Planning The Post Flood Future For A Sales Tax-Driven Town Government
By Frank Lancaster-Estes Park Town Administrator
I’m sure many of you had plans for the next few months that have changed radically since the September flood. For many of us, life was turned upside down in just a few days. The Town of Estes Park is no different. Now that we’re past emergency response to protect lives and property, we’re looking at how the flood may affect the Town’s finances in the near future. Our crystal ball is a little hazy right now. And, as good friend and former Larimer County Commissioner Jim Disney used to say, “Those who live by the crystal ball are destined to eat ground glass.”
Your Town government operates primarily on sales tax revenue, and in Estes Park, approximately 65 percent of our sales tax comes from our visitors. Anything that affects visitation has major impacts on the Town revenue. We were putting the finishing touches on the Town’s 2014 budget when the flood hit. Since that time we have reconsidered our assumptions, made numerous changes, and we’re sitting down with the Town Board to present the newly revised budget over the next couple of weeks.
We’ve made some very conservative revenue projections for the coming year and have adjusted our expenditures accordingly. We plan to revisit the budget with the Trustees at least quarterly as we continue to recover as a community. Even with the road closures, many retail businesses have had decent weekend sales in October. Reconstruction of the highways is progressing amazingly fast, the National Park is reopened, and though it certainly isn’t life as usual in Estes Park, it appears better than anyone expected in the days following the flood. Still, until we see hard numbers for economic recovery, we will keep a conservative approach to Town expenditures.
To guide staff’s budget recommendations to the board, we developed some objectives for the budget adjustments. First, we think worst case scenario will be a slow and difficult 2014, but expect to be back to full speed for 2015. Again, that is WORST CASE scenario. All signs point to a much better situation, but this is a good place to start for conservative planning. In making cuts from the original draft 2014 budget, we knew we shouldn’t touch any programs that attract visitors to our community. Now is not the time to cut back on programs that bring visitors to Estes Park who will eat in our restaurants, shop in our stores, stay in our lodges, and keep residents employed, kids enrolled in our schools, and salestax revenue flowing to the Town so we can fix your roads, keep providing excellent police services, maintain your parks, and all the other services that make Estes Park a great place to live. So there are no proposed cuts to services like the flowers we plant each spring, the holiday decorations and lights or the temporary ice rink — and work is proceeding with the Multipurpose Event Center.
As they clearly demonstrated during the flood, our Town staff is the organization’s greatest resource. So we are budgeting in a way to avoid any lay-offs and to maintain our compensation plan in order to keep the high-quality professionals we employ now. However, we are cutting out any expenditure that we can postpone until revenues return. This means we’re leaving several positions unfilled, including a Town Facilities Manager and Assistant Town Administrator. On the other hand, we’re keeping the planned addition of staff in Community Development to help facilitate recovery – returning the department to pre-recession staffing levels. We’re postponing new equipment purchases unless it is critical. We’re postponing contributions to our equipment replacement fund and other project funds for 2014. And, we are postponing almost all capital projects for 2014, including the construction of the parking structure and transit facility at the Estes Park Visitor Center.
After all is said and done, the Town’s departments have collectively come up with more than $700,000 in budget reductions to help us get through recovery. We will also tap into the General Fund’s fund balance to help offset the anticipated shortfall in sales tax revenue. The Town has done a good job of maintaining a healthy fund balance for a rainy day – and this certainly qualifies as a rainy day! We’ll leave plenty in the fund balance in case of another rainy day.
There are still plenty of other unknowns, including increases in health insurance costs and flood recovery costs including our match for the FEMA recovery dollars. But the future becomes a little less hazy each day, and we’re making educated, conservative estimates for your Town budget. We will continue to sharpen our pencils and tighten our belts while still providing you and our guests the best services possible.
Learn more and participate in budget meetings at www.estes.org/boardsandmeetings.