City closes 2003 books: Balance credited to living within our means

Filed under: Opinion |

On June 7, City Council will discuss how to reinvest a $3.3 million dollar balance that is available as a result of cautious spending and rebounding sales tax revenues late in 2003.

This reinvestment opportunity raises an interesting question for business readers.

What if your business came through some tough times and finally began to show signs of improvement. Take it a step further. What if your business was on the rebound and could address significant needs from the leaner years? Would you take your profits and reinvest them in your business, your employees, and your tools? Or would you get out your customer data base and send a refund to every customer you had done business with in the past year? That’s right & send every customer a refund leaving you with a zero reinvestment balance.

When the City Finance Department officially closed the books on the City’s 2003 budget in March of 2004, $3.3 million dollars remained in the general fund. The funds are the result of conservative steps we took during 2003 to ensure that the City government lived within its means. Prudent spending was further aided by a slight increase in holiday sales tax revenues.

Keeping it in balance

The Colorado Springs City Charter mandates that the City balance its budget each year: expenditures can never exceed available resources.

In January of 2003 we projected that we had to cut an additional $12 million from the originally approved $217 million 2003 budget. So we canceled millions of dollars worth of construction projects, continued with the overall civilian hiring freeze, stopped overtime hours except in critical areas, and suspended purchases of computers, vehicles and other capital equipment. Thanks to these actions – which directly impacted operating departments, City vendors, and individual employees – we did not spend more than we received in 2003 living within our annual budget.

Breathing easier

In years past when the economy has been healthier, sometimes City revenue has exceeded the limitations imposed by the Taxpayer’s Bill of Rights-TABOR. TABOR sets a limit on the amount of revenue the City can collect. Any revenue taken in by the City that exceeds the cap is to be refunded to taxpayers or the City may request, via a vote, to retain the revenue. In those refund cases, City Council has asked voters for permission to reinvest the funds. Sometimes the voters have agreed: In 1998 they allowed the City to keep $6.6 million to build five specific construction projects. In 1999 and 2001 the voters rejected the Council’s request to retain the surplus, and up to $12 was returned to households in the form of utility bill credits.

The $3.3 million presently under discussion by City Council did not come about because revenue exceeded the legislated TABOR cap. The $3.3 million is the result of the budget control actions we took to align our expenditures with our revenue in 2003 and stronger sales in November and December than had previously been expected.

Allocating the balance

Because the $3.3 million is well below the 2003 TABOR limitation, City Council has greater latitude as it considers what to do with the money. During the June 7 Council meeting, I anticipate City Council will decide what to do. Among the ideas they will discuss are: repairing Prospect Lake; replacing vehicles; retiring debt; and funding some of our pending road, bridge, and drainage projects and/or applying the money to employee salaries, which were all frozen in order to balance the 2004 budget.

I expect a thorough exploration of the options at Council’s June 7 meeting and a decision to be voted upon during the June 8 formal session beginning at 1 pm at City Hall. I encourage Colorado Springs Business Journal readers to tune into the conversation live on SpringsTV Channel 18 or via the internet at www.SpringsGov.com. And as you listen ask yourself& “If this were my business how would I reinvest it?”

Lorne Kramer is the city manager for the City of Colorado Springs. You may write or e-mail him at Lorne Kramer, City Manager, City Hall,107 N. Nevada Ave. Colorado Springs, CO 80901-1575 or AskCity@springsgov.com