Health of city budget hinges on fire vote, officials say

Long-term projections look grim if voters reject inclusion

Posted 9/17/18

Littleton’s budget reserves are set to shrink in coming years, according to projections in the city’s proposed 2019 budget, but by how much will depend on whether voters approve a measure to …

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Health of city budget hinges on fire vote, officials say

Long-term projections look grim if voters reject inclusion

Posted

Littleton’s budget reserves are set to shrink in coming years, according to projections in the city’s proposed 2019 budget, but by how much will depend on whether voters approve a measure to include the city in the boundaries of South Metro Fire Rescue.

The proposed 2019 budget, which won’t be up for approval until November, shows a 25 percent decrease in the size of the general fund. The change reflects the departure of the city’s two fire partner districts, which will become part of South Metro in January. Littleton will begin contracting with South Metro for fire protection in 2019, but voters will decide if Littleton becomes a full-fledged member of the district in future years or simply continues on a contractual basis.

Without the money the fire partners pay to Littleton, the general fund will shrink from $64.8 million this year to roughly $48.4 million in 2019.

Of that money, the city anticipates being able to hold $11.6 million — roughly 23 percent — in reserve, comparable to fund reserves in recent years. By 2023, however, the city anticipates it will only be able to hold $7.6 million in reserve — about 16 percent of the fund.

There’s a catch, though: That projection holds true only if voters approve the fire inclusion measure, a plan that would result in a property tax increase for homeowners. If voters turn down inclusion, Littleton will continue contracting with South Metro, but paying the difference out of pocket without raising taxes.

The result, according to projections, is that by 2023 Littleton would only have $2.5 million in reserves — just 4 percent of the budget.

Cutting the reserves that close is dangerous, said City Manager Mark Relph.

“It’s just irresponsible,” Relph said. “We would have no choice but to cut services.”

Relph was reluctant to identify where the cuts would come from, suggesting a hard look at every city department to identify non-essential services.

Mayor Debbie Brinkman was more blunt.

“We’d have to consider the library and museum — they’re not essential services,” Brinkman said. “That’s the doomsday scenario. I don’t know what that would look like, maybe cutting hours and staff, but it’s sure easier than cuts to police or snowplowing.”

Narrowing numbers

Even if voters approve inclusion, the city’s general fund will see the gap between expenditures and revenue narrow in coming years, as payroll and other costs are expected to climb at a faster rate than revenue growth.

Excluding fire-related changes, the city’s revenue is expected to grow by $1.8 million in 2019, an increase of 3.9 percent. The city’s expenditures, however, are expected to increase by $2.6 million in 2019, or 5.3 percent.

Of the increased expenditures, roughly a million dollars are earmarked for pay raises for city staff.

The pay raises would be doled out as an across-the-board 3 percent pay increase, with an additional 0.5 percent available to high-performing staff.

The raises are important to keeping the city competitive with other surrounding cities and the private sector during a boom economy, Relph said.

“Attracting new hires is the first challenge,” Relph said. “That’s tough if we don’t have a competitive compensation package. Retaining employees is another problem — turnover is even more expensive.”

Brinkman called the raises appropriate.

“A million dollars sounds like a lot, but when you look at the amount per employee, it’s pretty moderate,” Brinkman said. “It’s a wise investment in terms of supporting our employees with a cost of living increase. It takes people to run a city, and it costs an incredible amount of money to replace them if they’re easily lured away to other communities because we can’t pay fair rates.”

Other expenditure increases will come from the proposed hiring of new staff, including several part-timers: a prosecutor, graphic designer and police administrator. Three full-timers would be hired, too: two public works engineers and a code enforcement specialist.

The other sizable expenditure increase would be $400,000 to support consulting and outreach efforts to draft a new Complan — an overarching document that guides and directs city planning efforts. Calling for a plan to replace the old one — which was adopted in 1981 and last updated in 2005 — has been a hallmark of Relph’s tenure as city manager.

Mayor Brinkman said she saw the price tag for the Complan efforts as appropriate.

“Part of that is to make sure we can get this moving,” Brinkman said. “We don’t want to just keep kicking this down the line to future councils. You know what they say: ‘Good, fast and cheap: pick two.’”

Capital woes

The other portion of the city budget, the capital projects fund, is separate from the general fund, and pays for city buildings, equipment, vehicles and infrastructure.

The fund’s revenues come from gasoline taxes and one-time building use taxes. The gasoline tax revenue has been slowing in recent years as vehicles become more fuel-efficient, Relph said, and the building use tax revenues can fluctuate wildly from year to year.

The fund is expected to begin 2019 with $9.5 million, which Relph called woefully inadequate to address a backlog of issues, including a variety of road projects that could soar into the tens of millions of dollars. Fixing traffic congestion issues at Mineral Avenue and Santa Fe Drive could require the city to pony up $20 million to put into a pot with other agencies to pay for the project, Relph said.

Still, Relph is hopeful that voters will approve the fire inclusion measure, which would trigger automatic transfers of more than $3 million a year from the general fund to be earmarked for road repairs. While not enough to pay for big-ticket projects, the money could pay for deferred maintenance on city streets.

Citizen surveys keep telling us that road repairs are a high priority,” Relph said. “Well, this is it. This is the answer.”

Relph and Mayor Brinkman both pointed to citizen surveys that show support for a sales tax increase as a means to shore up the capital projects fund.

Overall, Brinkman said, she’s pleased with the budget.

“I feel good about the thoughtful and intentional conversations we’ve had,” Brinkman said. “We have a pretty good roadmap and plan of how we’re going to work through our future needs.”

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