Crested Butte finances taking a big hit from reduced sales tax revenue

Reserves are healthy

The warning bells over the town’s financial situation are going off. Crested Butte finance director Lois Rozman sent the Town Council a memo last week stating that revenues for the general fund “are below budget by nearly $58,000, the majority of which is from declining sales tax.”

The town had budgeted for a decline in sales taxes of 4 percent for the year. Being $48,000 below that sales tax budget number is closer to a 10 percent decline in that revenue source. The other $10,000 deficit is garnered through things like building department revenue and property taxes.
“March in particular is our fourth largest sales tax month, and it took a 13 percent hit,” said Rozman. “That’s big. Spring break just didn’t seem busy.”
July is the town’s biggest revenue month, followed by August, December and then March. September is actually Crested Butte’s fifth largest revenue month in terms of sales tax.
According to Rozman’s memo, “Declining sales tax is a major concern and all departments are watching their budgets very closely. The general fund has a healthy reserve for us to fall back on for 2009. However, this is not something we can continue to do for future years.”
She expressed the most concern over the general capital fund. “While it has a reserve,” Rozman pointed out, “it is not large enough to take $500,000 out every year. This will probably be the fund that will need the most adjustment for the 2010 budget.”
Sales tax revenue makes up 58 percent of the entire Crested Butte general fund. The general fund budget for 2009 is $3.1 million. Rozman said that the town has “about one full year of general fund expenses in reserve.”
On the capital fund, Rozman said about $2.2 million in funds was not allocated for any projects at the moment.
“We can see the future and it’s not pretty at the moment but we are somewhat prepared as a town,” said Rozman.
Town manager Susan Parker told the council at their May 18 meeting that the staff is already taking extreme measures to deal with the shrinking budget. “We are like everyone else. Sales tax is way down. Right now, there is no overtime allowed and travel and education is restricted,” she said. “It’s grim, but the staff is doing a great job.”
She indicated that while every budget item is on the table, including the possibility of staff layoffs, the town is weathering the storm at the moment.
Mayor Alan Bernholtz pointed out that Monday was a really nice day outside in Crested Butte.
“Let’s all hope for a good, busy summer,” he suggested.