City unveils $34.7 million budget
A $34.7 million operating budget that holds the line on city spending received its initial review Monday by the Aspen City Council.Individual department budgets will be scrutinized over the next month, before the city presents its finalized budget for a public hearing on Nov. 8. The council is scheduled to adopt the 2005 spending plan on Nov. 22.The proposed budget is down from the 2004 adopted budget of $35.6 million, but up from the $32 million in operating expenditures the city is now forecasting this year. The adopted 2003 operating budget totaled $39.3 million, but at the close of the year, actual expenditures were $33.5 million.”The fact that the operating budget stays stable is important to note,” said Mayor Helen Klanderud, acknowledging occasional criticism about city spending.Higher-than-projected revenues in 2003 and 2004 will leave the council with about $1 million in extra general funds that it can spend next year if it so chooses, according to Paul Menter, city finance director.In the coming weeks, the council will be asked how much it wants to put toward recreation program subsidies, special events, improvements to the S-curves and the downtown, and whether or not it wants to continue paying for the downtown catalyst it hired this year, among other things.The biggest fiscal challenge confronting the city is the skyrocketing cost of health insurance, Menter said. The 2004 budget reflects a 30 percent increase in the cost of providing health insurance to city employees.The city’s fund for self-insurance will go from $2.2 million this year to $2.7 million or $2.8 million in 2005.”If we continue to have 25, 30 percent increases in health-care costs, we’re going to be in trouble,” Menter said.The city is working with consultants on ways to contain insurance costs and revamp the health plans it offers to employees.Given the added dollars the city must plug into health insurance, it has capped the across-the-board increase in the top end of salary ranges at 1 percent for next year. In 2004, pay ranges went up 3 percent.”I want to put the majority of emphasis in salary increases in health insurance,” City Manager Steve Barwick said.The city’s proposed capital budget – for property acquisitions, construction and other infrastructure improvements – will jump dramatically, from $29.3 million budgeted for 2004 to $46.2 million in 2005.The increase reflects spending on the first phase of the Burlingame Ranch affordable housing, much of which the city expects to recoup when lots and homes are sold in 2006, and $16.9 million in borrowing for unspecified open space purchases. The open space bonds will be backed by a tax already approved by Aspen voters; much of the funds were initially targeted for purchasing open space on Smuggler Mountain, before talks with Smuggler landowner George “Wilk” Wilkinson broke down.On the revenue side, the city is projecting a 2 percent increase in sales tax proceeds in 2005 over this year’s totals. The 2004 budget anticipated an 8 percent increase in sales tax revenues; proceeds are currently hovering at 6.3 percent over what was collected in 2003.Sales tax proceeds remain the largest source of city revenues. Total taxable sales have increased an average of about 2 percent annually since 1993, but when inflation is factored in, taxable sales have eroded by about 1 percent a year over the past 11 years, according to Menter.Given the continuing conversion of hotel rooms to fractional-ownership units that won’t produce sales tax, the growth in Internet shopping and competition from downvalley retailers, the city can’t count on sales tax for substantial long-term growth, Menter warned.Aspen’s real estate transfer tax revenues, however, have skyrocketed this year and Menter expects those proceeds to end the year at 45 to 50 percent over what was budgeted for 2004. A real estate transfer tax is paid when real estate changes hands. The city has one RETT dedicated to affordable housing; revenues from the other are earmarked for the Wheeler Opera House.Janet Urquhart’s e-mail address is firstname.lastname@example.org
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