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Steamboat Springs — The Steamboat Springs City Council set a course for substantial cuts in community support spending and tourism marketing in 2009 during a Tuesday night meeting that stretched into Wednesday morning.

The meeting was the longest yet for the council seated in November 2007. Its duration speaks to the difficulties facing the city in a year when declining revenues and past loose spending are forcing tough decisions in the short-term and calls for an entirely new budget philosophy going forward.

"We're really serious about it," Councilwoman Cari Hermacinski said Wednesday. "We're not in dire financial straits right now, but, if we don't change something, we will be."

One of the toughest decisions council considered Tuesday was how much - if at all - to reduce money the city currently devotes to marketing its summer tourism season.

Finance Director Lisa Rolan predicted that a council plan presented Tuesday would reduce the Chamber's marketing budget from $638,352 in 2008 to $440,000 in 2009.

Council's direction will be plugged into the budget for consideration in coming weeks, but no official action was taken at Tuesday's meeting.

City Council President Loui Antonucci ultimately supported the plan but said marketing cuts could be counterproductive in a gloomy economic climate.

"When times get tough, it's not a time to cut your advertising," Antonucci said at Tuesday's meeting. "We'll be in a spiral going the wrong direction. The only reason anybody gets any money is because we have sales tax. I think we would be remiss as a council if we forget where this money comes from."

Steamboat's spending for self-promotion has a long history.

Summer marketing conducted by the Steamboat Springs Chamber Resort Association has been funded for decades by a 3.3 percent allocation of the sales tax the city collects from Steamboat merchants. As a home-rule city, Steamboat Springs collects its own sales tax. The 3.3 percent allocation is identical to the sales tax rebate the state of Colorado offers businesses. The state rebate compensates businesses for the bookkeeping involved in sales tax payments. In 1984, Steamboat businesses agreed to let the city keep their rebates and devote them to summer marketing.

A debate about those dollars intensified Tuesday.

Sandy Evans Hall, executive vice president of the Chamber, said marketing dollars should not be reduced because they already rise and fall with the sales tax fortunes of the city. But Hermacinski said 3.3 percent is an arbitrary amount not based on any analysis of how much money the Chamber needs to market Steamboat.

Council ultimately directed Rolan to separate its contributions to the Chamber from its overall community support spending. Council members directed Rolan not to change the 3.3 percent allocation, but to adopt practices similar to the state's that would disqualify audit findings, late filings and tax collected on the sale of businesses.

Other directed cuts to the Chamber include eliminating the city's funding of the annual Economic Summit, an expense of $2,000 this year, and cutting funding of special event development from $100,000 in 2008 to $75,000 in 2009.

Community cuts proposed

Council also separated intergovernmental agencies from overall community support spending. Council members directed staff to cut the city's contribution to the Yampa Valley Housing Authority from $105,000 in 2008 to $80,000 in 2009 - or whatever Routt County contributes in 2009, whichever is less. Funding for YVHA and other organizations jointly funded by the city and county, such as the Routt County Economic Development Cooperative and Vision 2030, will be the subject of a joint meeting of City Council and the Routt County Board of Commissioners next week.

Council directed finance staff to allocate just $355,686 to remaining community support organizations, which is about half of what those organizations received this year. Community support organizations include nonprofit organizations such as the Steamboat Springs Arts Council, Advocates Against Battering and Abuse, the Strings Music Festival, Yampa Valley Recycles and dozens more.

Even with the direction given Tuesday, city officials still must cut about $1.5 million from their budget or dip substantially into financial reserves whose low level already has been a subject of concern this year. That prospect is graying hairs in the city's finance department. Assistant Finance Director Bob Litzau noted that budget formation is an art, not a science, and said sales tax revenues could decrease even more than the 4 percent the city currently expects.

"What happens if we have a bad snow year?" he asked. "What happens if we're wrong and it's a 10 percent decrease in sales tax? We'd have to be able to cover some (essential) expenditures" with our reserves.