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City Council passes two interfund loans to help cover expenses in 2017-18 year

SPOTLIGHT PHOTO: NICOLE THILL-PACHECO - The St. Helens City Council discusses proposed budget changes and interfund loans during a meeting Wednesday, June 8. The council approved two interfund loans and passed a supplemental budget during the meeting. EDITOR'S NOTE — UPDATED JUNE 12, 2018 — This story has been corrected from the version that first appeared June 8. A fundamental error in our reporting appeared in the original print and web versions. The St. Helens inter-fund loan of $240,000 was the result of multiple factors, but was not the result of spending for Spirit of Halloweentown exceeding the budget for that festival, information we mistakenly reported and that led to the story's misleading headline.

The inter-fund loan was the result of a lower beginning visitor tourism fund carryover balance from the prior year than what was originally budgeted; an increase in anticipated expenses in professional services, from which the city uses funds to pay for contracted services such as event planning, etc.; and the city's inability under state budget law to use funds in its unappropriated fund balance line item of $212,000.

Those details are outlined in the version of the story below.

Details about Spirit of Halloweentown expenses and revenues have also been removed until final numbers can be verified.

The Spotlight regrets the error and apologizes for any confusion as the result of it.

The St. Helens City Council approved a series of budget actions Wednesday, June 6, including internal fund transfers and a change to the city's current fiscal year budget to accurately reflect expenses.

On Wednesday night, the City Council approved a supplemental budget and two internal loans. The loans were made to cover expenses for the city's storm and sewer funds, and the visitor and tourism fund.

In one action, $240,000 is being drawn from the city's general fund to cover previously unanticipated visitor and tourism expenses.

The large fund transfer has several contributing factors, explained the city's finance manager, Matt Brown. First, the starting balance of the visitor and tourism fund was $98,000, not $212,000 as had been reflected in the budget, Brown explained. Additionally, the city approved a new contract with the city's event planner, Tina Curry, president of Vancouver, Washington-based E2C Corp., in September with a new salary that more than doubled from previous years.

Brown explained that when the 2017-18 budget was drafted last spring, he based expenses for Curry's services on a previously approved agreement. In the 2016-17 budget, $29,000 was allocated in the budget under contract services.

In August, however, the City Council approved a new contract with Curry for $120,000 for her services after going out for a request for proposals from event planners. An audit in December of 2017, also showed that actual expenses of professional services in 2016/17 were closer to $120,000, Brown added.

Finally, the fund transfer was required because money appropriated in the contigency portion of the budget was not sufficient to cover those expenses. The city' is unable under state budget law to use $212,000 in its unappropriated fund balance line item.

Brown noted that funds in the visitor and tourism budget come from transient lodging fee payments to the city. The 2018-19 budget, which the City Council will approved Wednesday night, June 20, reflects a repayment to the general fund of $240,000 from the visitor and tourism finances.

The planned approval of the supplemental budget has been on the City Council's radar for several months, but Wednesday's vote comes on the heels of a series of questions and concerns raised by local residents and business owners about itemized budgets for city events.

Most recently, Curry hosted a waterfront festival on city property called the Festival of the Fairies, but the city has pushed back on public requests for itemized spending on the event, such as how much was spent on props, decorations and other supplies. The refusal to release those records about public spending practices has raised concerns from some residents about how tourism dollars are being spent.

The council on Wednesday also approved a $1.7 million loan transfer from the storm fund to the sewer fund. In previous years, Brown explained, storm and sewer monies were in the same fund. In 2017, however, Brown split the funds into two separate accounts. When the two funds were restructured, incorrect numbers were inserted into the proposed budget.

The supplemental budget and loan transfers correct the issue.

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