Steamboat’s capital projects budget faces steep cliff
October 5, 2010
Steamboat SpringsSteamboat Springs — Sharply declining funds for capital improvement projects had city officials breaking out the budgetary scissors and planning for several years of decreased spending Tuesday in Centennial Hall. — Sharply declining funds for capital improvement projects had city officials breaking out the budgetary scissors and planning for several years of decreased spending Tuesday in Centennial Hall.
Steamboat Springs — Sharply declining funds for capital improvement projects had city officials breaking out the budgetary scissors and planning for several years of decreased spending Tuesday in Centennial Hall.
Gone from Steamboat Springs' proposed 2011 budget are $179,000 slated for median improvements on Lincoln Avenue south of downtown, $50,000 worth of playground improvements in city parks and $40,000 for clay court resurfacing at the Tennis Center at Steamboat Springs. And that was just the first day.
The city budget is pending revisions and formal Steamboat Springs City Council approval through two more public hearings, the first of which is Nov. 2. The financial state of the city's capital improvement program was perhaps the biggest source of concern during a daylong budget hearing that quickly became ominous.
"When we look down the road at the CIP, it's absolutely terrifying and the trend is unsustainable," Councilman Jon Quinn said. "This is a harsh reality that I think we're all going to have to face."
Capital projects affect nearly every city resident and, in 2011, include high-priority items such as $725,000 for the annual paving program, a $530,000 fire truck replacement, fire department equipment and training, floodplain mitigation and more. Some capital projects receive state or federal grant funding — in most years, grants are the top source of capital projects revenue. But those grants sometimes require the city to provide matching funds that can drain revenues.
Building-use and excise taxes on new development also fund capital projects. But the recessionary economy has slowed taxes and fees to a trickle — so much so that Deb Hinsvark, the city's interim finance director, did not plan for any building-use tax revenue for capital projects next year. Building-use taxes are projected to total about $550,000 for the city this year. They totaled more than $820,000 in 2009 and more than $4.4 million in 2007.
Hinsvark clarified that although she's not ruling out some building-use tax revenue in 2011, the city also could have to refund money to some developers who paid use taxes up front and then scaled down their projects because of the economy, making the city's net revenue levels very uncertain.
The bottom line is that the city's 2011 capital projects budget has about $6.4 million in proposed expenditures. Revenues include about $2.8 million of grant funding and total about $3.9 million. With a capital projects fund balance of about $3 million projected for the end of 2011, there's not much breathing room in 2012.
In "2011, we're able to fund what we can do," City Manager Jon Roberts said. In "2012, we're not."
Hinsvark presented figures Tuesday that show a $740,000 gap between capital projects funds and costs in 2012. That gap would be filled from the city's general fund.
City Council members and city staff showed no inclination to cut high-priority capital projects involving public safety and core services, meaning declining capital project revenues could produce a significant drain on the city's general fund in coming years.
"There's a few things on here that cutting them makes me very uncomfortable unless we've made hard choices on the general fund side," City Council President Cari Hermacinski said about next year's capital projects list.
Roberts indicated that choosing between capital projects and general fund expenditures could be brutal.
"That's really what it comes down to — are we going to reduce staffing levels to accommodate a capital project?" Roberts asked.
Hinsvark presented City Council with a revised capital projects plan that limits the amount of grants the city accepts in coming years — the city would cap its grant-matching funds at $1.2 million annually through 2016 — to reduce the "gap" needed for capital projects during those years.
Still, that gap could be more than $1.7 million in 2013.
"Unless we see some growth," Hinsvark said. "And that's the one thing we can't predict."