City of Starbuck's Finances Improving

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Mayor Dinsmores says there is still a long way to go, therefore, a works in progress

Just one year after the City of Starbuck was in danger of defaulting on four December bonds, Starbuck Mayor Steve Dinsmore said the city's financial situation has improved, but is still a work in progress.

Even though the city's bottom line has improved, Dinsmore cautioned the upcoming year will likely emulate 2009 in Starbuck; paying down debt and replenishing various city funds with few city projects inbetween.

"We just haven't spent any money this year, and we probably won't do much this next year either," he said.

In order to avoid missing its December 2008 bond payments, the Starbuck City Council was forced to issue a $385,000 refunding bond last November. To help replenish city funds that have been depleted over the years, as well as pay for the new bond, the city was also forced to raise its operating levy by 75 percent at the end of 2008. In addition to replenishing city funds, the 75 percent increase allowed the city to weather a significant cut to Local Government Aid.

According to the city's end of year audit, the City of Starbuck ended 2008 with $493,035 in total cash and investments.. Once the final LGA and tax payments are received, Dinsmore estimated the city will end 2009 with approximately $1 million in total cash and investments. Dinsmore attributes the higher amount of money in the city to a higher tax levy, a substantial profit at Hobo Park/Starbuck Marina, and little spending on any major upgrades or improvements in the city limits.

"You could say we have a lot more money, but we did a lot less too," he said.

For instance, Dinsmore said the city held off on any major road projects or upgrades to Hobo Park this past year in an attempt to reign in spending and replenish city funds. While there may not be many upgrades or improvements this year, Dinsmore said eventually the city will need to make improvements and repairs to the sewer system, campgrounds, streets, and repairing potholes in the near future.

"We have to take a hiatus for a little bit, but then you have to get back on track," he said.

For the city to make it until its next scheduled LGA and tax payments this summer, Dinsmore said the city will need approximately $500,000 on hand, in addition to money that will be collected through payments to the city.

While he maintained he is only one vote on the council, Dinsmore said with the money left after making its usual payments he would like to see the city take steps to pay off three of its outstanding bonds with lower principle balances to help lower the city's debt. The three bonds he pointed to specifically were last year's refunding bond and two bonds for the Starbuck Marina and Hobo Park. If the city took such action this year, Dinsmore estimated the city could save approximately $30,000 in additional interest payments.

If the city can pay off those bonds, "then we will be back at a reasonable debt rate for us," he said and "we wouldn't have the vulnerability that we currently have."

Another goal for the upcoming year is to help replenish various governmental funds (for example water and sewer) that were used to help offset a negative general fund balance. In the past, Dinsmore said when the city's general fund had a negative balance the city used various governmental funds with a positive balance to offset the negative general fund. When the city's financial picture becomes more clear, Dinsmore said he would like to see the various enterprise funds that were used for the city's general fund expenditures to be repaid at a reasonable rate of interest.

While he said paying off the bonds and replenishing the various city funds is his wishes for the upcoming year, Dinsmore said it is also up to the other four members of the city council who may have other ideas of how to proceed in the upcoming year.

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Mayor Dinsmores says there is still a long way to go, therefore, a works in progress

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