The city’s ongoing budget crisis became slightly less acute this week with the discovery of a few million extra dollars that, it appears, Colorado Springs Utilities owes the city as a result of an inadvertent miscalculation of the so-called payment in lieu of taxes (PILT).
That’s good news, since it enabled the city to pony up $365,000 to keep the Pioneers Museum open and to provide enough funding to keep the aquatics centers open for a few more months.
But thanks to the Dark Lord of Taxes, He-whose-name-must-not-be-spoken (he’ll sue!), the PILT will be phased out during the next several years. And thanks to previous successful voter initiatives created by his tax-cutting majesty, even a reviving economy won’t bail out the city.
That’s because, thanks to the mini-Tabor amendment to the city charter, year-to-year city revenue growth is capped at a rate pegged to certain local and state indicators. In practice, if a suddenly booming economy produced a 20 percent gain in sales tax collections, the city would likely be required to refund two-thirds of the gain to the taxpayers.
So acute and visible are the city’s problems, and so pressing is the need for some sort of long-term solution, that even Broadmoor CEO Steve Bartolin weighed in last month with a long, thoughtful letter to the mayor and members of council.
In the letter, Bartolin expressed his concern about the city’s cost structure, noting that personnel costs consume the lion’s share of the budget.
“My intent was not to have (the letter) circulated,” he said, “I don’t want to embarrass anyone. Colorado Springs is not alone in this – every city, large and small, is going through similar difficulties. But it may be time for somebody to take a fresh look.”
Bartolin’s no stranger to the restructuring process. He’s been at The Broadmoor for 18 years, becoming its CEO three years after the El Pomar Foundation sold most of its interest in The Broadmoor to the Oklahoma Publishing Company.
Looking at today’s resplendent resort, it’s hard to believe that The Broadmoor of two decades ago was a faded grande dame, increasingly shabby and irrelevant in a changing resort environment.
During Bartolin’s tenure, The Broadmoor has added 150 rooms, a new golf club, a new spa facility, a new pool complex, the 60,000 sq. ft. Broadmoor Hall, The Summit restaurant, the mountain golf course, 23 retail shops, and developed the Broadmoor resort community, as well as spending$35 million restoring the main building.
“We don’t have any debt,” Batolin said. “We’ve spent hundreds of millions (in improvements) and we’ve financed it all through cash flow. In my business, a lot of people focus on quality, and a lot of people focus on costs – but you have to do both. We have about as many employees as the city, not including utilities and the hospital, so there may be some similarities.”
The Broadmoor may be a success story – but Bartolin’s former employer, the Greenbrier, has fallen upon hard times.
Like The Broadmoor, the Greenbrier is a historic resort hotel with a national reputation. Situated on 6,500 acres, offering 700 luxuriously appointed rooms (to use hotelspeak!), it has sheltered kings and presidents, movie stars and scoundrels. Today it’s in bankruptcy, having lost $35 million last year.
“They let their personnel costs get out of control,” said Bartolin. “There were some expensive labor agreements, and they just refused to tackle them. They thought they could just go on raising their prices. This is a very, very competitive business. Their personnel costs got to 70 percent of their budget and no business can compete with those kinds of costs.”
Bartolin didn’t have to point out that the city’s personnel costs consume 70 percent of the general fund budget, and that the city’s cost per employee, with benefits, is close to $90,000. For a business, such a cost structure would be unsustainable.
Maybe, Bartolin agreed, it’s time to bring in a major national consulting firm such as McKinsey & Co, and ask them to analyze the city’s operations and make specific recommendations.
“I’d support that,” he said, “we need to do something. We all have to work with the city.”
And Bartolin, more than most of us, has a dog in the fight. He’s not happy that council has cut the CVB’s budget by almost $600,000 this year, particularly since the Broadmoor pays a substantial percentage of the “lodger’s tax” from which the Convention and Visitors Bureau funds are derived. As the state of Colorado learned a few years back, cutting tourism funding has at least one absolutely certain outcome: fewer tourists.
And he’s also concerned about prospective increases in the resort’s water bills.
“We paid $586,000 last year for water,” Bartolin said, ” and if water rates are going to increase at the level they predict, then we’ll be paying $2.5 million ten years from now. That’s a lot of money.”