Carbondale still adjusting to ‘new normal’ budget
October 5, 2010
CARBONDALE – When the town of Carbondale went into its 2010 budget planning last fall, senior staff made a conscious decision to set the clock back about five or six years and called it the “new normal.”
In other words, all those double-digit sales tax increases in the mid-2000s? That was rather abnormal, and the economic contraction that began to play out in 2008 with a decline in local sales taxes and other revenues signaled a return to the norm.
So, taking a cautious approach, the town based its 2010 budget on another 5.7 percent decline in sales taxes throughout this year – better than the 16 percent decline the town saw in 2009, but still recognizing that the local economy was still correcting downward.
Through July, sales taxes, which make up about 60 percent of Carbondale’s general fund budget, remained about 7.8 percent down for the year, despite one month, June, in which sales taxes actually increased about 2 percent. For July, sales taxes were again down about 2.8 percent, according the town’s most recent sales tax figures.
For purposes of planning next year’s budget, the town appears to be making the right decisions based on a new economic reality, rather than a cyclical downturn of some sort, Carbondale Town Manager Tom Baker said.
“The board made … a decision that allowed us to address the problem in a sustainable manner, and one that will avoid a cycle of budget crises as the economy continued and continues to unwind,” states a staff memo outlining its recommendations headed into the 2011 budget process.
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Town Council will have its first of several discussions on the 2011 budget at a special meeting Tuesday, as it prepares a draft spending plan for the coming year.
“We don’t see any obvious indicators that there’s going to be a dramatic change going into next year,” Baker said. “We’re trying to keep an eye on what’s going on in the real estate and construction sector, but there’s nothing to indicate that’s going to change much either.”
Rather than dipping into reserve funds to make up the expected decline in revenues this year, the town chose to make the necessary cuts to adjust to the new revenue levels. That has put the town in a good position headed into next year, Baker said.
“We’re in pretty good shape,” he said. “We’ve reduced staffing by about 18 percent since 2008, about half through attrition and half through layoffs. I believe our organization is now sized correctly for our revenue stream.”
Based on a projection that sales taxes will remain flat through 2011, the town does not anticipate lifting its current wage and hiring freeze. Staff also recommends that the town continue to suspend payments into employees’ retirement funds for the time being.
“If we lose a key position, we will look into hiring that position,” Baker said. Otherwise, any town positions that come open will be closely evaluated before they are filled, he said.
Tonight’s budget meeting is open to the public, but any public comment will only be allowed at the discretion of the mayor. A formal public hearing on the budget will be scheduled in December before the final 2011 budget is to be adopted.