Mt. Crested Butte council looks at draft of 2013 budget

Property tax revenues fall 38 percent, but town still builds reserve fund

With property tax falling dramatically, building revenues funds rising steadily, and sales tax up in the air, the Mt. Crested Butte budget for next year is a reflection of the uncertainty surrounding finance in the Gunnison Valley. But as the Town Council sat down with staff for the first in a series of work sessions related to the 2013 budget, it wasn’t all bad news.

Despite some frustration over an inability to replace lost employees or the reluctance to give the current workers a raise, the town will use a budget surplus to put more money in reserve next year and is already seeing signs of better building seasons to come.
For town finance director Karl Trujillo, estimating revenues a year out is tricky business, especially since the sales tax collections for the rest of this year are still a mystery, but could be an indication of things to come in 2013. And sales tax alone makes up about 54 percent of the town’s total revenues.
At a budget work session on Tuesday, October 16, Town Manager Joe Fitzpatrick pointed out that historically the amount of sales tax collected in winter closely reflects the number of available airline seats coming into the Gunnison Valley. This year, the number of seats is expected to drop by almost 3 percent, helping to guide some of the budgeting decisions.
In looking ahead to 2013, Trujillo and Fitzpatrick came up with a projection based on the last two years. They expect January through April to see a 3 percent decrease from this year and then return to this year’s level through the end of the year.
In real numbers, that will take the town from $1.544 million in sales tax collected this year to a projected $1.522 million collected next year.
Councilman Chris Morgan, who is also chairman of the Rural Transportation Authority board in charge of local airline guarantees, said the decrease in seats was due to a restructuring that cut out the worst performing flights and should leave the overall number of travelers to town unchanged.
Fitzpatrick said while revenues made in the winter seasons still far outpace those in summer months, he was concerned about the reliability of winter season. “I’m concerned about this resort solving the problem of demand,” he said. “And I’m very uncomfortable about winter.” A lot of snow this year, he added, would certainly help.
Second only to sales tax in revenue generation for the town is property tax, which ebbs and flows with an assessed valuation that fell $14 million in the current two-year cycle. According to Trujillo, the town’s assessed valuation dropped 32 percent in 2011 and another 6 percent this year. “That 6 percent really came as a shock,” Trujillo said.
The decline in value shrunk the town’s stream of property taxes to $479,000 this year from $790,000 in 2011. The next valuation, based on property sales through June of this year, won’t impact the town’s property taxes until 2014.
Building revenues, although a relatively small part of the town’s revenue stream, have been encouraging, beating expectations this year by $65,000. “It was a real good building year and it looks like next year is going to be pretty good as well,” Trujillo said, citing several prospective projects around town.
In addition to the new buildings being permitted, the town has revamped the way it calculates permitting fees, which should take a more accurate account of a property’s value and boost the amount the town can require in fees.
Even without the changes, the town Building Department estimated it would take in $107,000 this year and closed out the season with $165,000 in revenue, which will inform the budgeting process for next year as well. Details related to how the town budgets for permit fees and use tax will be worked out at a later work session.
This year’s take in building fees got a big $20,000 boost from Crested Butte Mountain Resort’s parking garage being built in the Town Center lot. But as that revenue dries up next year, Trujillo hopes other building projects will pick up the slack.
For all the uncertainty, or outright decline, in the town’s revenue stream, Trujillo reported a $282, another $125,000 surplus is planned in the budget for 2013. That money will go into the town’s reserve fund, which has grown from just 12 percent of expenditures to 47 percent this year. “We’ve been trying to build it up to 50 percent and we’ll be there next year,” Trujillo projects.
There are bills to pay, however, and almost one-third of the town’s expenses go to employee salaries and benefits. Still, it’s been five years since their last raise and Morgan felt that is too long, considering the ever-rising costs of living locally.
He threw a number out there. “A 2 percent raise across the board would be $20,000,” he said. On the other hand, Councilman David Clayton pointed out, the raise would be “permanent and next year we could see another 20 percent hit on the mill levy.”
The council seemed to settle on the idea of a bonus that would be given out evenly across the board, instead of making it a percentage of employees’ salary.
Whether employees see a bonus or a raise next year is still on the table, as are details related to the amount of revenue being budgeted for the Building Department and other exciting facets of town finance. Another work session delving into the capital projects budget will be held in town hall
November 7.