Vail moves to ‘crisis’ budget
Town is covering steep drop in revenue with a combination of reserves, cuts and freezes
Vail over the years has built a large rainy-day fund. It’s raining, hard, right now.
The Vail Town Council adopted a “crisis” budget plan at its June 2 meeting that includes spending cuts, furloughs and a substantial use of reserve funds.
The loss of revenue comes largely in the wake of the March 15 closure of Vail Mountain due to the global COVID-19 pandemic. April sales tax collections were down 75% percent compared to 2019 collections. Town officials had estimated an 80% drop.
Due to the pandemic, many town-sponsored special events have either been canceled, moved to 2021 or reimagined. That’s resulted in an estimated $864,000 savings in event spending.
But a budget memo indicates that staff will present at least some plans for newly-imagined ways to draw visitors during the summer and fall.
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Some of the biggest cuts come in the town’s capital projects fund. The biggest cut is a delay in building a $4.6 million retaining wall on the north side of the town’s public works campus, on the north side of Interstate 70 roughly across from the town’s golf course. That wall is needed before the facility is largely rebuilt, a project that’s likely been delayed until at least 2022.
In all, the town has deferred $25 million in capital expenses.
Vail Finance Director Kathleen Halloran told council members that roughly 60% of the budget shortfall will be covered from reserves, with the remainder covered by various cuts. Those cuts include pay freezes, not hiring open positions, and some furloughs. The town for the summer has abandoned paid overnight parking. It’s expected there won’t be as much parking demand this summer, and not staffing the parking structure kiosks will save some money.
While cuts are being made, the town is making use of its reserves to keep putting money into the Vail Emergency Relief Fund. The initial $500,000 into the fund is expected to be followed with another $500,000.
With all the cutbacks, the town’s general fund still shows a healthy reserve. The current projections show the town’s general fund will end the year with $29.8 million still in the bank. That’s roughly 68% of the town’s normal general fund revenue streams. Council policy is to have at least a 35% fund balance for the general fund.
Across all funds, the town is financially healthy.
According to the town’s most recent audited financial statement, from McMahan and Associates, the town’s assets exceed its liabilities by nearly $321 million. Across all funds, the town has nearly $111 million in reserves.
As Vail’s lodges, restaurants and shops gradually reopen, there should be more activity into the summer, but June’s sales tax collections won’t be reported until August.
Council member Travis Coggin called the current budget plan a “prudent” move.
Councilmember Jen Mason said July and August may be more telling about how the town is recovering.
But, Coggin noted that if July’s revenue is only 50% of the previous year, “We’re not going to make it up in October and November.”
Vail Daily Business Editor Scott Miller can be reached at firstname.lastname@example.org.