SL Tahoe's budget and LTVA issues

unedited 3/09 Tahoe Mt News

By Kathryn Reed

City officials – elected and staff – seem to be using new math when it comes to budget planning.
In October the budget was passed with expectations that revenues like the hotel tax would increase this fiscal year. This occurred even though economists had declared the country in a recession, local businesses were hurting and closing, foreclosures were increasing and the stock market was dropping faster than the reservoirs in California.
Lodging properties in February said they are down 25 percent.
Also in the fall, the past council approved $335,000 for the local visitors authority with the caveat that much of the money be spent in the city limits. This would be mostly on events – some would be new like a wine walk on Ski Run and some old like the two fireworks shows.
With the new year and new council came the complete withdrawal of city funding for Lake Tahoe Visitors Authority, even though this is a tourism based economy.
On March 3 Christine Vuletich, city director of finance, gave a grim budget update. It proves October’s optimism was faulty.
Transient occupancy tax is off 35 percent, or $557,294, from budget expectations; and down 36 percent from a year ago.
Sales tax is down 3 percent from projections, or $44,881. However, it’s up 1 percent from last year. Measure Q, which is a 0.5 percent sales tax for South Lake Tahoe that took effect April 1, 2005, is down 9 percent from what was forecasted, or $71,585. It’s down 6 percent from a year ago.
Property tax is down 1 percent from what was projected for a loss of $36,389. It’s up from 2008 by 1 percent.
Those are the three main income sources for the city.
The housing situation as it relates to property tax collections may not catch up with South Lake Tahoe for a couple years as home values are reassessed and foreclosures hit the county assessor’s desk.
The current budget calls for a 2 percent increase in general fund revenue. The reality is the city’s general fund revenue is done 8.4 percent through January, which are the most current numbers available. That equates to $873,320.
This budget also added the position of a sustainability coordinator. That job and all others except ones related to public safety have been frozen for a cost savings of almost $390,000. That line item is expected to be carried into the next fiscal year.
No jobs are being cut. No furloughs planned.
Part of the $2.8 million deficit the city is coping with is the result of the state withholding reimbursements. If and when those dollars may be forthcoming is unknown.
At the first council meeting this month, the group of five agreed to go forward with completing the design of the Lakeview Commons project. It was brought to light that $55,000 is needed to take the project to bid.
The council is expected to entertain that expenditure at its March 17 meeting. When City Manage Dave Jinkens was asked March 5 where that money would come from he said possibly reserves.
The theory in moving forward with the project by El Dorado Beach is that any federal stimulus money that might reach South Tahoe needs to be for a project that is “shovel ready.”
The bulk of the current budget is being balanced with one-time savings of $956,827 from general fund capital improvement project deferrals.
No mention was made earlier this month about curtailing the ongoing costs associated with the countless consultants the city has contracts with.
The $335,000 that was for LTVA is now considered a general fund savings for this budget cycle and is earmarked to do the same in the 2009-10 budget year.
The LTVA is left scratching its head, scrambling to re-do its budget (like everyone else), and trying to figure out how to fund everything with less.
Carol Chaplin, executive director of the agency that promotes tourism throughout the South Shore, said she gave a contract to the city in November after funding was approved. That contract is what got voted down earlier this year so in effect it killed the funding allocation.
The two votes were by the same body, but made up of different people. City Manager Dave Jinkens said the city did not drag its feet to get the contract voted on by a council that is less LTVA friendly. He equated the situation to being much like what President Barack Obama is doing – a new administration merely changing policy and direction.
But the decision is not sitting well with the LTVA. Board President Pat Ronan would like to see if the maneuver is legal. Executive Director Carol Chaplin is resigned to moving on, but not happily so.
“Until we are not a community based on tourism, I think the city has a place in promoting tourism,” Chaplin said. “What other revenue sources are they looking at?”
Apparently the only bright spot in this dismal economy is that campground reservations are up, so an unexpected $10,000 from people sleeping on the ground is projected by the city’s Parks and Rec Department.
LTVA as of press time was still not sure what events would be cut or curtailed. One thing for sure, advertising dollars will stay strong. A radio promotion in the Bay Area started Feb. 25. Weidinger Public Relations has been sending out more press releases than years past.
The summer ad campaign was approved last month. It will focus on the South Shore being a 24-hour hot spot, with ads featuring daytime and nighttime fun.
This will be Mering and Associates last campaign for LTVA. The Sacramento firm is credited with (or disparaged for) bringing us the Blue World campaign.
LTVA’s board will hear presentations from potential ad companies in April or May, with an agency selected in June or July. Winter 2009-10 will be the first campaign for the new company to tackle.
As for the city, monthly budget updates are expected at council meetings.