PRESS RELEASE Town of Mammoth Lakes Adopts a Balanced Budget for Fiscal Year 2012-13, Approves a Long-Term Fiscal Plan Making Funds Available for a Settlement with MLLA
Town of Mammoth Lakes, California – June 21, 2012 – After a public hearing on June 20, 2012, the Town Council adopted a balanced budget for Fiscal Year 2012-13, and approved a long-term fiscal strategy that creates an annual surplus, available for a settlement with Mammoth Lakes Land Acquisition (MLLA) and other creditors.
The Town’s FY 2012-13 baseline projection reflected a $2.8 million shortfall, before any payment to MLLA. The Town’s approved budget addresses this shortfall with a Balancing Plan that includes reductions in virtually every spending category, including such important priority areas as tourism promotion, housing and transit.
The Town Approves a Budget Balancing Plan
The Town’s Budget Balancing Plan was developed after a thoughtful and in-depth analysis of what is left of the Town’s programs, services and staff after years of significant cuts. In developing the Plan, the Town has considered the competing demands for the Town’s limited resources and balanced that with the obligations the Town has to maintain Mammoth Lakes as a livable place for its residents, a desirable destination for its visitors (who provide substantial revenue to the Town and can choose among many resort towns), and a responsible payer of its debts.
The significant budget reductions to date, along with the Town’s already relatively high existing tax burden and inability to raise taxes without voter approval, have made the development of the Plan especially difficult. Nevertheless, the Town Council, management and its various partners (including employees, service providers and vendors) have all shown leadership in developing a workable solution. The resulting Balancing Plan contains the following measures:
• Pay and benefits of Town employees will be reduced by 10-24%, saving $1 million annually.
• Most Town departments will see their costs further reduced, with position reductions and layoffs that have already begun, in advance of the July 1, 2012 fiscal year start. These significant reductions will generate an additional $1 million in annual savings.
• Property lease payments will be reduced by 10%, generating $50,000 in annual savings.
• The Town will also reduce by 10% payments to high-priority areas of tourism promotion, affordable housing and transit. Net savings from these reductions are estimated at $154,000 annually.
• The Town’s efforts to more actively enforce the reporting and collection of TOT are already underway. These efforts are expected to generate $0.5 million in additional annual revenue, of which $173,000 would be allocated to tourism promotion, affordable housing and transit, with the remainder staying in the General Fund.
The Town’s budget also provides additional, but still inadequate, funding for road rehabilitation: The Town, mindful of the need to pay its creditors, has proposed to fund only half of its road and related infrastructure need, budgeting only $750,000 of the $1.5 million that is needed to maintain current road conditions.
The Town Adopted a Long-Term Fiscal Strategy
The Town engaged a financial advisor, FTI, to assist with a long-term projection of its revenues and spending, and the corresponding forecast of the contemplated balancing measures. After taking into account the Town’s baseline budget shortfall, and the Budget Reduction Plan, the FTI model estimates that over the five-year forecast period, some $3.6 million in net funds will be generated. After the five-year forecast period, some $550,000 in annual surplus funds are projected. These funds are available for a settlement with MLLA and other creditors with whom the Town does not reach agreements.
AB 506 Mediation Process is About to Conclude
Many of the measures included in the Town’s Budget Reduction Plan are currently being discussed in the AB 506 mediation with creditors. The mediation is scheduled to conclude on June 29, 2012, before the start of the new fiscal year. The process has been confidential until recently. However, the Town has obtained confidentiality waivers from all mediation participants, and will soon begin posting on its website information regarding the identity of mediation participants, financial information about the Town, and the details of any agreements reached with any of the consenting interested parties. MLLA is currently not a participant, but has been invited by the Town on numerous occasions to join the process.
Budget Implementation to Begin July 1, 2012
Regardless of the outcome of the mediation and the status of agreements, the Town plans to implement its FY 2012-13, including the Budget Reduction Plan, on July 1, 2012.
Detailed Budget Documents are Available Online
The detailed budget document, the Budget Reduction Plan, FTI’s forecast and other relevant budget documents are available on the Town’s website, under http://www.ci.mammoth-lakes.ca.us/index.aspx?NID=192.