Long range town finances frustrating CB council

Cut services/reduce reserves?

By Mark Reaman

While expressing a general need to tighten up town finances and look at ways to increase revenue in the mid- and long-term future at an April 7 work session, the Crested Butte town council did not decide on any definitive path of action at a second work session over the town’s long range financial planning. That might happen at the third work session scheduled for June 2.

Council discussed lowering the percentage of reserves it carries in the various town funds, now set at 100%. They talked about how a mill levy increase could protect Crested Butte streets and alleys but how it could also put pressure on local homeowners and businesses. Councilmembers agreed another large affordable housing project should probably not be on the books until the large Mineral Point and Whetstone developments settle out. A long and sometimes uncomfortable discussion was held about how best to possibly trim services and personnel, but councilmembers were hesitant to suggest specifics. 

Given recent economic uncertainty in the country, councilmembers wanted to stay on a conservative financial path and no one was confident the recent booming sales tax increases would continue. While recognizing that some budget funds like the open space and transit-and-mobility funds could have their reserves brought down significantly from 100%, council voiced support to retain hefty reserves of 75% to 100% in the general and capital funds. 

Town manager Dara MacDonald and finance director Kathy Ridgeway dug deep into the budget numbers and showed that even if reserves were cut in half and $5.8 million in extra money was transferred to the capital and street-and-alley funds to cover anticipated projects, that money would only last about five years. MacDonald said council could reduce reserves to 50% and that would still be considered conservative.

Take a rest from housing development

MacDonald pointed out changing financial conditions impacting CB included inflation, the town emphasis on housing and climate, the general cost of goods and services, and the fact overall operation and personnel costs were putting pressure on the town budget. 

“The reserve percentage we hold is arbitrary, but I am uncomfortable spending our reserves for continuing expenses,” said mayor Ian Billick. 

“All we are doing in that case is avoiding making the hard decisions,” Billick said.

“As I see it, the funds are already going down as everything gets more expensive,” said councilmember John O’Neal.

“We’re also doing a lot more as we become a fancier place,” said councilmember Mallika Magner who noted an increase in staff that has led to the need for more office space over the last several years.

Billick said the town runs primarily on sales and property tax and CB sales tax is at 4.5%. But when added to other sales taxes charged in town, it comes in at 9.4% which is on the high end of similar towns.

Magner suggested some town fees could be increased and if sales tax was raised, the council could choose to exempt groceries. MacDonald wondered how many locals that would impact since many did their primary grocery shopping in Gunnison.

As for upcoming major expenditures, Billick said he didn’t see the need to spend money in the next five years on another major affordable housing project with Mineral Point and Whetstone coming online over the next several years.

“I’m with you. Let’s see the need after Whetstone settles a bit,” said councilmember Gabi Prochaska. “But perhaps we keep the idea of land banking open.”

Councilmember Beth Goldstone also suggested looking for less expensive opportunities in housing like the GreenDeed and GoodDeed programs that help local homeowners. 

In response to a question from Magner, MacDonald said the town did not rely on any direct federal money, but some federal grants could be cut such as one meant to help replace the century-old town infrastructure in Lake Irwin. She said cutbacks in federal money could impact the planned roundabouts on Highway 135. “For us, the uncertainty of the economy could impact tourism,” she said.

“The thing that also makes me nervous are the federal capital grants for buses,” said Billick.

Over-serviced?

The topic of services and personnel came up and Billick asked if the council had a strategy to address better efficiency and possible service cuts in town.

Prochaska suggested not every position should automatically be filled when someone left a town position. She suggested the council could perhaps analyze whether it should be filled.

Billick adamantly disagreed saying with more than 60 staff positions, council should not be discussing every vacancy. MacDonald assured her that when there is staff turnover in a department, the vacancy provides an opportunity to look at better efficiencies.

“The idea of being more efficient with less people could be the opposite,” said Goldstone. “Things could take longer for example.”

“Are we okay with things taking longer?” asked Magner who advocated that town services should be analyzed for cuts. “We all love the services we get,” she said. “When people complain it’s because they didn’t get a service. We all want services but that is the tough thing. How do we pay for them all? Perhaps we accept our rough edges?”

“I have a hard time imagining a reduction in services with the monumental growth happening like all the affordable housing being built in the North Valley” said councilmember Kent Cowherd. “We’ll need a new level of service, not less.”

“The bottom line to me is that we shouldn’t grow services faster than revenues,” said O’Neal. “That is difficult with Crested Butte being the hub of services in the North Valley. We may have to offer less services to be fiscally responsible.”

“One strategy is to look at future growth of the staff and not get rid of positions but not add positions,” said Billick. “That’s a conservative approach.”

Countering a statement by Magner that the population was decreasing, MacDonald said while that may be slightly true in town, the North Valley population was increasing a lot and Crested Butte provided most of the services.

“That doesn’t seem sustainable,” said O’Neal. “We have to decrease expenditures and increase revenues.”

“Most of our revenue is sales tax and that goes up with such growth,” explained Billick. 

“So, what services should decrease,” asked Billick of the council.

“That’s a tough thing to ask,” responded Magner.

“One idea might be to put parking enforcement under the marshals instead of outsourcing it to an out-of-town company,” suggested councilmember Anna Fenerty. “I could see an adjustment there for example.”

Fenerty also asked whose expectations the town was expected to meet. She said she didn’t have a car, so the proliferation of potholes was not a concern for her. “But I know that doesn’t work,” she said.

“A core level of service — safety, water, roads, utilities — shouldn’t be reduced,” said O’Neal. “Then it starts to get tricky. I need a deeper dive into what services we offer.”

Magner suggested MacDonald could recommend how to streamline services. “She’s the CEO of the town.”

“I disagree,” said Billick. “It is our responsibility as council to determine a level of service and her job is to implement it.”

MacDonald said the annual budget documents did a good job of explaining town services. She also indicated to the council that the exercise of making recommendations of what services to cut and thus which people to let go, was not a simple exercise to be taken lightly without specific council direction.

Magner insisted on pursuing that path, but no other councilmember jumped on that bandwagon. 

With little definitively decided, Billick said the next work session on the issue should address more specifics like how much money should be kept in the reserves, direction of the mill levy, whether to contribute $1 million to Mountain Express for its Whetstone bus barn and service levels in town.