Steamboat Springs A slowing economy and a decrease in tourist activity could mean tough decisions for the Steamboat Springs City Council as it prepares its 2009 budget in coming months.
In a presentation to City Council at its meeting Tuesday night, city finance staff members said they project a 4 percent decrease in revenues next year, even as demand for services, affordable housing costs, inflation and transportation costs will rise. That could mean trouble for the money council approves for noncity expenses, otherwise known as community support spending. Community support spending goes toward organizations such as Yampa Valley Recycles, Seminars at Steamboat, Strings Music Festival and the Steamboat Springs Arts Council.
Finance Director Lisa Rolan said the local economy is heading toward recession, if it isn't already there.
"Ultimately, this is going to result in a tougher year and tougher decisions that we're all going to have to make," Rolan said.
The city's main source of revenue, sales tax, has not declined this year, but its pace of growth is well off from 2007. Officials expect sales tax to turn the corner and start declining next year. The city budgeted for $19.34 million in sales tax revenues this year. For the 2009 budget, they will assume a 4 percent decrease to $18.57 million.
"Something's got to give," Deputy City Manager Wendy DuBord said. "We haven't had to do this kind of cutting in a budget for a long time."
Rolan touched only briefly on the controversial subject of community support spending - a relatively small part of city spending, but a personal issue for many Steamboat Springs residents. The city devoted $1.77 million, or 6.44 percent of its general fund budget, to 31 groups in the 2008 budget. Forty-six groups are requesting $2.32 million for 2009, which would be a 31 percent increase from this year.
"Thanks for the good news," City Council President Loui Antonucci joked after the presentation.
Antonucci also reiterated Rolan's claim that 2010 may prove even more challenging.
"I really believe we haven't seen the worst of this downturn in the economy," he said.
Assistant Finance Director Bob Litzau identified other areas of financial concern for the city, including utility fund reserves that have declined from $5.36 million in 2006 to $1.2 million in 2008.
"The reserves in these funds are getting dangerously low," Litzau said.
City Council went into executive, or secret, session at the end of its meeting to discuss the contract of City Manager Alan Lanning. Lanning, whose future with the city has been called into question after an evaluation by council last week, did not attend the public portion of Tuesday's meeting and it is unclear whether he was present at the secret session.
Executive sessions are legal in Colorado to discuss personnel matters. City Attorney Tony Lettunich listed two other justifications - permitted under state law - for the session: "conferences with an attorney" and "determining positions relative to matters that may be subject to negotiations; developing strategies for negotiations; and instructing negotiators."
Councilwoman Cari Hermacinski said Monday that a public discussion of Lanning's future will be held during next week's council meeting.