With five months of data in for 2010, the city of Colorado Springs finds itself with a stunner: It's collecting more revenue from sales and use tax than leaders projected, and more than last year.
So far, the city has taken in 8.21 percent more money than it did in the first five months of 2009. And while that's not a huge amount — less than $2.8 million extra in a general fund budget of more than $200 million — no one is complaining, least of all interim City Manager Steve Cox, who's been on the job three months.
"I'm optimistic," a smiling Cox says.
However, if you're hoping that extra cash will go to restore bus routes, give parks more water or bring back police helicopters, don't get too excited. Cox says while the decision is ultimately City Council's, it appears the money will go into city reserves, which have been seriously depleted during the recession.
If upward tax collections continue through the year, the city's fund balance could grow from $11.95 million (5.1 percent of the total general fund) at the end of 2009 to $24.81 million (11.9 percent) by the end of 2010. (That figure includes planned savings and extra revenues.) It would exceed Council's goal of keeping a 10 percent fund balance, but still come in below the Government Finance Officers Association's "best practices" recommendation of 16 percent.
For his part, Cox hopes to grow the reserve, saying, "[The recession] has reminded us that you can have bad years. You need to protect yourself against that."
Council will hear presentations in August on the 2010 and 2011 budgets. While many Councilors have expressed relief at the upswing in tax collections, most approach the good news cautiously.
"We're bleeding at a slower pace then he said we would," Councilor Tom Gallagher says, wagging a finger at Cox. "We're moving toward stable."
Cox thinks he can fund parks and recreation in 2011 at the same level as this year. And he's not expecting any further layoffs, though the city is still offering a voluntary early retirement program that's expected to remove about 40 of the general fund's 1,610.45 employees.
Chief Financial Officer Terri Velasquez once predicted the next three budget years would bring shortfalls, but with tax collections trending up, she's more hopeful.
"I think we hope to see some stabilization; however, it depends if the revenues continue to recover," she says. "We get mixed signals from economists."
If revenues recover, Cox says, the city will have plenty to consider. For instance, though there are hundreds of millions in capital needs, should restoring services be paramount?
First, however, Cox says Councilors should think about "tearing down any roadblocks" caused by the Taxpayer's Bill of Rights by considering the mayor's suggestion of a voter-approved TABOR timeout.
Such legislation would allow the city budget to grow freely for several years during a recovery — hopefully restoring city coffers to pre-recession levels. Otherwise, TABOR will restrict the budget, keeping it from bouncing back.
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