March 15, 2022

Pocatello for Accountable Government Entities (P.A.G.E.) is alerting the public about a proposal in front of the Pocatello City Council to subsidize the SkyWest Airlines service to/from Pocatello with up to $800,000 per year of taxpayer money.  The proposal is on the agenda for the Thursday, March 17, 2022, City Council meeting.

On their social media site, P.A.G.E. writes the following:

IMPORTANT for all Pocatello taxpayers.

P.A.G.E. learned an attempt was made on 03/10/22 to deliberate about the following matter in an Executive Session “under Idaho Code 74-206(1)(e) To consider preliminary negotiations involving matters of trade or commerce in which the governing body is in competition with governing bodies in other states or nations.”  The Mayor failed to obtain the required 2/3 vote of Council to enter into executive session as there was a difference in opinion.  Three (3) members did not believe the topic warranted an executive session and that it should be discussed/deliberated openly in the public and three (3) members wanted to deliberate the issue in executive session behind closed doors.  This is one of those rare occasions the Mayor does not get to cast a deciding vote.

 

On Thursday, 03/17/22 at the Pocatello City Council meeting (6 p.m.), the Council will deliberate and/or take action on whether to subsidize SkyWest up to $800,000 to maintain one daily roundtrip Skywest flight retroactive back to January 1, 2022 if Skywest’s costs exceed revenue.  The subsidization ends December 31, 2022 or until the funds are exhausted.  Skywest is reportedly losing a minimum of $50K -$60K per month on the Pocatello flight.

AGENDA ITEM #13:

(a) “Approve and authorize the Mayor to sign a transportation agreement with SkyWest Airlines to provide once daily air service between Pocatello and Salt Lake City.  If costs exceed revenue, the City will pay a subsidy to SkyWest for the service.  The term of the agreement will be 12 months or until the subsidy funds have been exhausted, whichever comes first.  The maximum subsidy for the 12-month period is $800,000.00;

b) Approve the use of Airport reserve funds, up to a maximum of $800,000.00 as needed for operational costs during the 12-month period.

 

PENDING CONTRACT:  3280 (pocatello.us)

Considerations:

1. $800K represents approximately 40.2% of the Airport Fund #6’s operational departmental budget of $1,990,091.
2. The $800K subsidization may or may not last until 12/31/2022.
3. The city has no control over the scheduling of this one daily flight.
4. There are no guarantees whether passenger load factors will increase or decrease in 2022.
4. For purposes of determining operating profits/losses attributable to the service, passenger revenues will be calculated as the product of total revenue passengers and average segment fares in the market.
5. Total costs are the sum of non-fuel costs and fuel costs.  Nonfuel costs are $3,408 per block hour.  Fuel costs will be actual fuel costs.
6. If passenger revenue is greater than costs no subsidy is owed for the quarter.
7. The federal grant dollars the Airport receives are utilized for capital improvement projects/maintenance at the airport.
Unanswered questions include:  What level of maintenance would the city be required to maintain if there are no commercial flights?  Are there other federal grants to assist with
runway maintenance for purposes such as as private flights, BLM/firefighting tankers, etc.?

 

NOT reported in the ISJ article: (See attachment/quotes below)

8. The proposed action to be taken under 13(b) is in violation of City Financial policy.  The Reserve Fund balance is not permitted to be used for recurring, ongoing operational costs.
9. Budgetary estimates prepared in July 2021 by the former CFO showed the Airport Fund#6 had $0 available in excess of the “required reserves” of approximately $1.7M.
Note: This situation could be determined to be an emergency for which reserves would be used depending upon one’s interpretation of emergency.  This action could deplete their reserves by up to approximately 47%

 

City Financial Policies – Resolution 2017-15

Section II, C. CURRENT FUNDING BASIS (RECURRING REVENUES): “The City shall budget and operate on a current funding basis. Recurring expenditures shall be budgeted and controlled so as not to exceed current revenues. Recurring expenses will be funded exclusively with recurring revenue sources to facilitate operations on a current funding basis.”

Section II D. USE OF NON-RECURRING REVENUES: “Non-recurring revenue sources, such as one-time revenue remittance of fund balance in excess of policy can only be budgeted/used to fund non-recurring expenditures, such as capital purchases or capital improvement projects. This will ensure that recurring expenditures are not funded by non-recurring sources.”

NOTE: Our Financial Policies copy was the same highlighted version created by the former CFO and presented to Council on 10/14/21. WE have added a darker highlight to those sections quoted above.

P.A.G.E. strongly encourages all residents to weigh in on this pending action as it concerns $800,000 of your taxpayer monies. Opinions will vary across the City. Please note there are statements made in the ISJ article which have not been confirmed by the ISJ – especially the statement that the City may be required to pay back the federal funds up to $100M (@ an avg award of $2M/year, that would represent approximately 50 years of awards/@ an avg award of $5M/year, that would represent 10 years of awards. What???)

Unless something changes, there will be NO public comment at the meeting. Please plan to attend the meeting and email the City Council members with your opinion prior to the meeting on Thursday, 03/17/22.

Full agenda: https://www.pocatello.us/…/ViewFile/Agenda/_03172022-1338

CITY COUNCIL EMAILS:
Mayor Blad: mayor@pocatello.us
Roger Bray: rbray@pocatello.us
Richard Cheatum: Rcheatum@pocatello.us
Linda Leeuwrik: lleeuwrik@pocatello.us
Josh Mansfield: jomansfield@pocatello.us
Claudia Ortega: cortega@pocatello.us
Chris Stevens: cstevens@pocatello.us”

 

 

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