There were no gasps, bulging eyes or exclamations of disbelief.
Informed of a multimillion-dollar shortfall in the 2008 budget, City Council members generally kept their lips sealed in frowns. Maybe Colorado Springs' leaders have grown used to hearing bad news from the finance department. Or maybe they were saving their outrage for a later report predicting the city will lose $212 million over 10 years if a longtime Council nemesis, state Rep. Douglas Bruce, gets his way.
Whatever the case, few commented on the projection Monday, though Councilman Jerry Heimlicher questioned exactly how much the shortfall totaled, given confusing language in an accompanying report. In one paragraph, it claimed the city will fall $2.5 million short in 2008 revenues, save $4.5 million on expenditures, and experience $8.5 million in expenditures beyond revenues collected.
City finance director Terri Velasquez would later explain that all this means the city is facing a $5 million shortfall. (Go figure.) She'd add that the $4.5 million the city is saving by cutting back on expenditures has already been factored in, meaning new cuts will be needed to balance the budget.
That $5 million is quite a chunk of change, even when swimming in a general fund budget of $246.8 million. The city attorney's office and municipal court, for instance, each have budgets around $4.3 million. Some departments get by on less than a million a year.
"We've been here before," City Councilwoman Margaret Radford says. "The important thing is that we're looking at it [now] instead of waiting until the end of the year and freaking out."
City Manager Penny Culbreth-Graft also seems confident the city could bridge the gap in months to come.
"We'll be fine this year with some belt-tightening measures," she says.
The Bruce factor
Department heads have been asked to look for ways to cut costs, like waiting 60 days before starting recruitment for a vacated position, or putting off extra training for employees. Mandatory cuts would be the next step if low revenues from sales and use tax persist.
But Culbreth-Graft thinks the financial picture could improve. Current projections are based on five months of overall data, and only four months of data on sales and use tax collection. If tax collection picks up over the summer, the picture could brighten.
At least for now.
Because while the city has acclimated to relying on volatile sales tax, and while it's adjusting to the weakened economy, and while it's working to mend the problem of sales tax "leakage" (money spent at businesses just outside the city), a Goliath is on the horizon.
Namely Bruce, the anti-tax warrior who authored the Taxpayer's Bill of Rights (TABOR).
Bruce, in all likelihood, will get two initiatives on November's ballot. They're aimed at eliminating the Stormwater Enterprise, which Bruce says violates TABOR, but they would affect all city enterprises. If passed, they would make today's budget slashes look like paper cuts.
The first ordinance would phase out all payments to the city from its enterprises (Colorado Springs Utilities, Memorial Hospital, the city's golf courses, etc.) over 10 years, and pass the extra cash on to customers. The second would state that city enterprises can only collect charges for "voluntary customer contracts," meaning that citizens would have to sign up for an enterprise service of their own free will before they could be charged for it.
"I don't think life will be the same for our citizens if these pass," says city attorney Patricia Kelly.
In addition to losing that $212 million over 10 years (causing a predicted 17 percent reduction in services at full implementation), the city says the ordinances would mean the death of the Stormwater Enterprise, the possible cessation of drainage and sediment control on Pikes Peak, and some sticky legal situations.
A city report also says the ordinances would force enterprises to create redundancies, like separate payroll and accounting services, that would end up costing more. The enterprises might also pay more for supplies currently bought by the city in bulk, like office supplies.
The death of Stormwater Enterprise could balloon into bigger problems, the city claims. The city is federally mandated to maintain stormwater discharge, but would lose funding for that maintenance without the enterprise Bruce refers to as the "rain tax." Noncompliance with the federal mandate could mean fines of up to $27,500 per day.
The city says cutting off Stormwater funds would also mangle a deal in the works with Pueblo to create the Southern Delivery System, poised to bring more water to the Springs as it grows. That's because the Springs might no longer be able to fund its side of the bargain.
Culbreth-Graft says she will prepare scenarios for how the city would cope if the ordinances are passed. But she's not upbeat.
"Any time you tell a manager, "Over the next 10 years, you're going to have to cut $212 million out of your budget,' that's crippling," she says.
Enterprise customers, meanwhile, could gain financially from the initiatives. Obviously, no one would have to pay stormwater fees. And since the payment in lieu of taxes would be slowly eliminated from Utilities bills, customers would save about $1 a month in the first year, and about $11 a month in 10 years.
Manitou Springs Mayor Eric Drummond says midyear budget projections for his city will soon be in, and as of April, revenues are expected to be 5 to 9 percent higher than last year's.
That means Manitou will likely meet or beat its budget projections.
Drummond says the city may use extra money to restore training or equipment that was eliminated in the city's last tight budget-planning season.
Manitou Springs' fortunes are the result of tourism, Drummond says, which has been good this year. An anticipated, largely-gas-price-induced downturn in out-of-state visitors has been covered by an increase in more Colorado residents daytripping into town.
With that in mind, Drummond says the city will look at investing in more marketing in the Pikes Peak region.
- J. Adrian Stanley