How Does the Money Work?

Each property owner pays his or her road taxes at tax time. The Municipality of Anchorage collects these tax dollars and sets them aside for LRSA use, but the Municipality retains control of the money. About 5% of this money is used by the municipality for handling our funds. While this reduces the money that we can spend for road maintenance, it also ensures that no LRSA member can spend or control your tax dollars.

The municipality opens bidding for service providers for the contract to maintain our roads. The lowest responsive bid wins. The winning provider must submit to an equipment inspection to ascertain that the provider does, in fact, possess all required equipment. The Municipality decides on what equipment a provider must own.

The LRSA Board has NO INPUT in selecting our provider, but it is up to the Board and the provider to establish a suitable working relationship. The Municipality and the service provider enter a three year agreement with the possibility of extensions on a year-by-year basis.

The BVLRSA Board (as do most LRSA Boards) has a standing order that when we receive 4 inches of new snow that the service provider can plow without specific orders from the Board. Whether we request service at other times is a decision made by the LRSA Board. The Board must balance safety and budget constraints, since the budget is for an entire year. Our fiscal year coincides with the calendar year, so as we deal with spring snow, we must allocate money to dealing with fall snow.

Interestingly, the entire collected LRSA budget is not available to us at all times, but is made available in four "loads" of money. This prevents our consuming all of our budget on any one season's work. Therefore, we must always have an eye on the rest of the season.

Every penny that is the LRSA's to spend is either in the operating budget or the Fund Balance. There are two main components to the Fund Balance: the Emergency Fund and the Undesignated Fund Balance.

Municipal code requires that we maintain an Emergency Fund valued at 20% of our yearly budget. This money can be accessed with assembly approval, but MUST BE repaid the next budget year, so the emergency money is returned "off the top" of the next year's budget. This unfortunate situation does occasionally occur in years of heavy snowfall. Available road funds in the following year are decreased by the amount needed to replenish the Emergency Fund amount.

At the end of the fiscal year, any unspent monies (a rare event) are moved to an Undesignated Fund Balance. As an example, if we had $10,000 remaining from the previous year's budget, about $5,000 would survive various processes to be returned to our Undesignated Fund Balance. This is our most easily accessible emergency money. We keep about 50% of a previous year's unspent funds, but rarely can do so.

To pay the service provider, the service provider sends (via email these days) to the Board chair an invoice for services rendered. The Board chair approves the invoice and forwards that approved invoice to the LRSA office of the Department of Street Maintenance. The LRSA office at the municipality requests payment of the invoice from Muni financial departments.

At no time are any LRSA funds in the hands of, or under the direct control of, any LRSA Board member! We can accept or reject the invoice submitted by the service provided, but have no other control over the payment process. We have no LRSA checkbook, we have no LRSA credit card. Your money is safe. There are no LRSA "books" that you can demand to see since we have absolutely NO control over the LRSA funds.

The 2009 and 2010 budgets were about $40,000, while the 2021 budget is $48,714.62. That does sound like a lot of money, but please examine the included invoice information. The PDF labeled "Inv_5615..." is an older invoice but is useful to show how expensive maintenance can be after a winter wind event: the invoice requested $20,000, almost 50% of our yearly budget at the time. In the fall of 2021, our provider sent an invoice for $32,077.80, which was 66% of our yearly budget! The PDFs labeled "Invoice 1" and "Invoice 2" are recent invoices from our current provider and sum to $9395. This sum was at the very end of the last quarter after we had paid for maintenance for three months. Road clearing after this December 2018 winter wind event caused us to dip into our Fund Balance for $6000. As you can see, the money gets spent quickly!