“Given the downturn in the national economy and in order to be prepared to respond quickly should the local economy experience a downturn,” read the introduction to the proposed 2009 budget for the town of Pagosa Springs, “departments propose to reduce expenditures between 6 and 10 percent beginning January of 2009.”
Presented at the mid-month council meeting Thursday, the budget reflected a general apprehension of future adversity and a climate of continued economic decline.
After identifying a couple of corrections to the budget that was presented to council, Town Manager David Mitchem explained that the final draft of the budget was more parsimonious than had been mandated by previous council resolution. I
In November, council passed a resolution mandating a 5-percent reduction in the 2009 budget compared to the 2008 budget but also stipulating monthly monitoring of town revenues in order to recognize fluctuations in those revenues.
In the budget iteration presented on Thursday, cuts proposed by various departments went beyond the mandated 5-percent and ranged anywhere from 6 to 10-percent.
The budget also eliminated three positions with the town: assistant town manager, director of planning and assistant police chief. Although those positions were budgeted for 2008, the resignation of interim town manager Tamra Allen (previous assistant town manager and director of planning) and the promotion of James Saunders to police chief from assistant chief allowed the town to leave the positions unfilled and excised from the 2009 budget.
Mitchem also informed council that the structure of the budget had changed with the creation of separate fund accounts for all of the town’s restricted dollars. Adding to the General Fund and the Geothermal Enterprise Fund, the new budget created an Impact Fee Fund, a Conservation Trust Fund, a Lodger’s Tax Fund and a Capital Improvement Fund.
The latter fund, while indicating no revenues in the 2009 budget, shows actual and budgeted expenditures for a zero fund balance.
As reported in last week’s SUN, a little more than $800,000 was cut from the capital improvement budget, restricting funds to the maintenance of current facilities, infrastructure and debt service. According to the proposed budget, “the Town will use remaining revenues to construct new projects on a priority basis,” justifying such a penurious approach in that it “ensures that the Town does not become overextended in new facility/infrastructure projects without considering the cost of maintenance.”
Mitchem reiterated the need to carefully examine capital improvement expenses, saying, “We need to take a look at our expenditures and how we can reduce our engineering costs,” referring to cost overruns on two previous projects, i.e., the Lewis Street project and the Town Park pedestrian bridge project.
Mitchem also reported:
• General Fund revenues predicted at $2,794,008 and expenses projected at $2,095,058 for a surplus of $698,950.
• The Conservation Trust Fund showing $131,617 in revenues and $100,000 in expenses for a $31,617 balance.
• The Lodger’s Tax Fund with anticipated revenues of $379,814 and expenses of $337,950 for a $41,864 balance. The budget cut the full-time position of Town Tourism Committee Director to a half-time contract position, eliminating some of the TTC’s expenses.
• Projected earnings of $107,493 in the Impact Fee Fund and expenses of $79,376 for a $28,118 balance.
• Geothermal Enterprise Fund projected revenues of $168,367 and expenditures of $102,738 for a $65,629 balance.
The budget also made somewhat painful cuts to the amount the town provides in funding to service organizations, leading council member Mark Weiler to comment, “It troubles me that we allocated more money to stray animals than we have for victims of spousal abuse,” referring to cuts made to the Archuleta County Victims Assistance Program.
Responding to Weiler’s comments, Humane Society Executive Director Robbie Schwartz said, “It’s easy to compare people to animals but the Humane Society provides an important service. We’re taking care of the animals of local people,” and she pointed out to council how her organization has been doing its part to cut back on expenses.
Weiler responded with a proposal for a more measured approach to funding service organizations. “I suggest we back-load expenditures to service organizations, and allocate funds in June of 2009.”
Council member Shari Pierce suggested that Weiler’s approach would be too draconian for some service organizations and proposed a compromise that would fund some organizations three months out, others in June, thus giving council and the organizations more flexibility in meeting their funding needs without going half a year without appropriations. Weiler accepted Pierce’s compromise.
Unlike the city of Durango, Pagosa Springs elected to retain green power for its facilities. Last week, the city of Durango announced it was cutting its green power program in order to cut budget expenses and would opt for coal-powered electricity instead of the wind-powered electricity offered by La Plata Electrical Association. The town of Pagosa Springs, in creating its own trimmed-down budget for 2009, elected to keep its own green power program and will continue to provide wind-powered electricity to its facilities.
By adopting the proposed 2009 by unanimous vote, council also voted to authorize the proposed mill levy set at 1.576 based on an assessed valuation for 2009 of $65,714,864, an increase of $1,389,206 from 2008.
Although the proposed 2009 budget was approved by council last Thursday, the budget is contingent on economic conditions and could be revisited after a two-month review. Due to a resolution passed at the November town council meeting, given a significant dip in those revenues (based on reports from the previous two months), the town could respond with further budget cuts in response to decreased revenue streams.
The town would answer a 5-percent drop in revenue with a 10-percent reduction in expenses. Furthermore, a 10-percent drop in revenues would lead to 15-percent budget cut, and a 15-percent drop would lead to a further 20-percent reduction in expenses.
Cuts to the budget would entail as little as asking department heads to excise nonessential services (with a 10-percent drop in revenues) to implementing a full hiring freeze and focusing on only essential services in the worst-case scenario. The policy states that “the town will not delay its response to changes in revenue streams,” suggesting that any such changes reported would necessitate immediate response by the board.
Council meets again in chambers at Town Hall on Jan. 5 at 5 p.m.