In their first look at the Colorado Springs 2016 budget proposal, City Councilors learned that the city could have a deficit of $12.4 million, said city CFO Kara Skinner.
That figure includes phasing out of the business personal property tax during the next three years, decreasing the 2016 budget by $700,000.
The first “bird’s-eye view” of the city’s $157.2 million general fund budget centered on estimates for the city’s general fund only; the city’s entire $450 million budget will be unveiled during October work sessions.
A top budget priority for Mayor John Suthers includes phasing out of the business personal property taxes. Other priorities include spending $13 million on stormwater projects and reducing the funding deficit for the Pikes Peak Rural Transportation Authority’s Transit Maintenance of Effort fund.
“The bottom line shows you have tough decisions here,” said Councilor Don Knight. A past process of the “fastest rat to the trough [gets the funds]” is no longer being used, he added. Instead, the city finance department considers each request on its own merits.
Revenue is expected to increase from a budgeted $147.9 million in 2015 to an estimated end-of-year figure of $152.9 million. The 2016 budget for sales-and-use tax revenue is $157.2 million, a $4.3 million uptick from the estimates for 2015.
The total projected increase over the 2015 budget amounts to $8.9 million, or a 3.5 percent increase.
Because of the 2015 reassessment of residential and commercial property in El Paso County, city staff expects its portion of the property tax to increase by $1.1 million, with the final assessed valuation numbers released in December.
“It’s going to be a difficult, challenging budget to put together, as the needs exceed the revenue,” Skinner said.
Those needs include what Skinner called “unavoidable” expenditures of $6 million and department requests of $15.3 million.
The city’s staff expects to increase the pay for employees by $1.1 million. That includes paying for the remaining three months of this year’s performance increases pay that started March 31. It also includes step pay increases for police and firefighters.
Another $1.1 million increase will pay the Urban Renewal Authority in sales tax sharing agreements. Revenue from those URA districts, at Copper Ridge and North Nevada Avenue, more than offset the $1.1 million, Skinner said. At Copper Ridge, the city splits the 2 percent sales tax, and at North Nevada, the URA retains the entire 2 percent and will continue to retain the sales taxes for 25 years, or until bonds are paid off, Skinner said. Bonds were used to pay for public improvements.
The city expects increases in both electricity and water rates, with no increase in gas and sewer costs from Colorado Springs Utilities.
Without giving specific numbers, Skinner said there are “significant needs” for vehicle replacements city-wide.
“The average age for the vehicles is very, very old,” Skinner said.