Our View: Steamboat’s fiscal health may require service cuts

Advertisement

Editorial Board, August through January 2012

  • Scott Stanford, general manager
  • Brent Boyer, editor
  • Tom Ross, reporter
  • Shannon Lukens, community representative
  • Scott Ford, community representative

Contact the editorial board at 970-871-4221 or editor@SteamboatToday.com. Would you like to be a member of the board? Fill out a letter of interest now.

The city’s plan to spend nearly $1 million next year on a combination of cost-of-living pay increases for all employees, raises for firefighters and paramedics and deferred maintenance and capital projects should be accomplished without the use of reserves. Further, the Steamboat Springs City Council needs to seriously consider cuts to city services to make the new expenditures possible.

Another 2013 budget workshop ended last week with council members essentially directing city staff to prepare a list of options for how the new spending requests can be made by using combinations of 2012 surplus revenues, cuts to other budget line items and money from the city’s unallocated reserves.

As we said several weeks ago, the decision ultimately boils down to the council’s philosophy on spending and saving taxpayer money. A conservative approach to budgeting during the past four years has helped the city build healthy reserves, but we don’t think now is the appropriate time — nor are the proposed new expenditures the appropriate way — to justify raiding the emergency fund. The council already approved allocating $330,000 from reserves to make a debt payment on the Iron Horse Inn.

The city instead could use surplus revenues from the current budget year to make up the spending deficit, but there are issues with that decision, as well. A strong case could be made for allocating any surplus monies from 2012 to reserves or to the city’s capital fund, which has been depleted by years of declines in building-use tax revenues stemming from the collapse of the construction and real estate industries.

A conservative budget approach then would leave the city with a final option — cutting existing expenses to make room for the new ones. That’s always easier said than done, but this council needs to give possible service cuts more than just lip service. At its meeting last week, the council was presented with several options, including consolidating some bus stops and eliminating low-performing bus routes, and cutting all recreational sports programs. These aren’t the only, or perhaps even the best, options, and we implore the council and city management to consider others.

Perhaps it’s not ultimately realistic to accomplish all of the savings through cuts alone, but the city owes it to taxpayers to realistically evaluate that option. Truth be told, the city largely has escaped having to make any significant service cuts during the past four years. And because growing — and unfunded — capital infrastructure needs might soon swallow any surplus revenues from future city budgets, this council might not be able to afford to kick the can down the road.

Comments

Scott Wedel 2 years ago

The budget process is screwed up when they intentionally budget revenues as less than expected. It is no one's best estimate that revenues will not increase next year. Best guess is around 2% increase. They should budget to that expectation.

But budgeting with a knowingly false expectation of no increase in revenues results in the city budget having two set of books. The official set with no revenue increases that projects spending reserves and the unofficial set with 2% or so revenue increases that is closer to a break even budget.

The danger of these two sets of books is that the spending is really based off of expecting a 2% increase, but the official budget expects no increase. So if revenues come in less than expected then instead of cutting spending they can claim this is expected and end up spending a chunk from reserves. Thus, having two sets of books allows the city to make no changes to the budget if revenues come in less than projected.

0

Robert Dippold 2 years ago

Scott,

It is common practice for businesses to have 2 sets of numbers as you probably know. The budget is typically conservative with regards to revenue and expenses. The second set of numbers is a best case or latest estimate. In most cases the expense budget does not increase unless if the projected revenue becomes a solid probability. Is it public knowledge that the city expense budget is based on an optimistic revenue forecast or what is your source of information? Thanks

0

Scott Wedel 2 years ago

Robert, I think it is more normal to have one budget and have considered the range of options if revenues come in less than expected.

There appears to be no dispute that revenues are expected to be more than the zero increase in the budget.

Thus, it is common sense that the official budget with a modest deficit to be covered by reserves is not viewed by at least some on the City Council as being a budget that will actually take money from reserves. I do not think it is a coincidence that city council is considering spending much of last year's budget surplus (what was added to reserves) and thus if actual revenues turns out to be city finance dept's current best guess of revenues then the budget will be balanced. It was a policy decision to budget based upon no increase in revenues, and not based upon facts of actual expectations.

Note the Routt County which has a far better record that SB City of conservative budgets does budget to best guess (which is remarkably accurate) and then budgets to add some reserves so if revenues come in a little light then they don't need to make cuts.

I think the city council members are smart enough to recognize that.

0

Michelle Hale 2 years ago

Or just a thought, get out of the way of Oil that would bring in tax dollars for such things.

0

Requires free registration

Posting comments requires a free account and verification.