On Nov. 6, the Pagosa Springs Town Council adopted a new budget and five-year capital plan for 2026.
The budget was first presented to the public in September and the council has since held two work sessions to give staff direction on how the council wanted to direct expenditures.
The big “what if” question lingering over this budget season was Ballot Measure 2A, a ballot question asking town voters to strengthen the town’s sewer infrastructure by raising the sales tax within the town’s boundaries by 1 percent to pay for sewer repairs.
Town staff had prepared two budget scenarios, one where 2A failed and one where 2A passed, for the council, until it became known that the measure had passed by about a 76 percent margin, according to the town’s website.
Mayor Shari Pierce thanked the voters in a statement, saying, “On behalf of Town Council, I’d like to extend our deepest gratitude to the voters of Pagosa Springs and the advocates of 2A for their strong show of support and civic engagement.”
The biggest difference between the two budget scenarios was the one with 2A’s passage included expected revenues from the sales tax increase, and the town’s expected expenditures for repairs and maintenance of its troubled wastewater system.
Town Manager David Harris explained at the meeting that the town would create a new fund, called the Sewer Infrastructure and Facilities Fund (SIFF), where revenues from the new sales tax would flow and expenditures for sewer-related projects would stem.
Harris noted that the increased sales tax revenues are expected to bring in about $3.7 million in the first year, but expenses for the sewer repairs would be about $6.6 million in the same year.
He added that about $2.4 million would need to be spent on the town’s continuing effort to repair what it calls category 4 and 5 problems with the aging sewer pipe system.
Other sewer-related expenditures for this coming year include engineering plans for a possible new downtown wastewater treatment plant and the town’s obligation to pay for 25 percent of the upgrade costs for the Vista wastewater treatment plant, owned and operated by the Pagosa Area Water and Sanitation District’s (PAWSD).
The town will also be adding a new employee to the Public Works Department and will be purchasing a new vehicle for the public works fleet, Harris added.
With the passage of 2A and the creation of the SIFF, “there are a lot of moving parts,” he said, and “we’ll have a better idea” of where the town stands after the first year of the increased revenues and costs of the big projects.
Council member Leonard Martinez expressed he wanted to make sure that the council works hard to help the people who voted for the 2A measure by possibly lowering the sewer rates.
“We need to show that we understand this will be here for a while and help those who voted for it,” he said.
Harris explained that the new budget does include an increase in sewer rates from $71.25 per month to $76.25.
“That is baked into this,” he said.
One way to think about this going forward, he suggested, is that the sewer rate fees would be used as “the maintenance and operation budget,” and the SIFF funds would “be for capital projects …where you’ll be taking the money for those big projects.”
He also clarified, “Let me be clear, we are not asking you to approve rates tonight,” explaining that the rates would be set when the council sets its fee schedule for 2026.
“For now, we are asking y’all to approve the budget with the increases that are baked into the revenue and if we change it later, then we change it later,” he said.
Martinez expressed concern that “those increases are gonna be a hardship for some people,” saying that he has “found a partner to actually create a fund that will help people to pay for the monthly sewer bill if they are not able to make it.”
Harris explained that “once we get a few months under our belt, we’ll know better how that sales tax is performing,” but, right now, “there’s a lot of moving parts.”
Speaking to the most immediate sewer problems, stemming from October’s flooding event, Public Works Director Karl Johnson explained that, on Oct. 29, his staff had performed a “temporary repair of the gravity [sewer] line” that runs under the 1st Street bridge.
The town had temporarily set up a bypass of this line after it was severed by flood debris, but staff was “having trouble keeping it functioning,” Johnson said.
The new repaired pipe is PVC, he explained, and it would not likely withstand “another flooding event” of the magnitude of the recent flood, making it a “weak link” in the system.
Public works staff believed it was the “best long-term solution for the short-term before we can construct that lift station over there,” which would allow the town to “decommission the gravity main that is on the bridge,” he said.
An unprecedented amount of unwanted water inflow and infiltration (known as I and I) also impacted the town’s uphill wastewater conveyance system, with Johnson saying that the “Wednesday after the storm saw a peak of 1.5 million gallons” of water was being pumped “uphill through the conveyance system.”
He explained that it has since come down to “more normal” levels of 350,000 gallons of water or less, but, he explained at a previous meeting, these “spikes of I and I” would probably accelerate deterioration of the piping system, turning some Category 4 problems into Category 5 problems and so on and so forth.
Last spring, the council conducted a strategic planning retreat, where it framed its broad vision for the future and its priorities for the upcoming fiscal year.
Out of that retreat, the council, as a body stated, “We are an engaged community with access to natural spaces, opportunities for sustainable growth and respect for our heritage.”
The main points from its strategic vision statement included:
• “We have a cultural infrastructure with inviting spaces.”
• “Our downtown is the center of gravity.”
• “Residents are involved in the Town’s activities and direction.”
• “We have the necessary infrastructure: people, recreation, technology, utilities.”
• “Our growth is planned, sustainable, and beneficial to our residents.”
Leading into budget season, the council then updated its goals and objectives for the upcoming year’s budget.
The council decided to break these priorities into tiers, with tier 1 being of the highest priority for the budget and tier 3 the lowest.
The council’s tier 1 priorities for the 2026 budget include the sanitation district; workforce housing; parks and trails maintenance; the geothermal system; and traffic management, parking and road maintenance.
When a motion was made, the council approved the budget unanimously.
derek@pagosasun.com
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