As if the news inside Centennial Hall wasn't sobering enough Tuesday, the faces of some Steamboat Springs City Council members were further pained as they periodically refreshed market data on their laptop computers during a daylong hearing on the city's 2009 budget.
As the Dow Jones Industrial Average headed toward a 5.1 percent loss of 508.39 points - closing at 9447.11, it's lowest point in more than five years - council members directed tough budget cuts colored by their uncertainty about how long and deep the economic recession will be.
Fearing budget discussions could be just as difficult in coming years, council took aim at a number of areas of the budget described as unsustainable. Those included the city's heavy subsidy of facilities such as Howelsen Hill, Howelsen Ice Arena and the Tennis Center at Steamboat Springs.
Council directed its staff to set up separate enterprise funds for each of the facilities, which currently are budgeted within the Parks, Open Space and Recreational Services Department. Enterprise funds are managed separate from the city's general fund and are meant to be self-sufficient. Operating the three facilities as enterprise funds likely would require major shifts in their operations and fee structures, because they currently enjoy large government subsidies.
"Every single facility we're running at a deficit, with the exception of the golf course," acting City Manager Wendy DuBord said, referring to the city-owned Haymaker Golf Course that already operates as an enterprise fund. "It's just amazing to me that people think these facilities make money."
Howelsen Hill's subsidy is the largest at about $900,000 a year. According to the 2009 proposed budget, the cost to run the ski area next year is projected at $1 million, while only $130,000 in fees will be collected. The ice arena's subsidy is projected at $281,000. The Tennis Center's subsidy is harder to pinpoint in the proposed budget because it is budgeted under a parks division that includes other facilities. However, the $157,139 cost to operate the Tennis Center is more than double the division's total revenues excluding contributions to the Yampa River Botanic Park.
Also considered Tuesday were major increases in the city's fees for services. Among them was a 20 percent increase in the valuations used to calculate building-use tax and a new city building permit fee of $3.40 for every $1,000 in estimated construction value.
Also proposed were 50 percent increases in the city's water and wastewater fees. Under the proposed water fee increases, an average monthly residential water bill of $31.38 could increase to $47.07, and an average monthly commercial water bill of $64.24 could increase to $96.44.
City Council President Loui Antonucci said those increases might be too much too fast for Steamboat residents, but DuBord said years of taking that attitude have left the water and wastewater funds chronically under-funded. The infrastructure needs of the funds, DuBord said, have brought the city to a critical juncture.
"We have never raised (fees) to what we think they should be, but what we thought people would accept," DuBord said. "And we're paying the price for that."
In the most noteworthy move of the day, council directed DuBord and Finance Director Lisa Rolan to balance the general fund rather than use $1.9 million in reserves to balance the city's operating budget. As proposed Tuesday, the 2009 budget would have depleted the general fund's reserves by more than 15 percent, from $12.6 million to $10.7 million.
"I don't think that is fiscally responsible, because we don't know what is going to happen next year," Councilwoman Meg Bentley said. "We can be patient. What we can't handle is running our reserves into the ground."
DuBord predicted the move will mean a hiring freeze, no pay increases for existing city staff, the elimination of benefits for seasonal employees and layoffs. City Council was more willing to accept revenue depletion in the city's total budget, which includes capital projects and enterprise funds in addition to the general fund. The capital projects funds will decrease by $5 million under the 2009 proposed budget, but most of the expenditures are for public works projects that city officials said should not be put off.
"We have been doing a good job providing frills," DuBord said. "We have not been doing a very good job taking care of basic infrastructure."
"I don't really have a problem with what we're spending in capital," Antonucci added, "because if we don't do it now, it could increase in cost in the future."
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