Colorado Springs sales tax revenue is higher than it was this time last year and is on track to come in over budget by year’s end.
The city’s 2011 mid-year financial report shows sales and use tax revenue — which accounts for 80 percent of the general fund — was $36.5 million as of June 1. That’s roughly $1.5 million higher than in 2010, the year that put the city back on firm financial footing. In May, the city collected $9.6 million, up from $8.9 million during the same month last year.
Overall, sales tax revenue is 3.25 percent higher so far this year, despite a dip in February and March that had collections lower than a year before.
“We’ve had very strong increases,” said Cara Skinner, fiscal planning manager. “We’ve been doing pretty well since the recovery started in 2009 and revenue was strong throughout 2010.”
The city budgeted sales and use tax revenue to come in at $117.48 million this year. However, it is now projected to range from $120.5 million to $124 million. That’s roughly half the $224 million budgeted for 2011.
“We’re tracking very close to budget,” Skinner said.
While that could be good news in the future for city services, Mayor Steve Bach has issued a hiring and promotion freeze until after the 2012 budget is completed in order to bolster the city’s fund balance.
The city has nearly the same number of employees it had nearly three years ago.
In 2008, the city had 205 employees. In April of this year, it had 192, according to the mid-year report.
The fund balance, on the other hand, is growing.
Currently, the fund balance is 13.4 percent of the general fund, or $30.2 million. That’s the highest since 2004, said budget officer Lisa Bigelow.
Still, it isn’t high enough for Bach.
“I am very concerned about the future,” he said. This is a major concern of mine, and we will increase the fund balance. There are some legacy costs that we can’t really control — the pension plan, health insurance. The increased revenue is good news, but there are some costs that aren’t reflected here.”
Bach’s concern might be warranted, considering the measures the city was forced to take during the last few years.
Severe budget cuts forced the city to turn off street lights were and stop watering parks. The actions gained widespread media attention.
“I don’t want to be the laughingstock of the nation again,” said City Council member Tim Leigh. “I campaigned on this and it’s an issue I’m behind. We have to address it. I believe in negotiating from a position of strength, and that means money. I’m a huge advocate of this.”
New council member Angela Dugan agreed, saying the next budget should be more fiscally conservative.
“To me, 14 percent is scary,” she said. “I think we should move more cautiously with the budget, estimate next year’s more cautiously.”
Bach wants to take that fiscally conservative approach even further with multi-year budgeting.
“It’s clear that 2012 is going to be an OK year and so is 2013,” he said. “But what about 2014? We need to set up the budget so we can be prepared as circumstances occur.”
City Council President Scott Hente said talk of saving fund-balance money is good, but noted too that expenses are piling up.
“The money has to come from somewhere,” he said.
“In the past, when we were close on the budget, we’d tell them to make up the difference by taking it out of the fund balance,” he said. “You can talk about increasing it, but when you have 100 people here talking about transit cuts, it can be tough.”
Bach said he wouldn’t be swayed by “a single constituency.”
“I’ll stand up to them,” he said. “We have to have the courage to do what’s right. We need to keep the city on firm financial footing.”
But, he noted, there are other ways to increase the fund balance, other than simply cutting programs.
“We need to grow jobs, and I view that as a main priority,” Bach said. “We can’t do this by merely becoming more efficient, we have to grow the economy, have a bigger pie.”
So far this year, the city has drawn on money from the fund balance to pay for potholes and to start watering parks. The decision to begin watering the parks was one of Bach’s first decisions as mayor.