Aspen braces for flat sales tax revenue
ASPEN, Colorado ” The Aspen City Council antici-pates a worsening economic pic-ture, and as a result, the 2009 budget it passed Monday con-templates sales tax revenue next year that is identical to this year’s.
That’s a departure from the original budget proposal, which projected a 1 percent increase in sales tax revenue.
But given concerns from some council members, including Steve Skadron and Mayor Mick Ireland, that estimate was shaved by 1 percent ” about a $70,000 difference.
A few Aspen residents, howev-er, told the council that expecting revenues to remain flat is too optimistic; they pre-dicted local sales next year will fall off dramatically.
“We haven’t begun to hit rock bottom yet,” said Mike Wampler, owner of Aspen Velo bike shop. “If you don’t look at least 10 per-cent down, you are kidding your-selves.”
The 1 percent reduction includes the city’s portion of county sales tax revenue collec-tions, and is meant to send a mes-sage to the public that the council understands the severity of the global eco-nomic crisis.
“I don’t want anyone to think we were flying blindly here,” said city finance direc-tor Don Taylor about the budget assump-tions and the city’s strategy created months ago. “We’re not oblivious and are acutely aware of what’s going on.”
The council has the ability to revisit the budget at any time, and plans to hold all capital expenditure spending for 60 days to see how the economy shakes out after the holidays and President-elect Barack Obama takes office.
City officials said they will keep a close eye on the budget assumptions and be prepared to make changes as necessary.
City financiers are preparing several scenarios based on possible revenue shortfalls and how they may affect servic-es and programs, Taylor said.
“The assumptions on which this budget is based are very tenuous,” Taylor wrote to the council. “The national and world econ-omy seems more troubled each week.”
City officials will provide regular updates to the council on the state of the local and national economies in an effort to stay abreast of the situation, and the budget assumptions.
“I’m comfortable knowing we are going to be measuring this weekly, if not monthl-y,” said City Councilman Dwayne Romero. “We can adjust … there is no right or wrong at this particular moment.”
The 2009 budget adopted by council Monday includes nearly $102.3 million in expenditures, which is 2.35 percent less than 2008.
Most of that comes from a reduction in capital spending, which amounts to $4.1 million in projects planned by about a dozen departments in City Hall.
The city government has also frozen hiring, meaning no new employees will be hired in 2009. And supplemental budget requests from department heads will be kept at a minimum.
Department heads have been limited to a 5 percent payroll increase from 2008 for all employees, which includes raises and health insurance costs.
Another direct hit is a big cut in the gen-eral fund that contributes to the city employee housing fund ” from $529,260 to $200,000 in 2009.
To prepare for a worst-case scenario, the city years ago adopted a policy of keeping enough cash on hand in the general fund to keep city government running for 90 days if revenue sources dry up, and each department in City Hall has a cash reserve as well.