Fort Collins confronts budget shortfall

By Dan MacArthur
Fossil Creek Current

Prepare to pay even more for fewer services as the Fort Collins City Council begins the grim process of dealing with an admitted fiscal calamity.

"If ever there was a time that could be called a budgetary crisis, this is probably it," proclaimed Mayor Doug Hutchinson. His statement set a somber tone for a May work session he called "the beginning of the beginning" of an effort to, by November, possibly cut as much as $6.8 million from a nearly $100 million general fund budget for 2007.

City manger Darin Atteberry predicted the solution most likely will require a blend of more cuts along with added revenue resulting from new fees imposed on residents and possibly businesses.

On the revenue side, two fees and one utility rate hike that could generate up to $7.4 million annually are being considered.

The potential fees are a transportation maintenance fee of up to nearly $16 annually per residential unit with greater rates for businesses based on the number of trips they generate. The other is a parks maintenance fee of up to nearly $78 annually assessed to households only.

Electric rates also could be boosted by 1 percent, costing the average household almost $6 a year. The proceeds collected by the city-owned electric utility would be transferred into the general fund as a "payment in lieu of taxes" that the city would otherwise collect from a privately owned utility.

The potential creation of an independent library taxing district was not included among the possible revenue sources. Such a district could free up some $3.5 million earmarked for library services. But the council could not depend on those revenues because the proposal would not go before voters until Nov. 7.

Neither did the revenue options include an increase in the city's sales or property taxes, which would require voter approval. City council could impose the fees and utility increases.

But Hutchinson fervently stressed that before talk turns to collecting more revenue from residents, the emphasis first and foremost will be on finding cuts and greater efficiencies such as outsourcing city services and operations. He acknowledged, however, that such economizing will be much more difficult this time around than last year's effort resulting in $5 million in cuts and the loss of 107 city staff positions.

"With that process, guess what, we found all the things that were easy," he said, "eleven pages of cuts that didn't cause many problems."

But with what Hutchinson later called "low-hanging fruit" already picked, the council would have to reach well into the higher branches for the next harvest. The council got some sense of just how high with some $4.3 million in options detailed in a book-length staff report presented at the work session. Among them were these options:

• A $600,000 savings by reducing the scope of Dial-A-Ride services for the disabled to minimum federal standards
• A $330,000 savings by closing the libraries one day a week and reducing services

• A $300,000 savings by cutting back on street rehabilitation
• And more than $1.6 million savings in police services by eliminating the traffic enforcement motorcycle officers, resource officers in elementary and middle schools, and the criminal impact unit dedicated primarily to methamphetamine-related crimes.

Atteberry emphasized that these were only options and not recommendations, although he said city staff had already carefully considered them.

"These are very hard cuts, and there inevitably are going to be jobs associated with these cuts," he said. Even so, the council directed the city staff to identify cuts sufficient to close the full $6.8 million shortfall if necessary.

Although the city adopted the 2007 budget with a projected $2.3 million deficit it was prepared to address, the growing gap and flat revenue receipts surprised administrators. They had conservatively predicted a 4.5 percent revenue increase this year and a 1.3 percent increase in 2007. But those predictions now appear unrealistically optimistic with the continuing decline in sales tax revenues resulting from increasing competition by retailers in neighboring communities.

It appears no additional cuts will be required in the 2006 budget. Administrators will continue monitoring revenues and meeting with the council as the process proceeds into the fall.