Monte Vista's Meltdown

Article by Marcia Darnell

Municipal finance - September 2003 - Colorado Central Magazine - No. 115 - Page 11

Copyright © 2003 by Marcia Darnell and Central Colorado Publishing Co. All rights reserved.

WHAT CAUSES A CITY to go belly-up, financially? The answers are murky and the opinions are loud and angry.

In the last month, Monte Vista, a city of 4,500 in the San Luis Valley, has lost its city manager, finance director, mayor, and one city council member. The city is awash in red ink, and took out a loan from a local bank using -- really! -- city hall as collateral.

Unable to pay its bills and running low on leadership, the city is struggling to climb out of its financial pit. But how did it get there?

"It goes back for three years," says Don Schall. "I think there's enough blame to go around for everybody."

Schall is a retired business owner and lifelong resident of Monte Vista. He's on the new committee formed to try to solve the city's problems.

"It's strictly a personal opinion, but it appears to me that the city council was not given information and/or didn't want information," he says. "There was deficit spending for three years, including this year, and it reached a boiling point, and there were no more corners to turn and no more bushes to look under."

Two council members stated at a public meeting that they didn't want to look at the city's books, that they didn't make sense to them.

According to Schall, part of the problem is too many people on the city payroll. When the AE Staley Co., a starch plant east of Monte Vista, shut down, the city employees working at the city-built waste plant there weren't cut. Later, the city sold its waste pickup operation to a private company, but kept the trash collection employees.

Monte Vista has 40 full-time workers, 3 part-timers, and 11 seasonal employees. Salida, which is only a little larger, has 53 full-time, 25 part-time and 1 seasonal employee.

Salida, however, is the largest town in a 50-mile radius and a major retail center (see charts). Salida is also separated from larger retail centers by twisting mountain roads, which can make shopping in larger cities inconvenient.

Monte Vista, on the other hand, is less than 20 miles from Alamosa, which is a far larger retail center. And Monte Vista is an agricultural center, which translates into fewer taxable sales. So Monte Vista has a far more difficult course to follow than some of its larger neighbors -- and far less money to spend.

Several Monte Vista residents who declined to be quoted by name said they believe that the city's problems go back years. Sloppy accounting procedures, misuse of funds, and indifferent oversight led to the current crisis. Most say that the most recent city manager and finance director were made scapegoats for problems begun years before they were hired. Those voicing anonymous opinions said they'd like to see a full audit going back three to six years.

J. Robert Ogburn, a retired district court judge and Monte Vista resident since 1966, is also on the special finance advisory committee.

"I just saw the problems when the audit report came out," he says. "I knew where to look and what to ask and I started and stuff just came tumbling out."

THE CITY OF ALAMOSA is 15 miles away and light-years away in terms of financial health. City Manager Mike Hackett has been on the job 15 years, and finance director Bonnie Moinet has been there almost as long.

"There was a deficit when I came here," says Hackett. "I had to replace the finance director and the accountant. I instituted a budget freeze my first week on job. We had to build our reserve up."

The city has operated under budget ever since.

"We budget rather conservatively," Hackett says. "We also don't have as many employees as cities of comparable size. We write the budget very carefully. We're very conscious of the economy. And we offset some costs by having a great relationship with the Department of Local Affairs."

Salida has also run into financial trouble on occasion. But Salida and Alamosa have heftier revenues to aid recovery.

Debbie Downs of the Department of Local Affairs is advising Monte Vista on ways to resurrect itself. She has suggested hiring an interim city manager who specializes in turnarounds; finding a new insurance plan for city workers; closing the city pool; and suspending stipend payments to city council members.

The last item caused an uproar, with residents applauding and the council backpedaling. The benefits amount to over $7,000 per year for each councilor. Some on the board said that the stipends have been in place for a long time and that yanking them would just be too painful. But many believe that the pain of the city's recovery will be long and must be shared.

And for a city getting shutoff notices from Xcel Energy, pain may be the best remedy.

Marcia Darnell lives, writes, and balances her own budget in Alamosa.