Members of the Eagle Town Board began 2013 budget talks Tuesday night by setting guidelines for the spending plan and noting that a decision by Gypsum means a roughly $400,000 hit.
Earlier this year, members of the Gypsum Town Council informed their Eagle counterparts that they would be ending the Costco revenue sharing agreement in 2013. The agreement dates back six years and splits unencumbered sales tax revenues from the Costco retail block at roughly 60/40, with 40 percent going to Eagle. However, the deal did not mean Eagle collected $40 from every $100 in sales tax generated at the big box store.
According to Gypsum Finance Director Mark Silverthorn, Gypsum was required to earmark .8 percent of its sales tax revenue for law enforcement services and an additional 1 percent for the Gypsum Recreation Center debt. The town also negotiated a debate incentive with Costco. As a result, the 60/40 cost share comes into play after these required deductions and the end result is lower. For every $100 in sales tax revenues from the Costco site, last year Eagle received $16 through the cost share deal.
With that revenue source now projected to be 0 for 2013, Eagle's operating fund revenues over expenses is projected to drop from $377,000 in 2012 to just $24,000 in 2013. However, Eagle Town Manager Willy Powell also noted that the town has built a healthy fund balance over the past few years, which will help Eagle absorb the revenue share loss. In 2011, the fund balance was $1 million. This year it is projected at $962,000 and in 2013, it is projected at $782,000.
Of course the town's other alternative is to cut spending, but an ambitious capital project and a set of budget guidelines complicate that option.
Eagle's big ticket item in the 2013 budget is $3 million for the Eby Creek Road project. Eagle has saved up that money for several years as the town's contribution to the $17 million project.
The town is partnering with the Colorado Department of Transportation and the Eby Creek Road project has also received funding from federal and county sources. When completed, the plan will include construction of four new roundabouts, improvements to the existing roundabout, a new pedestrian bridge over Interstate 70 and various landscape and sidewalk improvements. Construction is slated to begin this summer and completion is scheduled in 2014.
Along with funding for the Eby Creek Road project, five guidelines are steering the town's spending plan for 2013:
• Avoid layoffs
• No wage increases
• Sustain program levels
• Achieve objectives as resources allow
• Account for a succession plan
With those goals accounted for, the town does not have to cut spending, but the revenues over expenditures drop to just $24,000.
On Tuesday, the board did not launch into a detailed discussion of program funding but they did briefly discuss the succession plan issue and personnel decisions that will affect the overall budget numbers.
Both Powell and longtime Eagle Town Clerk and Finance Director Marilene Miller are planning to step down from their positions in 2013. As the town looks to hire new staff, the initial thought is to replace the two jobs with three positions - manger, town clerk and finance director. That will have budget implications. Additionally, the board wants to allow for a transition period so that Powell and Miller can help train the new hires. The budget includes $20,000 for recruitment and additional salary costs.
In looking at the budget, Trustee Brandi Resa suggested cutting back insurance and retirement benefits for employees to cut expenses. She said private business often has to make those decisions.
"It does hurt morale but its something, as a board, we should look at," she said.
"I think we can look at it, but I am very hesitant to do that," responded Mayor Yuri Kostick.
Powell noted that most of the town's employees earn below the medium household income level for the community ($62,750 according to 2010 U.S. Census) and that cutting insurance benefits would be a big impact on people earning modest salaries. He also noted that while private businesses may choose to cut back benefits during hard times, they have much more flexibility than government has to provide bonuses or revenue sharing when times are good.
"I am 100 percent against cutting any employee benefits," said town board member Scott Turnipseed. "We need to focus on how to increase revenues."
Town board members noted that in the long term, the recently approved Eagle River Station project will provide more sales tax revenue to the town. In the shorter term, members noted they wanted to focus on community marketing efforts and conservative spending.
And as they looked at ways to make up for the approximately $400,000 Costco revenue sharing loss, town board member Joe Knabel offered a more positive way to look at the situation. He noted that while revenues over expenses will dip to only $24,000 in 2013, Eagle will be able to sustain its spending without assistance from the neighboring community. That's important to note, he said, because the revenue sharing agreement was always a year-to-year deal that could be stopped at any time, as demonstrated by Gypsum's decision to end it in 2013. Knabel said now the town needs to look at ways to increase its revenues independently.
The town board will continue its 2013 budget review during a special meeting on Tuesday, Oct. 30.