City officials trying to address budget deficit
April 29, 2014
A recurring city of Glenwood Springs general fund budget deficit that is expected to average about $900,000 per year will eventually draw down the city's reserves to zero by 2019, unless measures are taken in the intervening years to prevent that from happening, city finance officials have advised.
The city has done well to make up an imbalance between revenues and expenditures in recent years, including trimming what was a more than $500,000 budget deficit at the start of 2013 to just $142,000 by year's end, City Manager Jeff Hecksel said during a recent work session with City Council to outline the situation.
"That's pretty significant, and shows there is a difference in how we budget and how we actually spend," Hecksel said. "Operationally, the city has done a good job."
But a combination of annual sales tax revenues that are showing signs of stabilizing around $2 million less per year than the city was collecting in 2008, plus the ever-increasing costs to run city government, means the future chances of making up that deficit are grim, he said.
Add to that a significant portion of the overall city sales tax that is scheduled to expire after 2018, the special 1-cent Acquisitions and Improvements (A&I) Fund tax, and, simply stated, January 2019 "is when you run out of money," Hecksel said.
To put the $900,000 annual deficit in perspective, he said that's about the cost each year to run the Glenwood Springs Community Center and other city recreation programs.
Closing the community center is not being recommended, Hecksel stressed.
But voter re-authorization of the special A&I tax, which was originally approved in 1998 to fund the construction of the community center, as well as the City Hall building and the municipal operations center, would go a long way to supplement recreation and other types of expenses, he suggested.
That very prospect is expected to be a topic of discussion when City Council meets with the Glenwood Springs Chamber Resort Association board of directors for a work session this Thursday.
"That is something I think the chamber is interested in," City Councilman Mike Gamba, who also sits as the city's representative on the chamber board, said during the budget work session earlier this month.
"At a bare minimum, I think we need to extend this tax for the next 20 years," he said of the A&I tax, which now generates about $3.8 million per year.
The chamber's ad hoc "Community on the Move" committee campaigned for the original tax in 1998, in addition to other tax measures over the years, and would likely be asked to do the same if voters are asked to extend it.
A selling point could be continued operation of the community center and other nonessential programs and services, suggested Councilman Ted Edmonds.
At a time when tax increases or extension are a tough sell, "Maybe that has appeal," he said.
Ultimately, Hecksel advised it will take a combination of maintaining revenues and reducing general fund expenditures over the next four years to make up the anticipated ongoing deficit.
"We do have significant concerns about operating expenses going into future years," he said. "I don't see an opportunity for any new taxes being approved in the next four years. Between now and then we have to continue to control costs."
That includes coming up with a reasonable capital construction schedule that will mean picking and choosing which projects get accomplished during that time, and which ones will have to wait, he said.