City short on funds to address infrastructure needs, officials say

Dwindling capital projects budget spells trouble; called ‘critical problem’

Posted 9/23/19

Littleton’s city-owned buildings and vehicle fleet are increasingly in need of repair or replacement, but the city budget can’t cover the costs. That’s among the bigger takeaways from the …

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City short on funds to address infrastructure needs, officials say

Dwindling capital projects budget spells trouble; called ‘critical problem’

Posted

Littleton’s city-owned buildings and vehicle fleet are increasingly in need of repair or replacement, but the city budget can’t cover the costs.

That’s among the bigger takeaways from the city’s proposed 2020 budget, which will formally go before city council for ratification in October.

Building, maintenance, fleet and technology costs come out of the city’s Capital Projects fund, which has been inadequate to meet a slew of needs for years, said City Manager Mark Relph.

“We have a critical problem,” Relph said. “We have all this stuff competing for limited resources, and we don’t have an answer for that.”

A recent survey of more than 30 city-owned buildings showed many are in dire straits, Relph said.

Buildings at the city’s public works maintenance yard, which date to the 1940s, are riddled with holes, corrosion and leaks, Relph said, and periodic patch jobs are increasingly coming up short. The municipal courthouse, which is more than a century old, gobbles up maintenance costs. City hall is beleaguered by an outdated HVAC system and woefully inadequate electrical system, Relph said.

“We’re popping breakers in here all the time,” Relph said.

Meanwhile, the city’s fleet of vehicles, which includes a number of highly specialized public works vehicles, continues to need repairs and upgrades.

“If we don’t maintain them, we’re replacing things when they fail, which is much more expensive,” Relph said.

But five-year budget projections show precious little money to address such issues.

In years past, the capital fund has been supported by the Highway User Tax Fund — the gasoline tax — and fees related to new construction and development, Relph said. The fund can see wide fluctuations: in 2016 the fund’s beginning balance was $16.7 million, but in 2020 it will start with just $6 million.

Of that balance, $3.1 million comes from a dedicated fund established after Littleton voters approved a merger of the city’s fire department with South Metro Fire Rescue. The budget calls for Littleton’s mill levy to be lowered from 6.662 to 2.0 in 2020, as taxpayers will now pay South Metro directly for fire protection.

The city is required to spend the new fund on street upgrades, which Relph called a welcome stabilization of the road repair budget.

But the rest of the fund has to cover a variety of other costs. The city has been on a roll of landing federal grants for transportation projects, Relph said, but those grants require the city to come up with matching funds — which are currently expected to peter out over the next two years.

That’s concerning, Relph said, as the city is staring down massive costs related to the intersection of Santa Fe Drive and Mineral Avenue, where a plan to build a freeway-style interchange could clock in at $100 million — with Littleton on the hook for 20% in order to snag grants.

So what’s the answer?

“We need a dedicated revenue source,” Relph said. “Could that be an increased sales tax? Property tax? Both? Something else? We don’t know yet, but it’s an issue city council will have to address.”

Resident surveys have shown support for a ballot measure to increase sales taxes, but city council decided over the summer not to pursue such a measure in 2019, saying there wasn’t time to build a sufficient case before the fall election.

"It takes a lot of time and work to go after something like that," said Littleton Mayor Debbie Brinkman. "We didn't feel like we had enough time to nail down all the specifics. It takes a lot of strategic planning to make that kind of leap."

A 1% sales tax increase could bring in an additional $8 million a year, Brinkman said. Littleton's sales tax rate is currently 3%. 

"It would fix a lot of problems," Brinkman said. 

In previous years, the city transferred surplus money from the General Fund — which pays for personnel costs and day-to-day operations — to the Capital Projects fund, but that practice was discontinued in 2017 in the face of mounting operating costs with little new revenue, according to the proposed budget.

While the 2020 budget shows reserves of 25%, well above the city’s preferred practice of hold 8% to 18% in reserves, no money will be transferred to the Capital Projects fund, because long-term projections show the reserve dwindling to 12% by 2024.

Why not cut costs?

“We’re always looking for ways to trim expenditures,” Relph said. “However, the magnitude of the problem is beyond that. I can’t trim pens and pencils enough to make up the money we need. It would take eliminating the library and museum to cover those costs, and that simply isn’t on the table.”

Why not cut salaries or positions?

“We’re in the municipal services business,” Relph said. “If you want those services, you need people to carry them out. We’re in an extremely competitive labor market — we’re competing with other cities and the private sector.”

A recent survey found that Littleton was losing potential police officers to other cities that offer better benefits, Relph said, and engineers can often make better money in the private sector. Even entry-level maintenance jobs are going unfilled, he said.

However, the city is well on the way toward full implementation of Priority-Based Budgeting, Relph said, which is a strategy that ranks city services and functions into tiers, making it easier to identify bloated budgets or unnecessary expenditures.

The city will also explore whether it can begin contracting for some city services, Relph said.

“We’ve got to uncover every opportunity here,” Relph said. “The magnitude of the problem is just too significant not to.”

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