The Crested Butte News Serving the Gunnison Valley since 1999
Start with 75% in operating expenses and possibly go lower for 2026
By Mark Reaman
The Crested Butte town council has voted to reduce the minimum amount of money it holds in general fund reserves from 100% of annual operating costs to 75%. During the next budget cycle councilmembers will consider lowering that reserve percentage even more.
The August 5 vote on a formal Fund Balance Reserve Policy will free up approximately $2.75 million in the town’s general fund. The general fund will now carry an estimated reserve of about $5.6 million.
Some reserves in the capital fund could technically be freed up as well, but the town has always tried to save up money for major projects. The council has expressed a desire in the recent past to use most of the freed up one-time funds for large capital investments, including major support for the street and alleys fund. Any money in the capital fund is restricted for capital projects, maintenance of capital projects, streets, housing and parks. Money in the general fund can be used for much broader purposes.
The council in 2018 established the goal of having 100% of operating expenses in reserves. That figure was somewhat arbitrary, and a staff memo described it as an “outlier when compared to other communities.” The memo stated that the Government Finance Officers Association (GFOA) recommended that governmental entities carry a minimum of two months of operations and maintenance reserves in their general fund.
During previous discussions, councilmembers generally appeared amenable to reduce reserves so it could use some of the money for town projects instead of having it sit in the bank. The council expressed some unease dropping the reserve percentage too much and basically settled on holding 50 to 75% of annual town operating and maintenance expenditures.
Interim Crested Butte finance and administrative services director Rob Sweeney reminded the council that among other things, a fund balance demonstrates strong and responsible fiscal management. He said going from 100% to 75% in operating reserves seemed prudent especially for a tourism-based economy. But he said the 75% recommendation was based on previous council direction and meant as a starting point for council discussion.
Councilmember Mallika Magner has been a supporter of lower fund balances in part to mitigate a proposed increase in the streets and alleys mill levy needed to pay for regular improvements. “For myself, I struggled without being provided an industry standard for reserves. The GFOA recommends two months of reserves for the general fund and that changes my perception. Why is staff recommending 75% when that group is recommending 17%?”
Sweeney said the GFOA recommendation was the minimum amount. He added that having 75% in reserves “was still a hefty cushion in case of a major catastrophic event in town.”
The most likely such catastrophe discussed at the meeting was a wildfire in the valley that decimated summer tourism and the sales tax revenues. Mayor Ian Billick agreed with that assessment and added that the uncertainty of federal government funding could negatively impact things like paying for buses for the valley’s mass transit systems. “Not being able to pay for buses could hamper or shut down our transportation system,” he said.
“I agree that we can come off the 100% reserve number, but it is an uncertain world at the moment and I’m pretty conservative,” said councilmember John O’Neal.
Magner indicated she would go much deeper than the staff recommendation of holding 75% in reserves. “The GFOA recommends holding 17%. Given our current situation, use the released money to backfill the streets and alleys fund instead of raising the mill levy significantly. Use the money instead of having it sit in the bank.”
“I think moving to having 75% is a good first step,” said councilmember Kent Cowherd. “I am pleased with the staff recommendation that frees up some money. I like releasing that money to address other needs.”
Responding to a question from O’Neal, public works director Shea Earley said he was comfortable with 75% in reserves. “That makes sense,” he said. “My one pause is that if the town gets hit with a major disaster like losing the water treatment plant in a wildfire. But no amount of reserves could help in that situation.”
“I would be open to starting with 75% in reserves, hearing public feedback on the move but possibly lowering it further during the upcoming budget process this fall, said Billick. “Let’s take the first step tonight and look at a lower rate in the budget process.”
“I’m still not satisfied with the difference between the staff recommendation and the government recommendation,” reiterated Magner.
Town manager Dara MacDonald said the staff had discussed the issue and would be comfortable holding a minimum of 50% of annual operations in reserves.
Council voted 5-1 to start with adopting the new formal policy retaining 75% in reserves. Magner voted against the resolution and councilmember Gabi Prochaska was not at that portion of the meeting.
