Board member: Buffalo Rapids struggling with budget

 By Jamie Ausk-Crisafulli
Yellowstone Newspapers

        While the Buffalo Rapids irrigation project has recently received publicity for its employee issues, which include a possible unionization, the budget issues are an even bigger concern, according to Buffalo Rapids Board of Control member-at-large Ric Holden.

“Problems follow the money,” Holden said.
Buffalo Rapids Project provides irrigation water for nearly 28,000 acres of land in Dawson, Prairie and Custer counties.
When Holden began his term on the board in May, he said he was shocked at the state of the budget.
“I alerted the board  ... there was a serious problem with the budget, that we were not going to make it through the year,” he said.
“We had an unfunded, unbalanced budget.”
Buffalo Rapids is funded through taxing landowners who use the irrigation service, matching grant funding and revenue through the BR shop.
In November of 2008, the Buffalo Rapids Board of Control borrowed approximately $190,000 from Stockman Bank to cover operating costs, including paying employees. Although the two BR districts have had to  
borrow from each other from time to time, this was the first time the irrigation project had to take a bank loan to cover costs, said Holden.
In June of this year, the board received a letter of default from Stockman Bank for the loan it had taken out in November of 2008. Holden said the letter stated that bank officials were concerned that Buffalo Rapids did not have enough revenue to pay the loan.
In a special meeting, the board went over each line item in the budget to get a better grasp on what the budget situation was at that time. During that time, the board found some errors, including double  accounting of interest on a loan and some areas where there was more revenue coming in than previously thought.
Through that process, the board came away with what they felt to be a balanced budget at the end of the day, according to Holden.
The board met with the bank president to show him the revised budget and assure him that BR could cover the payments on the loan.
The board is also attempting to address the budget issues by  
implementing a checks and balances system.
At a recent board meeting, board members voted 5-1 to establish a $10,000 spending authority limit on budget items. All budgeted items over that amount and all other purchases must have prior approval from  the board. This rescinds a September 2008 resolution the board passed which allowed unlimited spending authority for purchases by the project manager, according to meeting minutes.
However, the future of the budget continues to look bleak. On September 25, it was determined by an outside accountant hired by the board that Buffalo Rapids is facing a $170,000 budget deficit, not  including the Stockman Bank loan, according to Holden. On the same date last year, BR was $145,000 in the hole and did not have an outstanding loan.
While Holden said that November tax revenues will “hopefully bring us up to even,” he said he is still concerned that BR will be in the same situation as it was last year when a bank loan was needed to cover  operating costs. After receiving a letter of default on the loan this year, borrowing money again could prove to be difficult, he added.
The Buffalo Rapids Board of Control will hold an annual meeting, a first of its kind, in Glendive on Nov. 3 at the Jordan. This will give irrigation users the opportunity to learn more about the issues facing  the irrigation district.

Published Oct. 15, 2009

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