Steamboat Springs One way to decide how to cut the budget, City Council figured out Tuesday afternoon, is to decide what not to cut. With more than $1 million in cuts anticipated, the city has fewer and fewer sacred cows it is willing to protect this year.
City Council prepared for the worst, anticipating drops in sales tax revenue as drastic as 10 to 15 percent after the terrorist attacks.
Council members decided to budget for an approximate 8 percent drop from initial predictions of a 3.5 percent increase in sales tax revenues a total of $1.1 million taken out of projected revenues. Tourism numbers are likely to drop through at least December as travelers reconsider vacation plans, said Steamboat Ski and Resort Corp President Chris Diamond. That leaves the city, with its sales tax-heavy budget, hoping fear of flying and other financial and emotional factors don't dissuade tourists from coming to Steamboat this winter any more than is already anticipated.
The city does not want to cut any personnel, projects or service from the police, fire and ambulance departments, nor does it want to fire anyone currently working for the city. In fact, 3 percent raises are being pushed ahead across the board for city employees, in addition to pay for performance raises. Those raises can reach as high as 8 percent, said Human Resources Director John Thrasher. The city's current workers, it seems, are safely guarded from cuts. Two council members have spoken in general terms about "reducing service levels" at city facilities but specific plans in that regard have not been proposed.
What that leaves on the chopping block, to the chagrin of some city employees and City Council members, is capital projects.
More than $1.2 million in capital projects could be cut or deferred, even after $6.2 million had already been recommended for elimination by the city manager and finance director before the budget retreat began. The capital projects that remain amount to a little more than $1 million, though more may be funded in the spring.
Projects that are likely to be dropped or deferred until spring include the repair of the leaky City Hall roof and interior renovations, a 10th Street parking extension, improvements to the tow house on Howelsen Hill and Yampa River improvements, among others. Capital cuts and deferrals, in addition to a hiring freeze on new city employees, would save the city about $1.4 million, according to Finance Director Don Taylor, meaning it would save enough to make up for the revenue drop while also bolstering reserves.
"For a short-term interim response, this seems to me like it's the right way to go," said Councilman Jim Engelken.
Another $1.5 million per year in potential funding for new capital projects has been put in jeopardy now that the impact fees on new development are going to court to see if the residents of the city will get the chance to vote on them. Council members reacted angrily to the lawsuit served on them Tuesday before the budget hearings, saying the petitioners needed to reexamine their priorities in these difficult times.
The city may find itself in a deeper and deeper hole in the long run as far as capital is concerned. In its five-year capital improvement plan, the city is anticipating needing more than $47 million to pay for its major new capital needs.
With or without impact fees, the shortfall is likely to be in the tens of millions of dollars based on the current rate at which the city funds capital projects unless the city finds a new revenue source to pay for capital projects. That has a number of council members worried.
"Continued postponement of these projects can result in a crumbling infrastructure, higher maintenance costs, and reduced levels of service in the future as the city grows," said City Councilman Paul Strong.
"The city has already been delaying capital projects due to tight budgets. Now this problem will only grow worse."