CB budget in good shape with shift to housing and climate

Expect rate increases in enterprise funds and inflationary salary considerations

[ By Mark Reaman ]

Looking at next year’s Crested Butte town budget, the town council admits it finds itself in an enviable position with plenty of money, even with millions of dollars in line to be spent on affordable housing projects. Still, financial pressure is mounting for things like water and sewer rates and town employee salaries given rising inflation and that is causing consternation within the council.

“The goals and priorities set by the council drive the budget and there are some big projects,” said town finance director Rob Zillioux at the September 20 council meeting. “It is also time to replace some aging equipment. That is on top of the goal to have one year’s worth of spending in our reserve funds.”

The goals include starting the new Paradise Park and Sixth and Butte housing projects next year and $4.5 million is earmarked for that purpose with another $1.7 million anticipated to be spent on housing in 2023. Staff is also searching for a new position that would be a “housing specialist.” These expenditures will draw down the general and general capital funds since the current affordable housing fund is in the red after the purchase of the old Ruby Bed and Breakfast.

Climate Action Plan expenditures also play a budget role. The town is looking at purchasing a hybrid loader that will cost about $325,000 as opposed to a more standard one that would cost about $300,000. However, Zillioux said the lifetime cost of operating the hybrid loader is meaningfully less than a traditional loader.

Electric vehicle infrastructure is also costing money throughout town and in the town shops as the CB vehicle fleet is converted to more electric. Parking management costs are also listed as a new expense.

When it comes to the Water and Sewer Fund, council reluctantly okayed rate increases. Citizens can expect to see increases next year in the 20 percent range. That will pay for wastewater treatment plant improvements and water system projects. The projects are required to replace very old infrastructure, increase capacity and to meet ever-evolving regulations. “Raising rates is required to pay for the increase in costs,” Zillioux explained.

But council members expressed heartburn at the October 4 council meeting over such a significant rate increase proposal and are exploring freezing rates for senior citizens that have been in their home at least 10 years. “That is just such a big hike at once,” said mayor Jim Schmidt.

“These increases push the middle class community out of town,” added councilmember Mallika Magner. “The working people of town are under pressure and I don’t want the town to be available only to the wealthy.”

Still, council approved the big hike at the October 18 meeting.

Zillioux said that general fund revenue is expected to grow about 14 percent compared to the 2021 budget, but it could be even higher as the “town’s makeup is changing rapidly.”

The general fund reserve as of the end of June stood at $8.2 million. One year’s worth of expenditures would be $5.4 million. Overall for the town finances, reserve funds are expected to total about $20.3 million at the end of 2022.
Zillioux also brought up to council a tweak to the budget increasing the pool of money for salaries. “These are strange times and Colorado is seeing steady inflation,” he said citing figures from the town’s insurance agency showing a 6 percent inflation rate in Colorado. “That has an impact on salaries and we all certainly see the cost of living in general and housing in particular rising quickly in the valley. Rents have gone up generally 15 to 20 percent in the last year or so.”

Instead of allocating a 5 percent general salary increase, he suggested that the pool of money for salaries be increased to 8 percent with 4 percent being given for cost of living increase and the other 4 percent being used for merit increases if appropriate.

Town manager Dara MacDonald noted at the October 4 meeting that the budget for wastewater improvements could change significantly if the federal government approved the infrastructure bill. Currently the town is counting on receiving about a half million for capital improvement grants but if there is more federal money available, that figure could change and have a big impact on next year’s budget. “If that passes it could be a whole different world,” she said. “But we aren’t counting on that at this time.”

Audit issues
Speaking of the budget, council also looked over the latest audit report that included what was termed “material weaknesses” in the town processes. The new auditing firm took a deep dive into the town’s process and recommended things like tightening up internal controls, implementing more timely reconciliation of records, and having all departments use the same accounting software.

“The previous auditors got too comfortable with the town so we wanted to change auditors to get another view,” explained town manager Dara MacDonald. “That meant basically starting from scratch and was a lot of work. There is nothing I found shocking but they pointed out ways we could do better. We are happy with the audit and the weaknesses they found so we can make changes.”

As a result of increased demand on the Finance Department, the staff is considering adding a staff accountant to the finance team.

MacDonald said internal controls have been improved with more upgrades on the way.

“I commend the staff for bringing in new auditors,” said councilmember Ian Billick. “I would suggest the council form a council audit committee in the future to be more involved in the finances.”

Council agreed to consider that and approved the audit document unanimously.