Carbondale trustees eye spending from reserves
Facing the prospect of stagnant revenues next year, Carbondale trustees are weighing the possibility of spending down the town’s reserves.
The finance staff projects that by the end of this year the town’s general fund reserves will be at about $5.5 million, or about 82 percent of Carbondale’s 2016 general fund budget.
The possibility of spending reserves came up during a work session Tuesday, during which the board took their first look at the town’s financial trends in anticipation of the 2017 budget process. Projected revenues and expenditures are not pinned down for 2017, but Renea Gustine, Carbondale’s finance director, is not expecting to see dramatic increase in revenue.
Gustine stressed that her projections Tuesday were very rough numbers that typically start solidifying in September.
A much anticipated sales tax boost from the new City Market will be a delayed gratification, as the store isn’t expected to open until late 2017. The town’s property tax revenues benefited this year from reassessments, but that won’t happen again next year.
And revenue from the highway users tax will also stay stagnant, at about $186,000, said Gustine.
Last year the town budgeted for a 4 percent increase in sales tax. So far this year the town has seen an about 5 percent increase.
Gustine is recommending the trustees budget for a more conservative 2 percent sales tax increase for 2016.
That increase is expected to be eaten up by higher employee medical insurance rates. Gustine said these rates are expected to increase by 8 percent. The town is also going to be looking at some kind of cost of living raise for employees, she said.
Staff’s current projections show the town will dip into reserves for about $90,000 in the remainder of this year.
The board almost unanimously agreed that money needs to be set aside in the budget for some kind of affordable housing project.
“We don’t want to keep saying we don’t have any money to do anything” about affordable housing, said Trustee Ben Bohmfalk.
Other projects, such as increased lighting in town following instances of sexual assault after dark and clean energy projects, topped some trustees’ wish lists.
Marty Silverstein was concerned about the town’s lack of funding for capital projects.
Trustee A.J. Hobbs, who is set to resign from the board soon, suggested implementing an excise tax for heavy energy users in town.
Mayor Pro Tem Dan Richardson talked about work on the town’s GIS mapping that could highlight Carbondale’s assets, such as its recreational opportunities.
As trustees talked about items on their individual wish lists, Trustee Frosty Merriott chimed in with a dose of reality: The town’s department heads, too, are going to bring budgets with their own wish lists, and it can’t all be done without dipping into reserves.
“What are we prepared to take out of reserves? A quarter million? Half a million? $1 million?”
Merriott said he’s willing to dip into reserves in 2017 for perhaps $250,000 to $500,000 for capital projects or housing. But asking for much more than that would lose his support.
“It’s very important to see what are our priorities,” and “it’s important to realize there’s no new money here,” he said.
Gustine said the town has historically kept about 80 percent to 100 percent of its yearly budget in reserves.
Currently staff’s rough projection of general fund reserves at the end of the year will be $5.5 million, and the town’s 2016 general fund expenditures are projected to be $6.7 million for 2016.
So at the end of 2016 the town will have the equivalent of about 82 percent of its annual budget in reserves.
Several trustees indicated they’re willing to see what the town’s tolerance is for reducing that percentage.
“I’d like to have a public conversation about where we’re comfortable to be at (with reserves) and where other communities are at,” said Bohmfalk. Keeping reserves at nearly 100 percent of the annual budget “seems like an awful lot,” he said.
Trustee Katrina Byars said she too is in favor of using reserves “wisely and carefully.”
Other municipalities keep much less in reserves, including some upvalley towns that keep only about 25 percent of their annual budget in reserves, she said.
Byars would be comfortable keeping only 50 percent of the annual budget in reserves. She wanted to free up that money for housing, noting an Eagle County affordable housing project that turned a profit for the county.