Water board trying to figure out proper amount for mil levy

“The question has come up for several years”

Many board members of the Upper Gunnison River Water Conservancy District (UGRWCD) feel their most important job is to protect the Upper Gunnison River Basin’s water resources, and a hefty amount of cash reserves are an asset to have in the face of potential threats and legal battles.

But UGRWCD board member Gary Hausler believes the board’s most important job is to protect the livelihood of the constituents within the district, and many of those constituents are facing rough economic times.
With the UGRWCD entering its yearly budget process, Hausler is once again encouraging the board to consider reducing the District’s mil levy to ease the tax burden.
During a regular UGRWCD meeting on Monday, October 27 Hausler argued that the tax burden of keeping the 2.0 mil rate in 2009 was too much to ask of citizens in the district in the current national, and local, economic situation. Haulser warned that assessed property values may rise again during the county’s biannual property assessment next year.
Citing the projected 2008 end-of-year reserve of $1.9 million, Hausler said, “The question becomes how much reserve is enough. That’s what the board has to determine.”
The 2009 budget calls for property tax revenues of $1.4 million with the existing 2.0 mil levy rate. With a rate of 1.5 mils the district would earn roughly $1.05 million in tax, and would have to use about $290,000 in reserves to keep operational expenses in 2009 at the 2008 level.
Board member Steve Schechter supported the idea of keeping the existing mil rate due to the potential for a legal battle over water. He cited an earlier board discussion about a Front Range interest in 200,000 acre-feet of water from Blue Mesa Reservoir, and a previous attempt at a trans-mountain diversion from the Taylor Park area that created an expensive and costly litigation known as the Union Park lawsuit. Situations like that, Schecter said, “could come back at any time.”
Attorney John McClow said the 12-year Union Park lawsuit, which ended in 1998, cost the district around $450,000.
Board member Jim Pike said he agreed with Schechter’s concerns.
Board member Dennis Steckel also supported keeping the current mil rate as a measure of caution. “We’re not under any immediate threat tomorrow. But I think the threat is enormous,” Steckel said.
Board member Ralph Grover also agreed. “Yes there’s nothing immediate, but if we can’t capture and hold this money against some of these Front Range interests that have incredibly deep pockets we’re going to be pounded into the ground,” Grover said.
Another concern among the board was if there could be legal repercussions if the mil levy were altered.
Schechter asked, “If we drop our mil levy (this year) and vote to raise it again later and we’re sued, how much would the legal costs be?”
UGRWCD attorney John McClow said prior to the meeting he had looked into that aspect of changing the mil rate. “The question has come up for several years whether we should, or may, adjust the mil levy,” McClow said. “What the voters authorized (in 1998) was a total rate not to exceed two mils.” McClow said the UGRWCD de-Bruced the mil levy at that time, allowing for changes without a vote of the public.
McClow said a temporary reduction was legally permissible in his opinion. “It’s an annual exercise you can engage in every year. You can set it at any level you feel appropriate (up to 2 mils).”
McClow said there was at least one recent Colorado Supreme Court case, although different in scope, which supported his analysis.
To answer Schechter’s question McClow said if a suit against the UGRWCD over the mil levy were successful they would at minimum have to pay the attorney’s fees for the plaintiff. “I think the opportunity for success is very low. No other district has a ballot issue like this one,” he said, referring to the 1998 ballot question that authorized the mil rate.
Board member Ralph Grover asked to confirm that, if reduced, the UGRWCD could not raise its mil rate until the next budget cycle. “If we needed money we’d have to wait for the next budgetary cycle?” Grover asked.
“Correct,” McClow said. Furthermore, McClow said if the mil levy was lowered and somebody attempted to sue the UGRWCD, for whatever reason, during the next budget cycle, the District would not be able to raise the mil levy until the end of the litigation.
Hausler also questioned some of the District’s increasing expenses in the draft 2009 budget, such as an increase in staff salaries of about $15,000 between four people. “I think they’re doing a great job… It has nothing to do with their personalities or position. It has to do with the overall economy,” Hausler said.
Grover argued that the District hasn’t been following its own bylaws to hold regular staff reviews and proposed holding a special meeting prior to the next budget work session to make those reviews. “We haven’t followed the contract and I don’t think we can continue this discussion,” Grover said.
Grover also said he had heard concerns from some District constituents that he felt portrayed the district in a negative tone, and suggested increasing the amount the district spends for public outreach to $14,000. Grover said part of the funds should be used to buy a regular newspaper advertisement with brief reports of the District’s activity. He also suggested the board hold gatherings on occasion in other areas of the District, such as Crested Butte, Lake City and Pitkin.
The board also had a discussion about finding additional office space. UGRWCD manager Frank Kugel said he was informed only the week before that an office in the next unit over could be up for rent soon. Aside from having a place to keep the District’s files, which are currently housed in a storage unit, Kugel said it could give them more meeting space. During Monday night’s meeting, which featured several presentations, public visitors had to sit in different corners of the room to avoid a large projection screen.
Haulser argued that it would be appropriate for the board to make due with the current facilities. Citing the number of vacant office units in the City of Gunnison, he said they should even seek to reduce the rent, as the current office lease would expire next September.
Several board members were supportive of the idea of having more space. Board member Bill Nesbitt said the District’s file should always be kept close at hand to help anyone who needed to do some research into water rights decrees and District activities.
But ultimately, as the meting wore on into hour four, Board member Ken Spann said he simply felt there wasn’t enough time to appropriately consider some of the contested budget items.
Spann suggested finishing up with a discussion of the remaining line item expenses and holding a special meeting to discuss revenues, salaries, the rent and three other expense items.
That meeting will be held on November 10 at the district offices. The board will have another budget discussion on November 24, and the budget must be adopted during their regular December meeting.