Budget managers optimistic that city trimmed enough

When slumping sales-tax revenue prompted Grand Junction city officials to trim $6 million from the city’s 2009 budget earlier this month, they accomplished their twofold goal of avoiding both employee layoffs and scaling back essential services to city residents.

City budget managers say they believe the cutbacks will end there. And they’re optimistic residents soon will loosen their vise grip on their pocketbooks as the city fast-tracks some capital projects and proceeds from the $787 billion stimulus bill trickle into communities across the nation.

“I think as a result of those efforts, we’re not going to decline any further, and we’ll start to recover,” city Financial Operations Manager Jodi Romero said.

Some Grand Junction City Council candidates and economy watchers, however, are skeptical about a quick recovery and pushing for further budget cuts. They say there are indications the valley won’t pull out of this slump until next year.

“The consumer confidence level is just not there,” said Diane Schwenke, president of the Grand Junction Area Chamber of Commerce. “I simply cannot see anything right now on the immediate horizon that will flip that trend.”

City officials have enjoyed robust sales-tax growth since the Grand Valley began to emerge from the shadow of the oil shale bust nearly 20 years ago, including double-digit, year-to-year increases four times in the past decade.

But sales-tax dollars ticked up only 1 percent the last quarter of 2008 over the same period in 2007, as Wall Street tumbled and energy companies began to pull out of the Piceance Basin for a number of reasons.

Then, sales- and use-tax revenue dropped more than 10 percent in January and February, from $11.1 million in 2008 to $9.8 million this year. It is the first time year-to-year revenue has fallen off in 25 years and contrasts sharply with the 8 percent increase Romero forecast for 2009.

City Manager Laurie Kadrich responded by skimming $6 million off the city’s budget, largely by leaving new and existing positions unfilled, postponing equipment purchases and realizing a savings in fuel spending.

Romero said cutbacks at that level should be sufficient even if the 10 percent slide extends for the rest of the year. It’s too early for city officials to revise their revenue projections — that usually doesn’t happen until the middle of the year or later — but Romero thinks a rebound is around the corner.

She points to the American Recovery and Reinvestment Act — the stimulus bill — and the fact the city plans to move up several water and sewer projects as evidence that dollars will flow again soon.

“What I’m hearing is folks may be less cautious (about spending),” she said.

City Councilwoman Teresa Coons said city officials have to act cautiously without panicking, which could have a ripple effect in the community. She said council members receive sales-tax reports monthly and therefore can react quickly in the event a decline lingers.

“We need to be prudent. We need to make sure we’re not spending beyond our means,” Coons said. “But on the other hand, a panic reaction by cutting staff, putting contractors out of work, that doesn’t help the situation. It makes it worse.”

But council candidate Reford Theobold, who previously served on the council for 18 years, thinks the city needs to tighten its belt another notch or two. He said the recent announcements that Grand Junction Steel will close and energy-service companies Halliburton and Schlumberger laid off workers could serve as bellwethers.

“I hope (Romero’s) right. I’m afraid she’s not, because I don’t see any indication that (revenue) has bottomed. The thing is: The longer you wait to make the cuts, the harder it is, because you’ve already spent (the money),” he said.

Theobold said he’s wary of postponing spending because it could actually cost the city more in the long run, particularly in vehicle purchases and road maintenance. He pointed to the fact the city is delaying spending on road paving, even though it’s on pace to pave major streets every 41 years and residential streets every 81 years.

In 2003, it was on schedule to pave every 15 and 30 years, respectively.

Schwenke said the fact Grand Junction traditionally feels the ripples of changes in the national economy later than other communities could work against the city when the economy improves. She also noted that even though many believe the energy industry will ramp up operations again, “that is an industry that is not as nimble as a small business.”

“It involves corporate planning, corporate decision-making totally outside Grand Junction,”
Schwenke said. “Even if the decision is to come back in, they’re going to do some planning before they come back in, before they start to put the rigs back up. That’s not going to be a flip-the-switch kind of thing.”

The bottom line, Schwenke said, is she isn’t seeing the positive indicators city officials are.

“I think that we need to be prudent,” she said. “We don’t want to panic. But I also think for most of 2009, we need to be cautious as individuals and businesses in terms of our investments and our projections.”


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