Sales tax shortfall has city scrambling
The suspension of select programs and maintenance could fix budget woes for the city of Grand Junction, but only time will determine how much will be axed out of the city’s 2010 budget.
Grand Junction City Council members and city officials met Monday evening to discuss how to alter this year’s budget after January sales and use tax collections came in 19 percent below projections. The city also finished 2009 $2.5 million below budget in sales and use tax revenue and collected $800,000 less in 2009 than in 2008 in development fees.
City Manager Laurie Kadrich said the worst case scenario for the city would likely be a $10.2 million sales and use tax revenue shortfall this year, which would happen if every month in 2010 were as bad as January. Her most optimistic prediction was a $2.5 million shortfall, which would project revenue getting back on track after the first quarter. But Kadrich said she most expects a middle-ground scenario that would require about $5.6 million in cuts.
“I think that would be asking a lot of our economy,” to expect a lesser budget gap, Kadrich said.
Kadrich presented council members Monday with a scenario that would save the city $4.5 million with cuts in 20 areas, including:
— One year without gutter and sidewalk replacements, storm water drainage cleaning and sidewalk construction.
— Reductions to overtime and seasonal hours.
— A $1.4 million drop in street pavement projects.
— Delays for buying computers, street lights, traffic light upgrades, police cars and fire department equipment.
— Reductions in fleet maintenance, uniforms and contract services.
Another batch of seven cuts worth $1.5 million was also introduced at the meeting, in case council members were receptive to further cuts or cuts that could be swapped out for suggestions on the first list. The second list included:
A one-year elimination of the city’s spring clean-up program, the street overlay program, the chip seal program and the fall leaf collection program.
A yearlong suspension of the city’s code enforcement and weed abatement divisions.
Deferment on geotechnical work on First Street.
Based on comments council members made at the meeting, Kadrich will present a revised list of possibilities to the council in March.
Getting rid of the spring clean-up program got the worst reception, picking up no support from council members. Weed abatement and leaf collection were also bones of contention. Councilman Tom Kenyon said the $11,000 saved by dropping the leaf collection program wasn’t enough to justify its removal from city services. As for weeds, Kenyon said he and other council members receive dozens of calls on the subject every summer.
“We can’t just ignore them,” he said, adding the city would look “pretty shaggy” with no weed removal.
While the $4.5 million list was more popular with council than the $1.5 million list, Councilman Gregg Palmer said he worried about proposals on the first list that would affect public safety and streets.
Palmer and Councilman Bill Pitts also expressed concern about a proposal to have a fleet fund pay for all fuel budgeted in the city’s general fund. Although the move could put a strain on the fund and would make paying for fleet maintenance difficult if the change were implemented for a few consecutive years, there is room in the fund for the alteration this year, Assistant City Financial Services Manager Jay Valentine said.
Councilwoman Bonnie Beckstein voiced concerns about reneging on a 10-year commitment to provide $500,000 a year to Mesa State College for economic development after it was suggested the city could hold off for this year on the $500,000 payment. Mayor Bruce Hill agreed, but said he wouldn’t mind holding back if the $5 million total is paid eventually. Kadrich said she spoke with Mesa State President Tim Foster and assured the council he was understanding about the possible delay in payment.
Hill noted that most of the cuts involve city services, purchases and maintenance. He questioned whether personnel cuts should be on the list.
“It’s not easy to take people out of employment,” Hill said. “But we’re getting to the point where we’re cutting into bone marrow.”
Councilwoman Teresa Coons countered that laying off city workers may affect the jobs of others and have a trickle-down effect in the community that may result in even less sales and use tax coming in.
“It sounds easy to say ‘cut people,’ but it can have an effect on our economy,” Coons said.
Once a job-reduction program, which will offer a package to employees who volunteer to leave the city, is complete this spring, the city will be 60 employees shy of the 701 employee total a year ago. The city is also scaling back with a hiring freeze, a reduction overtime and fuel expenses, and a delay of capital equipment purchases and construction.
After the budget discussion, council members also talked about altering development fees so that developers would pay for infrastructure changes, such as adding, fixing or widening streets, necessitated by new construction.
Palmer said transportation impact fees, which were created in 2004 and are paid by developers, only cover about 52 percent of the cost of these infrastructure projects. Palmer said he’d prefer to go back to the system whereby developers paid for the construction rather than giving money to the city to do the work.
“The taxpayers are paying the other half right now,” Palmer said.
Hill said he’d also like the city to take a closer look at the fees, but he’d rather they reflect better the true cost of construction rather than disappear. Council members will discuss the fees again at a later workshop.