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Home arrow News arrow Mt. Crested Butte takes hit to general and capital fund
Mt. Crested Butte takes hit to general and capital fund Print
Written by Seth Mensing   
Wednesday, 11 September 2013
Property valuation drops 29 percent

Mt. Crested Butte finance director Karl Trujillo hopes the worst of the economic downturn is behind the town, with a five-year outlook that starts with a 29 percent drop in property tax revenue and only gets better from there.

 

 

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Town staff recently heard from the county assessor’s office that the town’s property valuation for the two-year period starting in 2014 had dropped 29 percent, meaning about $139,000 in property tax revenue would be missing from both the general and the capital fund for the next two years.
“It’s a huge hit,” Trujillo says. “We need to be buying new equipment, like a new snowplow in the future and those cost more than $200,000. So that hurts a lot.”
The town’s five-year plan calls for the mill levy to stay the same—at 5 mills for the general fund and 5.37 mills for the capital fund. That means property tax will be reduced right alongside the valuation. The town’s only opportunity for significant new revenue will be through sales and admissions tax and building fees.
After property values fell 32 percent after the previous valuation in 2012, the town’s budget was cut to the bare essentials. Now the only thing left to cut is road maintenance.
Councilman Gary Keiser pointed out that when the roads deteriorated to a point in 2010 that maintenance could no longer be deferred, the town sold bonds to pay for a complete resurfacing of the town’s roads.
“We need to keep up … so we said we would take $300,000 a year and use it for resurfacing, not just crack sealing,” Keiser said. “The assumption was that we could keep the roads at the level we had gotten them to after spending the money from the bonds. That’s where the $300,000 number came from.”
But the five-year plan shows a reduction in funding for road maintenance that will eventually cut $100,000 from the road maintenance budget through 2015, when Trujillo thinks the town will be able to start putting money back into the roads.
Fortunately, sales tax revenues have been breaking records over the last year, making up some of the loss. Collections from every month of the summer exceeded the budget, with July beating expectations by 14 percent.
“It was another record-breaking July,” Trujillo confirmed.
The recession hit Mt. Crested Butte particularly hard in its effect upon the value of property. Since 2012, property valuation in the town is down more than 60 percent, Trujillo said. But looking ahead in the five-year plan, Trujillo sees brighter days, with property values projected to increase 3 percent in 2016 and then another 6 percent in 2018.
Despite working on a thin margin, the town has been able to put away 50 percent of its annual operating expenses as cash reserves—about $1.2 million, a goal reached three years ahead of schedule. Reaching that goal right now, Clayton said, “is what’s going to save us going forward.”
“Five years ago the reserves were at 12 percent, so that’s real good,” Trujillo said. “Now, anything we bring in that puts us over that 50 percent is transferred into the capital fund to offset that loss of revenue from property tax.”
In the five-year plan, the town is also trying to anticipate any costs that might fall on the town from the development of the Biery-Witt Performing Arts Center (PAC) and is trying to put $300,000 aside for next year “in case we have to start doing construction plans,” Trujillo said.
The town has committed a total of $6 million to the development of the PAC and has already spent about $250,000. Much of the remainder will have to come from bonds, Trujillo said, although they haven’t made those plans yet.
Without a bond issue and with other sources of revenue creeping up over the next five years, Trujillo said, the town should be able to have more than $2 million in the bank by 2018.
The five-year plan will be revisited and updated again next year.

 
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