Steamboat Springs City Council struggled this week with a tentative plan to cut its community support budget virtually in half from $1.7 million to about $810,000.
The proposal to trim the community support budget cuts was developed in consultation with a citizens committee. The cuts would affect a wide variety of nonprofits and human service organizations, as well as perhaps funds that the city provides the Steamboat Springs Chamber Resort Association to market the resort.
Councilman Jon Quinn objected to putting all of the community support funds in one budget basket.
"The bottom line is, we're still a sales-tax-driven community," Quinn said. "Most businesses spend 2 to 15 percent of their budgets on advertising. In my mind the dollars spent on the Chamber go right to advertising the city of Steamboat. : Until the community gets behind a municipal property tax - without those advertising dollars being spent, our revenues go down."
City Finance Director Lisa Rolan stood before City Council on Tuesday night to seek approval for a set of recommendations by the seven-member citizens Community Support Committee. It includes fixing the community support budget to 3 percent of the general fund.
Adopting that policy would reduce substantially, roughly by half, the $1.77 million funded in the 2008 budget, which represented 6.44 percent of the general fund of $27.65 million.
The committee's proposal includes the money the city historically has provided to the Chamber for summer marketing. However, the proposal does not presume that each of the three areas of funding - nonprofits, human services and Chamber - would be reduced proportionally.
Councilman Steve Ivancie had no qualms about accepting the recommendations of the advisory committee.
"I'm comfortable with 3 percent," Ivancie said. "I think everyone has to be aware we have to do some cutting."
Former City Councilman Paul Strong, who is active with several nonprofits, cautioned that large cuts in the support budget could undermine many of the qualities that define the community.
"If you cut the community support in half, you'll see a lot of (these organizations) go away," Strong predicted. "The rodeo did pretty well this year. But last year we lost $20,000. Without the $40,000 from the city, we might have closed our doors."
Council directed staff to continue budgeting, using the assumption of a 3 percent community service budget, but also to return with spreadsheets reflecting the impacts of cuts of varying proportions.
While city officials rethink the way they redistribute sales tax dollars to community organizations, city department managers are being asked to make deeper cuts in their own proposed budgets to the tune of about $1.9 million.
Interim City Manager Wendy DuBord said that when department managers began turning in their budget requests late this summer, and they were compared to projected revenue declines, the city was $3 million out of budget.
"We can't make revenues go up," DuBord said. "The only thing we can do is reduce expenses."
Rolan said she and Assistant Director Bob Litzau consulted with municipal finance directors from across the state to project declining sales tax revenue.
"As a member of the Colorado Municipal League, I have access to a Listserv group including all the finance directors. I sent out an e-mail, and I told them where we stood," Rolan said. She also asked what adjustments they were making in light of the economy.
"I received a lot of responses and compiled that information for City Council," Rolan continued. "I looked at what they were doing, the revenues they had coming in, and we considered national economic indicators. Right now I think there's a pretty good chance we'll se a 4 percent decline in sales tax revenue."
Rolan said a key consideration in her estimates is that most of the municipalities she considered balance their revenue stream between sales and property taxes, but Steamboat is solely reliant on sales tax for its revenue stream.
DuBord said declining revenues are just one part of the city's budget challenge. The other part is representing increasing costs, notably for fuel.