Carbondale Corner: A lesson in economics
January 11, 2017
The favorite pastime for my two boys is playing 20 questions. Now that I'm mayor, it's more like 40 questions. Most recently the topic du jour is money. We often talk about the family budget, their personal budget and, now, Carbondale's budget. As always, their questions force me to really think through issues in hopes of shedding some light on a subject that isn't necessarily easily understood, especially when it's in a state of flux.
As a kid, it's easy to think that money for baseball fields and police officers comes from a big bank account that never goes broke. A recent trip to City Market became an economics lesson as I showed them on the receipt how our local purchases (via sales tax) collectively fund the plowing of streets, the beloved Recreation Department and more.
While sales tax is the town's largest source of general fund revenue (61 percent in 2016), the financial picture is a bit more diverse. Our income stream is a cocktail of funding coming from the federal government, the state of Colorado, Garfield County, sales, use and property tax (4 percent in 2016) — all funded by us, the taxpayers. Various fees are also part of the mix.
Local government budgets are always subject to changing priorities and regional economic trends. But it's becoming clear that new, perhaps more structural changes are afoot that may require more adaptation than in years past. One such trend is Colorado's voter-mandated fiscal policy (e.g. TABOR, the Gallagher Amendment, and others), which is clearly unsustainable given competing revenue and spending mandates.
While the aspect of TABOR that requires voter-approval of all tax questions makes great sense, other aspects of the amendment have hamstrung the state's budget. According to a 2011 study by the University of Denver's Center for Colorado's Economic Future, by 2024 the state will have only enough revenue to support its obligations for Medicaid, K-12 education and corrections. Notice that transportation and many other local priorities aren't listed in there.
Shortly after I graduated high school, the state spent $126 per person on transportation. Twenty-five years later it is spending less than $69 per person despite the fact that vehicle miles almost doubled in that time frame. So between constitutional amendments and a gas tax that hasn't budged since I was a teenager, the 2017 transportation budget is almost guaranteed to shrink once again. And a shrinking state transportation budget means we either come to terms with reduced maintenance and/or transportation project funding, or we ask voters to make up the difference.
Another concerning trend is dwindling Department of Local Affairs funding. DOLA distributes revenue derived from energy and mineral extraction statewide to local governments as a way to help mitigate some of the local impacts from these industries. This revenue fluctuates with oil and gas production. But local distribution of this funding is also controlled by the Legislature. This means that if the state's budget is tight (which it is), the Legislature can choose to reduce local funding (and it has) in order to shore up its own coffers.
Unfortunately for municipalities, many counties are using this same tactic with Road and Bridge (R&B) mill levy (property tax) revenue, which is the last troubling trend I'll cover. Colorado counties are statutorily required to share 50 percent of the R&B revenue collected with the municipality from which it came. That is, unless it decides it doesn't want to. A loophole allows counties to shift the mill levy from R&B to a general mill levy, which does not need to be shared. Legal, but I would argue, unfair. To their credit, Garfield County has agreed to backfill our 2017 budget to at least match 2016 revenue levels. Nonetheless between the significant reduction in mineral leasing and severance tax revenue, and Garfield County's reduction of its R&B mill levy, Carbondale's budget is short more than $350,000 compared to 2015.
So as we start the New Year, I'm eager to do a little financial planning. We have the above-mentioned trends to contend with, as well as contemplate additional funding requests from Parks & Rec, RFTA, and potentially other needs. But don't call me Chicken Little — the sky is not falling. Why I love local government is because we can control our own destiny when we choose to. Municipalities are the most powerful human force on the planet. What it does mean is that it's time for a community conversation. How does Carbondale want to respond to these trends and needs? What do we want our future to look like? And of course, how do we want to pay for it?
Hopefully by the end of 2017 we'll have some answers to these questions. But knowing my boys, I'll still be running a deficit on answers for years to come. I guess that's a dad's job security.
Dan Richardson is mayor of Carbondale. This column will appear on the second Thursday of each month except during election campaigns.