City planning for sales tax drop in 2003
September 18, 2002
In uncertain economic times, Aspen is preparing its 2003 budget with a projected 5 percent decline in sales tax revenue in mind.
City Manager Steve Barwick said the 5 percent figure is the average loss of sales taxes in mountain resort communities statewide.
Barwick on Tuesday presented next year’s budget with two scenarios: flat sales tax revenue and a 5 percent decline. The Aspen City Council agreed with the latter.
“It’s a volatile marketplace, and Bush wants to start a war, so let’s go with negative 5 percent,” said Councilman Tom McCabe.
According to preliminary calculations, with a continuing decline in sales taxes, the city’s general fund revenue could drop from $13.5 million with flat revenue to $13.2 million with the 5 percent decline.
“We’re going from a rosy general fund projection to not quite as rosy,” Barwick said. “But that’s why we’re making small cutbacks, and we can adjust as we go along.”
Recommended Stories For You
He said the theme for the budgeting process is “small reductions and belt tightening today” in order to avoid major cutbacks in the future. Along those lines, Barwick said the budget proposal includes removing 4.5 full-time city employees over the next two years.
In 2003, that roster could include a police officer, a wildlife officer and an employee in the engineering office. A $300,000 deficit is estimated in the city’s general fund due to operations costs of the new Aspen Recreation Center, although the actual effect of the center on the general fund has yet to be determined.
Barwick also said the budget assumes the end of a multiyear facilities construction program that built $100 million worth of facilities in the community during the past nine years. Maintenance and operation costs will cost the city money over the coming years for the buildings.
But one of the largest sources of revenue from 2005 to 2007 will be impact fees the city will receive from the Grand Aspen development, since the sale of each timeshare unit will garner $4,000 for the city. In 2005, Barwick estimates $2.1 million in revenue from the impact fees, possibly boosting the general fund 10.4 percent that year.
Assuming that sales tax revenues bounce up 4 percent in subsequent years, Barwick still projects a loss of $4 million in revenue over 10 years, just by reducing next year’s sales tax projections by 5 percent.
[Naomi Havlen’s e-mail address is firstname.lastname@example.org]