City of Steamboat starts budget season with projected gain in sales tax revenue for 2014
June 16, 2013
• City projecting a 3 percent gain in sales tax for 2014
• Steamboat lagging behind some mountain resorts in recent sales tax gains
• City Council to start serious budget conversations in September
Steamboat Springs — For the first time in recent years, the city of Steamboat Springs is projecting a small gain in sales tax revenue as it starts budgeting for next year.
Finance Director Kim Weber on Tuesday night will tell the Steamboat Springs City Council that based on historic trends, the consumer confidence index and local, global and national economic outlooks, the city currently is projecting a 3 percent increase in the revenue for 2014.
The city anticipated no gains in sales tax as it started budgeting last year, and projected a 2 percent drop in the revenue the year before.
"Based on most economists’ forecasts, there are still issues to face and hurdles to overcome, but we are in a recovering economy," Weber wrote in a memo to the council.
Last year, when the city collected $17.6 million in sales tax, 3 percent of the revenue represented a sum of about $528,000.
Through March of this year, sales tax revenue is about 6 percent higher than it was at the same time last year.
But according to a financial outlook city officials will give Tuesday night, Steamboat is not seeing as much of a gain in its sales tax revenue this year than many other resort communities on the Western Slope.
The city’s survey of seven other communities found that as of March 31, Winter Park had collected 11 percent more in sales tax than it did the previous year; Breckenridge collected 12 percent more; Vail collected 10 percent more; and Snowmass collected an additional 13 percent.
Frisco and Crested Butte nearly mirrored Steamboat with 6 and 7 percent gains, respectively.
Steamboat’s sales tax projection for 2014 offers the council, and the public, an early gauge of how the city is preparing to budget.
According to city officials, this year’s sales tax prediction continues the trend of budgeting conservatively.
The council earlier this year adopted a new set of financial policies that make it a goal for the city to budget only 95 percent of the sales tax.
"This would mean that over $900,000 would be unbudgeted and left to go into reserves," Weber wrote. "This approach continues to ensure that the city doesn’t budget to spend all of the sales tax revenue while budgeting a realistic projection for sales tax."
The city’s projected gains in sales tax doesn’t guarantee the council or the city will budget in a "growth mode" and avoid cuts.
Last year, when presented with the flat sales tax projection, the council agreed to budget conservatively, but spent much time debating the merits of significantly underestimating the amount of revenue the city receives each year.
They also have the power to direct the city to anticipate more, or less, revenue, as was evidenced by the council’s willingness to forgo $350,000 in cuts to transit service last year by raising revenue projections.
In 2011, revenue came in 16.92 percent above the projected target. In 2010, it came in 10.51 percent above the target.
Council members in favor of the conservative approach said the underestimating has built up valuable reserves that help cover newer expenses, like rising health insurance and the debt payments on the Iron Horse Inn.
Critics of the approach say the revenue projections come at the expense of employee pay raises and capital needs.
The council could offer some initial feedback on the revenue projection Tuesday night, but the more significant budget conversations are scheduled to start in the council’s chambers in September.
Other agenda highlights
Sandwich signs: Planning Director Tyler Gibbs will propose that the city this summer temporarily stop enforcing its ordinance that prevents downtown merchants from using portable signs to promote their businesses. Gibbs told downtown stakeholders that the city wants to propose a new ordinance that would allow the signs, but in a way that addressed safety concerns and also prevent them from becoming "visual clutter."
Marijuana relocation: The council will consider approving the move of a medical marijuana center from its current location at Copper Ridge to a new building at 2385 Downhill Plaza. The move was unanimously endorsed by the city’s Planning Commission, and no public comment has been submitted.
Steamboat Springs Education Fund Board: Fund Board President Kristi Brown will update the council on the work of her board and grant vetting commission. The Fund Board recently awarded $2.5 million in grants to Routt County’s three school districts and education-oriented community groups.
To reach Scott Franz, call 970-871-4210 or email scottfranz@SteamboatToday.com