Playing Catch-Up, Whitefish Sorts Out Finances

By Beacon Staff

WHITEFISH – For the past several months, the city of Whitefish has been unaware of where its finances stand because of the illness and subsequent death of former finance director Mike Eve.

Eve had been battling cancer, which worsened in the final months of 2008, leading up to his passing in January. During that same time, Whitefish was searching for a new city manager to replace the departed Gary Marks. Whitefish was without a permanent manager between July and December. Dennis Taylor served in the interim.

When Chuck Stearns was hired as city manager and took office in December, he inherited an unclear financial situation that necessitated substantial backtracking. The city hired auditors from Denning Downey & Associates in Kalispell to help bring the city’s finances up to date. Calculations for monthly revenues and expenditures were incomplete as far back as October, Stearns said.

“The delays of getting financial information following Mike Eve’s passing causes some anxiety,” Stearns said.

But the city’s search for a new finance director has been moving forward quickly. The original list of 45 applicants has been narrowed down to four. Those remaining four will be interviewed on Feb. 20.

“We’re on a pretty fast track to get a replacement for Mike Eve,” Stearns said. “But it’s certainly been tough.”

As financial details have surfaced, Stearns said nothing alarming has emerged. The area of most concern, as with many other cities now, is the building code. Construction has slowed to a crawl and money from building permits and other related revenues have been miniscule. There were only five building permits issued in Whitefish in December.

The lack of financial information hasn’t impaired day-to-day city council affairs, Stearns said, because councilors haven’t voted on any matters that require new funding.

“Since I’ve been here since Dec. 1, the council hasn’t had to make financial decisions,” Stearns said.

Councilor Turner Askew echoed Stearns. He said the projects the council has looked at in recent months already have committed funding. But, Askew said, it will be a relief to know how much money the city actually has, especially in light of the difficult economic times. Everybody’s tight for money right now and he doesn’t expect Whitefish to be any different.

“I think you can safely assume that we have a financial problem,” Askew said. “The question the accountants are going to answer is, ‘How big?’”

Finances are Stearns’ expertise. He studied finance and small business administration at the University of Colorado and then received his master of public administration degree, with an emphasis on budgeting and finance, at the University of Montana. He was later the finance director for Missoula. As a result, he said he has “pretty good intuition” of where Whitefish is in terms of money.

There are a few things that are clear, Stearns said. For one, the city will most likely fall well short of the $530,274 in expected revenues from the building code – that was the amount listed in the city’s budget approved in September. Also, initial indications show a substantial decrease in resort tax funds too. December’s revenues were $115,738, down from $142,284 in December of 2007 and $146,258 the year before.

The city hasn’t been spending money that wasn’t previously allocated, so Stearns said if the city runs into problems following the long delay in calculations, they will have more to do with revenues than expenditures. But Stearns said the city started out the fiscal year in “very strong financial position.” The fiscal year runs from July 1, 2008, to June 30, 2009.

Stearns points to the city’s flush cash reserves. Whitefish’s budgeted reserves are $8.2 million, compared to city’s overall budget authority – including transfers – of $29.1 million. That means the reserves are equivalent to nearly 30 percent of the total budget, which in Stearns’ financial experience is robust.

There is also evidence of building permits picking up again. An example is an upcoming addition to the Lodge at Whitefish Lake. But Stearns said construction is a fickle business, as building proposals come and go without always reaching fruition.

“I usually don’t count on building permit revenues until the check is cashed,” Stearns said.

The auditors have been working for the city once a week. Stearns said they were expected to be finished last Friday or this week. Then the city will know its financial standing through January. Askew is eager for the council to have a clear financial picture to work with.

“It’s real uncomfortable to know that we don’t have complete guidance,” Askew said. “And we understand the reason, of course. But it will be nice to have that behind us.”

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