City infrastructure budget at ‘critical point’ officials say

Tax increases needed to head off bigger costs later, Littleton leaders say at State of the City address

David Gilbert
dgilbert@coloradocommunitymedia.com
Posted 6/15/21

Littleton city officials stepped up their efforts to build support for a slate of potential budget fixes on June 8, speaking to a packed house of civic and business leaders about the dire state of …

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City infrastructure budget at ‘critical point’ officials say

Tax increases needed to head off bigger costs later, Littleton leaders say at State of the City address

Posted

Littleton city officials stepped up their efforts to build support for a slate of potential budget fixes on June 8, speaking to a packed house of civic and business leaders about the dire state of the city’s capital projects fund.

The city faces a “critical point” if budget issues aren’t addressed, City Manager Mark Relph told more than 120 attendees at a State of the City address, a $30-a-plate gathering at the Ashley Ridge event center in south Littleton.

Without new sources of revenue for the capital projects fund, which finances infrastructure, Littleton could be “faced with a slow degradation of our quality of life,” Relph said. “The city won’t be in a position to address the impacts of growth ... We can’t let it sit this way.”

The capital projects fund, which draws most of its money from gasoline taxes, building fees, and a regular infusion of cash earmarked for road repairs, is currently projected to run dry by 2025, finance director Tiffany Hooten told the crowd.

The fund pays for road maintenance, city-owned buildings and the vehicle fleet including police cars, and forms the basis of matching funds required to obtain state and federal grants for big-ticket highway projects needed to address congestion, Hooten said.

City staff have identified more than 70 unfunded capital projects with a projected cost of more than $98 million in the next 15 years, she said, adding that infrastructure projects only grow more expensive the longer they’re put off.

Some of those projects include repairs and updates to the municipal courthouse, Town Hall Arts Center, Bemis Library and the Littleton Museum. Others include police radios and cars.

The fund’s revenue streams are unreliable, Hooten said, with gasoline taxes proving feeble as hybrid, electric and more fuel-efficient cars take to the road, and highly variable revenues from building use taxes. Littleton has fewer big-box retailers than neighboring municipalities, she said, making for a softer sales tax base.

In the past, Littleton has paid for big-ticket items with one-time revenues such as by selling water rights, but Hooten said those just won’t cut it forever.

“We’re out of one-time fixes,” she said. “We’re out of Band-Aids. Now is the time to confront this dilemma.”

The answer could come from tax increases, Hooten said.

City council has been exploring a range of tax increase proposals in recent months, which could go before voters as soon as this November. Recent opinion polling found broad support for a hike in the retail marijuana tax and the implementation of a first-ever lodging tax, though those are projected to generate up to $1 million each annually at the high end — still short of the $6.5 million a year city officials say is needed to meet that $98 million goal over the next 15 years.

An increase in Littleton’s sales tax rate from 3% to 3.5% would generate the $6.5 million a year, according to city estimates, while an increase to 3.75% would likely generate an additional $10 million a year in revenues, which Relph said would help “address growth issues sooner than later.”

Materials presented at the meeting also suggested a cost-saving measure: cutting Bemis Library and the Littleton Museum from the city budget, for an annual savings of $4.2 million.

Public Works Director Keith Reester said Littleton’s roads are in a sorry state, and only getting worse.

“We’re in the bottom quartile in the state” in terms of measured road quality, Reester said. “If we don’t take care of it, it becomes a million dollars a mile” to replace, he said. “We have segments of road that are there.”

Meanwhile, the city’s public works campus is falling apart, he said, with most of the buildings dating to to the late 1940s.

“The only new building we’ve built out there is because the fleet shop collapsed,” he said. “That’s not the way we want to support our community.”

It’s not all bad news, Reester said. The city has collected massive new amounts of high-quality data on city assets in recent years, allowing for carefully targeted upgrades.

But big items loom on the horizon. The intersection of Mineral Avenue and Santa Fe Drive is serving many times the cars it was built for, and matching funds to secure grants to fix it could stretch into the tens of millions of dollars.

Sean Walsh, who heads a public polling firm contracted by the city, said recent public opinion polling found residents generally view the city and local officials favorably, and found far more residents favor increasing city revenues than cutting costs.

The polling, presented to city council last month, found marginal support for the .5% sales tax increase proposal, though support for a .75% increase was below a majority.

Relph said he feels there are few other options beyond increasing revenues with taxes. Federal COVID relief funds are one-time and tightly regulated, while city funds with larger reserves, like the sewer fund, cannot legally be used for other purposes. Even general fund reserves are expected to contract in coming years in the face of growing payroll costs.

“We can’t cut our way out of this thing,” Relph said.

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