Mt. Crested Butte anticipates limited 2008 sales tax growth

Even with a boost in revenue from property tax and several large construction projects close to buying permits, Mt. Crested Butte is entering its 2008 budget season heavily dependant on sales tax revenues during the ski season. 

 

Mt. Crested Butte town manager Joe Fitzpatrick says the town’s yearly revenue is heavily influenced by the number of winter visitors.  “If skier days (at Crested Butte Mountain Resort) increase, we see an increase in tax revenue,” Fitzpatrick says.  “Eighty percent of our sales tax comes in the months of November through April—that’s huge.”

Mt. Crested Butte finance officer Karl Trujillo agrees the budget is seasonal.  “We have room for growth in the summer,” Trujillo says, citing the recently finished conference facilities at Mountaineer Square as a possible avenue for creating more summer traffic. 

Fitzpatrick says the town cannot control how many skiers hit the slopes, but has budgeted for a ski season on par with last year.  Fortunately, Fitzpatrick says, there are no expected shortfalls to the proposed 2008 budget, like the loss of the Club Med resort that caused sales tax revenues to plummet in 2007. 

Fitzpatrick and Trujillo expect that expenses incurred during 2007 will be $400,000 over budgeted revenues, a loss that must be taken from the town’s general fund. The town entered 2007 with $1.1 million in the general fund. 

Unless skier days significantly increase at the resort, the town is also predicting a revenue shortfall of approximately $192,000 during 2008.

Property values in Mt. Crested Butte have jumped from $80 million in 2006 to $148 million in 2007, which Trujillo says will make a positive impact on revenues. “That brings in a lot more revenue for us in property tax next year,” Trujillo said during a budget work session on October 16. 

According to Fitzpatrick, property taxes will bring in over $727,000 of revenue from the town’s mil levy.  That equals about 21 percent of the town’s entire revenue; in the past it’s been closer to 15 percent, Fitzpatrick says.

Trujillo says the property tax revenue helps offset slow growth in sales tax, but, “You never know what’s going to happen.  The property values could always go down.” 

Fitzpatrick says the biggest hurdle in creating the budget is anticipating construction growth. 

While not as critical as sales tax, construction is a big-ticket item on the budget, Fitzpatrick says.  In 2006 the town earned approximately $270,000 in building permit and impact fees.  Officials are hoping to close out 2007 with approximately $118,000 in permit fees, and are expecting only $95,000 from 2008.  Fitzpatrick says the $95,000 represents only single-family homes and some small condominium projects that are expected. 

Trujillo says, “In the past we’ve had some big building years and we’ve had some big fund balances that carried over.”  That money is often spent on capital improvement projects, such as the over $1 million allocated for road repairs in 2006.   

However, developers typically don’t pull a building permit until absolutely ready for construction, and the Mt. Crested Butte community development department has a number of large projects lying in wait, such as the 95-unit Cimarron building in Mountaineer Square and the 240-unit Solstice condominium project.  Both projects were originally anticipated to break ground in 2006, but, Fitzpatrick says, their permit fees have now been omitted from the budget to prevent confusion.  Fitzpatrick says Cimarron is definitely a possibility for 2008, but the town won’t budget for it until the shovels hit the dirt.  

Roads will continue to see routine maintenance next year as the town continues to catch up from years past, Fitzpatrick says.  For 2008, the town is budgeting $623,794 for road maintenance. 

Trujillo says $75,000 has been set aside for work on the recreation path.  This includes repairs to the walkway crossing Gothic Road, as well as further planning efforts into the recreation path extension from Marcellina Lane north.  Trujillo says the town is continuing to seek grant opportunities for funding the construction of the rec path extension.  

With the Lodge at Mountaineer Square completely finished, the town expects increasing costs associated with infrastructure around the base area.  Budgeted expenses on the town center for 2008 are up approximately $50,000 from $112,420 last year.  Fitzpatrick says the cost includes heating the bus loops at Mountaineer Square and Westwall Lodge, as well as costs anticipated with operating the new Transit Center.

Administrative costs increased over $130,000 in 2007, and are expected to increase again in 2008.   Fitzpatrick says the increase is due to a new staff member, salary increases, and the rising cost for employee health insurance. 

The next Mt. Crested Butte budget meeting is on November 6, and the first public hearing on the budget is expected on November 20.