Crested Butte projecting major revenue decline in 2020

But robust fund balances will likely get them through the crisis

by Mark Reaman

Having a healthy fund balance with millions of dollars in the bank has put the town of Crested Butte in a good position to ride out the coronavirus storm. How long the storm lasts will certainly have an impact on town services but for now, town staff anticipates it can weather the situation even if the revenues decline by 50 percent compared to what was budgeted for 2020.

During a special meeting on March 30 the Crested Butte Town Council discussed the situation with staff, led by town finance director Rob Zillioux. Zillioux presented the council with what he termed “a very, very preliminary forecast for 2020. Things could change dramatically if we are not back open by June 1,” he said. “The good news is that the town has really good reserves. The bad news is we’ll be using a large amount of those reserves to get through this.”

Describing the projections as cautiously optimistic, Zillioux said much depends on the federal and state financial assistance being set up. Zillioux said during the last two recessions, it took the town about five years to get revenues back to pre-recession levels. He said basically he was predicting the budget would be off a total of about $1.5 million between the general fund, the capital fund and the affordable housing fund shortfalls.

Zillioux projected that under the circumstances approximately $957,000 in town sales tax revenue that is budgeted for 2020 may no longer be collected.

“Things could be much more dramatic if travel restrictions aren’t at least partially lifted by the beginning of June,” Zillioux said. “July, August and September are our three most important sales tax revenue months.”

He said the general fund reserve fund would likely shrink from having $3.8 million in reserves to ending the year with about $2.8 million. The capital budget fund balance would go from $1.7 million to $1.4 million and the affordable housing fund would decrease by about $35,000.

How long will the restrictions last?

Council member Mona Merrill said, from what she is seeing, the coronavirus restrictions could persist into the fall. She said the town should plan for that scenario.

Zillioux said the senior staff had examined their department budgets and had come up with additional cuts that could be made.

Cuts ranged from not purchasing the new Tesla marshal patrol vehicle to delaying capital projects for town parks, delaying any new climate action plan and affordable housing projects, and paring down the travel budget.

Town staff also suggested that all purchases and services be made locally by the town in an effort to help Crested Butte workers and businesses. The cuts added up to about $743,000, or approximately half of the projected deficit numbers.

The town has deferred the payment of February sales taxes from businesses and told the local non-profits renting space from the town they did not have to pay rent and utilities for two months.

Requests to defer or provide relief for utility bills are being considered on a case-by-case basis. The plan to hire an engineer for town has been put on the shelf and even seasonal workers normally hired in the spring to spruce up the parks won’t be hired this year. The town is still looking for a community development director to replace Michael Yerman, who will be moving on in early April.

“I’m mostly focused on the summer,” Zillioux said. “The off-season months coming up don’t normally provide a lot of revenue.”

“Even if travel restrictions are lifted, it assumes people will have disposable income to come here and spend. I’m not sure they will,” said Merrill. “Everything is leaning toward this economic situation going into November.”

“We’ll be doing things like watching Texas and Oklahoma closely,” said Zillioux. “I’m very fiscally conservative, as you know. I feel it will end up being somewhere between the cautiously optimistic scenario and having no summer season. We can adjust things quickly, depending on how they start to shake out.”

“I feel it will be more like [Mona Merrill’s] scenario,” said council member Will Dujardin. “As much as I hate to say it, it seems we need to put as much as we can on hold, including affordable housing.”

“It is definitely time to be fiscally conservative and plan for the long haul,” said council member Chris Haver. “My advice to local businesses is, I highly recommend they take action instead of waiting. Go to the county website to find the different resources available. Reach out to your banks. But do it now and don’t wait. The same goes for people who need to file for unemployment.”

“Everything is so fluid, we just don’t know a lot right now,” said mayor Jim Schmidt. “We have to keep evaluating the situation as it unfolds. We’ll be talking about it at every council meeting for a while.”

Money for the residents?

Some council members wanted the town to donate money to non-profits such as the Community Foundation of the Gunnison Valley to show council’s support for the people living in the area.

Zillioux said he would bring the local grant requests normally received this time of year to the council at the next meeting April 6.

“I agree with the idea, but our first responsibility is to keep the town running,” said Schmidt. “A sales tax decline will hit town a lot harder than the county. As much as I would love to give a lot of people lots of money, we have to focus on the town.”

“Our town is our people,” said council member Mallika Magner. “I would like us to dig deep to make cuts and see if we can help our people as much as possible.”

Center for the Arts requests

major donation

One major non-profit that approached the town was the Center for the Arts. Its board asked that the town provide a $180,000 grant for operating expenses and, as Zillioux described, “work together to potentially find ways to use the new building” to possibly back a loan for more than $4 million.

Schmidt said a lot more details would have to be provided before council considered such a major request.

“It’s not very high on my list at the moment but I’m willing to hear more about it at a later date,” suggested Haver.

“I certainly don’t want the Center to go under but we have to look at the bigger picture first,” added Merrill. “This is something to look at maybe a month from now.”

“There are a lot of things overall to sort out in the next couple of weeks, so from my perspective we can have that conversation in several weeks,” agreed Zillioux.

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