Steamboat Springs With words of caution and a promise to find new solutions for increasing city revenue, the City Council passed a deficit-ridden 2001 budget Tuesday night by a unanimous vote.
The 2001 budget forced the city to dip into its reserves to the tune of $459,194. The city still has almost $3 million in reserves, Finance Director Don Taylor said.
"We don't budget out of reserves except very reluctantly and very seldom," said City Council President Kevin Bennett. "Heretofore we have been increasing our reserves."
Bennett was concerned the city was over budget even though it had projected sales tax revenues, the basis of the city's general fund revenue, to increase over this year's strong rates.
"We asked for a major decrease in reserves just to balance the budget with the most aggressive increase in sales tax projections in the last eight years. The days are numbered where we get to go to our reserves to balance," he said.
The city projected sales tax revenue to increase at about 4 percent next year, which is conservative compared to the 8 percent increases it has experienced so far this year, but somewhat extravagant compared to previous years' projections.
Last year the city had budgeted for revenues that would not increase at all over the year before, Taylor said, which is why the city now has more money to spend in omnibus ordinances throughout the year.
"I'm just very nervous about the overall general philosophy we took this year on the budget," said Councilman Ken Brenner. "Even though the city (has been experiencing economic growth), we continue to fall further and further behind."
Personnel costs, fueled by rising health care costs, have been identified by city staff as one of the reasons for the tight budget.
Personnel costs will account for $9,277,317, or about 26 percent of next year's budget. That $9.27 million is about 10 percent more than the city spent on personnel this year.
The city's internal service charges and computer service charges are also up over last year, Taylor said.
Internal charges are charges individual departments have to pay to cover telephone, insurance and front desk costs.
On top of the rising costs, however, is the city's difficulty in squeezing enough cash out of a sales tax based economy even though that economy has performed at a record pace this year.
Councilwoman Kathy Connell reiterated Jim Engelken's comments, registering her somewhat reluctant support of the budget as proposed.
"I am supporting it because I don't see any better alternatives, but I don't think we can be complacent next year," she said.
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