Gloomy outlook for Basalt proves right
Fears that Basalt’s sales tax revenues would dive in 2002 proved to be well founded during the first third of the year.
The Town Council budgeted for an 11 percent decrease in sales tax revenues for the year. Through April, the loss has been 10.6 percent.
“The trustees did a wonderful job,” said town finance director Renae Gustine. “They have a perfect crystal ball, and I hope it keeps working.”
She said she wishes the town’s forecasting wouldn’t have been so accurate and that revenues would have come in higher than projected. However, accurately anticipating a decrease makes it easier to deal with, she added.
When the Town Council planned its 2002 budget last fall, it anticipated a 5 percent decrease in sales tax revenues. Officials felt the local economy would reflect the slowing national economy.
But after terrorists struck on Sept. 11, town officials revised their projections for the year.
“That direction proved to be important because the Town’s first quarter revenue collections are consistent with the minus 11 percent revenue projection,” Gustine and Town Manager Tom Baker wrote in a memo to the council.
While sales tax revenues are about at the amount expected, building permit revenue is up about 7.5 percent. Property and sales taxes plus building permit fees combine to supply more than 85 percent of the town’s revenues.
Through April, the town has collected $585,300 in sales tax revenues. It budgeted to collect $597,000.
For the entire year, the town expects sales tax revenues to dip by about $222,000 to $1.8 million.
While other local governments, such as Pitkin County, are considering whether to approach voters for a property tax increase to offset lean budgets, Basalt believes it can absorb declining revenues, at least for this year.
The town is in a good position to tighten its belt because it has made significant improvements to the town infrastructure over the past two years, filled staff openings and adjusted salaries for most employees to reflect market conditions.
Baker and Gustine indicated further belt tightening may be necessary. At the least, the checkbook must be watched carefully, Baker said.
“In the late 1990s, the Town was able to increase expenditures over budget because our revenues were also over budget,” Baker and Gustine wrote in a memo to the Town Council. “This means that staff and [the council] will need to more rigorously evaluate potential expenditures.”
The town has also done a good job of socking away savings, the memo said. The town’s reserve fund will be at about $5.35 million by the end of the year.
While tourism in Colorado may suffer this summer because of drought conditions, Basalt’s fishing-based economy could remain strong. The U.S. Bureau of Reclamation announced Thursday night that its operation plan for Ruedi Reservoir this summer would produce releases of about 190 cubic feet per second on the Fryingpan River from July 1 through September. That is an ideal level for trout fishing.
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