Vail budget forecasts show only modest sales tax, other revenue growth for 2019
By the numbers
$43.1 million: Vail’s budgeted operational expenses for 2018.
$66.2 million: Vail’s expected 2019 revenue from all sources.
7 percent: Amount of Vail’s 2018 revenue from property taxes.
8 percent: 2018 revenue from parking fees.
Source: Town of Vail
VAIL — This town’s success has broken revenue records the past few years. But town officials are being cautious as they’re writing the 2019 budget.
The Vail Town Council on Tuesday, Aug. 21, held a session to talk about the 2019 budget. Town officials still expect growth, but only modest growth, in the coming year.
While year-to-date sales tax collections are up 5.2 percent over 2017, Vail Finance Director Kathleen Halloran’s preliminary budget is forecasting only 2.5 percent growth in 2019. Council member Jenn Bruno encouraged Halloran and Town Manager Greg Clifton to lower that projection to just 2 percent growth.
While the national economy is humming at the moment, council member Greg Moffet noted that an extended bullish stock market and other indicators show that a recession could be coming in the next 18 months. Fellow council member Travis Coggin added that some town real estate prices are starting to dip.
“We should be more conservative,” Coggin said. “Being conservative now allows us to seize opportunity in the future.”
Clifton said he and Halloran have talked about created a recession plan for the town. That process starts with conservative revenue forecasts.
More in reserve
In addition to the modest growth forecast — across funds as varied as parking, the lift ticket tax and the town’s real estate transfer tax — council members also asked to hold a greater amount of town revenue in reserve.
The town’s reserves are healthy at the moment — about $17 million — those reserves have been spent down over the years on various projects. Current town policy is to hold a reserve of about 25 percent of the town’s operating expenses. That would be roughly $9 million this year. That would cover about three months of town spending.
Council members asked Halloran to boost that minimum to 30 percent — about four months’ worth of spending.
Clifton said that could be wise. The town of Breckenridge holds six months’ worth of spending in its reserve. And, he added, that isn’t as drastic as it sounds, due to the unpredictability of both the national economy and the environment.
The council brought in a guest speaker for the session, former Breckenridge Town Manager Tim Gagen. He noted that a large wildfire near Ketchum, Idaho, cost that city half its sales tax revenues recently.
The 2002 Missionary Ridge fire near Durango cost the city a summer’s worth of revenue, Clifton said.
Forecasts can be wrong
On the other hand, Gagen, who served 17 years as Breckenridge’s top executive, said all of his predictions were wrong following the Great Recession, which began in 2008.
“Our bounce-back was much quicker than I’d expected,” Gagen said.
Vail was also quick to bounce back from the recession. The town used several million dollars of its reserves to pour into marketing in 2009 and 2010.
The town’s current financial status is strong enough that council members are talking about proposing some sort of tax hike — perhaps as early as 2019 — to create a steady housing fund.
But there are other factors at play.
Clifton told council members that a state ballot question this fall will ask voters for a .62 percent sales tax hike to fund transportation projects.
Council member Kevin Foley noted that if the state issue passes, then the town’s sales tax would be at 9.4 percent.
“That gives us reason to re-think our strategies,” Clifton said.
Even with a cautious approach to budgeting, the town still has plans for the next several years.
In the next year, the town expects to complete a plan for its civic area — roughly from Dobson Ice Arena to Vail Town Hall. Other plans include shelters at the Ford Park softball fields and continued water quality infrastructure work and streambank repair.
And, at some point, the town will have to look at replacing its 1970s-vintage town hall.
The council will take another look at the 2019 budget in September, and the plan will receive final approval in November.
Vail Daily Business Editor Scott Miller can be reached at email@example.com and 970-748-2930.