Mountain Express working to fix budget before ski season

Bus service will remain running

Mountain Express is scrambling to put its financial house in order this month after it became apparent the organization wouldn’t have enough money on hand to ramp up shuttle service next ski season.

Mountain Express, which provides free shuttle service between Crested Butte and Mt. Crested Butte for local residents and visitors, says it’s now making strides to correct the situation.
“No one should be concerned that Mountain Express is going to quit running,” says Mountain Express board president Bill Dickerson. “It’s not going to happen.”
Mountain Express is a joint venture of the towns of Crested Butte and Mt. Crested Butte but exists as a separate entity. Its board of directors consists of two members from the Crested Butte Town Council, two members of the Mt. Crested Butte Town Council and an at-large community member.
The organization operates on an approximately $1.2 million annual operating budget, with most funds coming from the towns, which both devote approximately 1 percent of sales tax revenue to the bus service. In addition, Mt. Crested Butte earmarks another 1 percent from its admissions tax. Those funds are augmented by state and federal grants that are used for operating expenses and capital purchases, respectively.
Mountain Express director Chris Larsen says the financial trouble is due to a combination of factors. The organization’s expenses have increased as fuel prices have gone up. “Our fuel costs are 37 percent more than what we budgeted for 2008 and that is just going up,” he says. In 2007, the service carried 600,000 passengers.
While costs were increasing, the organization’s board went ahead with a major capital purchase and allocated $357,000 for a new bus barn that will be located near the existing Town Shops in Crested Butte. Mountain Express made its first down payment on the building this winter.
However, the bus service had been relying on those saved funds to float it during times when it was spending money but had not yet received government payments. With those extra funds spent, there was no cash on hand when the organization needed to make payments in January and February.
The town of Crested Butte lent Mountain Express $150,000 so the organization could make payroll and continue operations until monies came in.
“In a nutshell, they have a cash flow problem due to not understanding what their cash balance was,” explains town of Crested Butte finance director Lois Rozman. “It puts them into difficulty come this fall.” The town of Crested Butte provides bookkeeping and audit services for Mountain Express but does not oversee its budget.
Larsen agrees that there was confusion over the budget, but hopes the problem can be addressed. “We thought we had more cash on hand than we did,” he says. “We’re optimistic that we’ll get it straightened out.”
Town manager Susan Parker compares the budgeting practice to a college student who puts his living expenses on credit cards until receiving the next scholarship payment. She says that while it might work in the short-term, it’s not good budgeting.
Dickerson says the organization is not in deep financial trouble, noting that the budget is balanced. “It’s not as dire as it seems on the surface,” he says. “Our budget is okay except the timing is off. We have a lot of expenses coming in before the money does and we have to figure out how to resolve that.”
The Mountain Express board has appointed a subcommittee to look at how the organization can cut costs and increase its revenue stream. “I feel pretty confident that we will be able to do so but I can’t tell you how,” Dickerson says. “This situation came to light quite recently.”
Larsen says the organization has some fixed costs that cannot change, like fuel and maintenance. However, he concedes that Mountain Express may need to cut back its service or cut employee benefits. “We haven’t really thought about that,” he says. “Hopefully, that’s not going to happen but we can’t really spend more money than what’s coming in.”
Parker says there’s some question about why the board chose to go ahead and purchase the new bus barn when it wasn’t financially ready.
Dickerson says the organization understood that the town would not renew its lease on the space in the Town Shops at the end of the lease term, 2010. With the deadline looming, the board proceeded to spend the monies on its new home. In addition, Larsen says there was concern that building costs were increasing with each year the project was delayed.
Adding more pressure to the budget is a federal grant that Mountain Express received to purchase two new buses in 2008. The grant must be matched 20 percent with Mountain Express funds, which the organization does not have. Larsen says it’s possible to delay the grant award until 2009, when the organization hopes to have more cash on hand.
Rozman has recommended that Mountain Express’ subcommittee immediately evaluate the organization’s current operating budget and next year’s operating budget, and develop a long-term operating and capital plan. The subcommittee, she says, “has some pretty heavy lifting to do.”