’re about the only organization that the city supports whose main goal is to bring in more LOT revenue to support our tourism-based economy. Putting on future events would be difficult. Our plan B is to ask businesses for help, but they’re already in a tough spot.”
During Tuesday’s meeting, Councilwoman Kaz Thea asked if funds could be moved around to minimize losses for the Chamber.
Dawson said if the city’s LOT collection—formally extended to 2050—doesn’t drop as expected, budget allocations could be reconsidered.
“We’re not stuck with the [approved] budget. We can open it at any time during the fiscal year and appropriate additional LOT revenue as the council sees fit,” she said.
Councilwoman Heidi Husbands proposed a salary freeze for city employees to help free up money that could be used to offset the recession and help local business owners.
“My philosophical goal is to protect the salaries of our employees,” Burke responded.
“I do appreciate the fact that people are losing jobs and money, but it takes so much out of our staff when they lose a co-worker and we have to retrain employees.”
Speaking on the city’s capital projects fund, Dawson said that low match requirements for capital improvement projects, such as the ITD’s repaving of Main Street, have proven helpful.
“The repaving project is expensive, but we have very minimal matching costs. We’re anxious for the project to be completed before Main crumbles from beneath us,” she said.
The city is currently prioritizing several capital projects for fiscal 2021. Those include continuing its multi-block River Street upgrade plan, building a new snow storage site out Croy Canyon, building South Woodside Park and renovating the fire station.
To view Hailey’s draft budget, visit tinyurl.com/ydhkpsaf.