Eagle County’s 11.5% sales tax increase jumpstarts 2020 budget
It's a far different story than what the county faced just 10 years ago
EAGLE — A decade ago, Eagle County faced a painful budgeting process.
As the Great Recession truly took hold in the Colorado high country, the county commissioners needed to cut 30 jobs and $1 million from existing programs to achieve a balanced budget.
The 2020 Eagle County budget reflects a very different economy. Sales tax revenues are up 11.5% over 2019 collections and the county’s bottom line fund balance will increase by $1.7 million. The county’s capital plan includes new equipment and substantial road maintenance. And, rather than facing massive layoffs, the county plans a 4% merit pay increase for employees.
According to Eagle County Finance Director Jill Klosterman, 2020 operating expenses are budgeted at roughly $134 million. That number is fueled by 2019’s sizeable sales tax jump.
Year-to-date, which reflects sales tax collection through September, revenues are up $1.4 million.
Klosterman said no single sales tax category stands out as contributing most to that increase. “It really is across the board,” she said, “but we have noticed more vendors which leads me to believe we have more diverse businesses paying sales tax.”
Some of the diversity can be traced to a pair of 2018 government actions. In South Dakota v. Wayfair the U.S. Supreme Court upheld the state’s right to apply sales tax to internet transactions, even if the retailer does not have property or employees in the state. In 2018, the state of Colorado enacted new online sales tax rules.
That means sales tax revenue from internet sales is now making its way to Eagle County’s coffers. Klosterman said the state has identified roughly $230,000 in new internet sales revenue for the county, but there’s an asterisk by that figure signifying it will likely be adjusted by the state.
In looking at next year’s sales tax revenue, the county will see another large jump when the recently approved tobacco/nicotine product sales tax — $4 per pack of cigarettes and 40 percent on other products — goes into effect.
“We are budgeting $1 million for next year,” Klosterman said. The county hopes that 2020 will be the apex of tobacco tax collections.
“We don’t really want to see that tax grow or collect huge amounts. Our goal is to shrink those sales,” Klosterman said.
The county is compiling a plan for how it will spend the tobacco tax money, which is earmarked for public health programs. “A big part of that will be cessation efforts,” Klosterman said.
On the property tax side, the final assessed valuation figure is due in early December. From there, the county will set its mill levy.
“We are looking at about a 10 percent increase in the total property values,” Klosterman said.
But county property owners won’t be seeing a 10 percent increase in their county property taxes, Klosterman noted.
The other revenue increase for the county is in investment earnings. The county will see approximately $300,000 more in that area this year.
Eagle County plans to spend about $11 million less in 2020 than in 2019. The reason why is located at the intersection of U.S. Highway 6 and the Edwards Spur Road. This year the county paid its share of the new roundabout construction.
Approximately 47 percent of the county’s budget goes to salaries and benefits. Klosterman said the county’s insurance costs have stabilized aver several years of large increases.
Along with the 4 percent merit pay increase, the county plans to increase the base pay for some of its difficult-to-fill positions including detentions deputies and bus drivers. The 2020 budget includes a $3 per hour increase for certified law enforcement officers.
On the capital projects side, the county plans mill and overlay improvements along a four-mile stretch of the Colorado River Road and will be bringing on three new electric buses for its ECO Transit fleet.
The road project will cost approximately $1.4 million and the bus purchase will cost just shy of $3 million.
“The electric buses we’ve purchased are roughly twice as expensive as a conventional diesel bus — $986,000 for an E-bus versus approximately $500,000 for a diesel model,” Klosterman said.
“While there is not a lot of concrete data on performance, we will monitor closely to determine the payback period,” she continued. “When talking with the vendor, they estimate about $40,000 in annual savings per bus.”
Klosterman added that a combination of federal low/no emission vehicle funding and VW settlement money is helping to fund the bus purchases with an approximately $100,000 per bus local match.
“That is comparable to our conventional buses where we’ve recently matched about $90,000 per bus,” she said.
Headed into 2020, the county plans to complete the Ridgway Open Space deal.
“We are currently under contract to purchase approximately 129 acres for $2.2 million,” Klosterman said. “We have contracted with the Eagle Valley Land Trust to help with the acquisition, conservation easement, and Great Outdoors Colorado grant application.”
Money for the acquisition will come from the county’s voter-approved open space fund.
“We expect this parcel will operate seamlessly with the existing Brush Creek Valley Ranch and Open Space parcel that we acquired in 2017,” Klosterman said.
The county has also budgeted $500,000 from its general fund for the “Save the Lake” effort to preserve the Sweetwater Lake parcel. Because the lake property itself is located in Garfield County, not Eagle County, open space funds cannot be allocated to the effort.
“But the commissioners have indicated that project’s importance to the community at large by budgeting money from its operations fund,” Klosterman said.
Time will tell
While the county commissioners will approve the 2020 budget in December, during the year ahead the spending plan will change as financial needs and special projects arise.
“We have a budget amendment process, so rather than plugging in a number on undetermined projects, we fully vet them and come back through the budget amendment public process,” Klosterman said.
“As we draft this plan, we will keep our healthy fund balance in mind and find ways to fund high priority projects,” Klosterman continued.
That’s where the lessons learned during 2009’s tough budget season come into play.
“We are in the midst of the longest period of growth in the U.S. economy. We don’t see any indication that will change immediately, but that is certainly on our minds,” she said.