Tax ‘sunset’ could put city in the red
October 19, 2006
Two separate city funds will go into the red in the near future if the city doesn’t find new sources of revenue.A .25 percent city sales tax that expires, or “sunsets,” in 2009 currently supports the Parking Improvement Fund and the Parking and Transportation Fund. The proposed .45 percent sales tax would kick in the day after the current tax expires, but it has no sunset date.The Parking Improvement Fund provides for the Rio Grande Parking Garage. City officials have budgeted $2 million in 2008 to repair a roof leak that’s degrading the concrete. Once that money is spent, said Assistant City Manager Randy Ready, the fund’s budget immediately drops into the red – a year before the current tax expires in 2009. If voters approve the new tax, Ready said, it would take care of the deficit and replenish the fund’s reserves. It would also cover a roughly $300,000 annual deficit the city predicts if the current tax expires without a source of replacement revenue.
The Parking and Transportation Fund is in a similar predicament. That fund covers the operating costs of the city’s free, in-town bus routes and the parking department.”We’re going to be OK through next year, but starting in 2008, the fund goes into the negative as well,” Ready said. The city is predicting significant annual deficits in that fund as well, without a source of replacement revenue.Ready said watching those funds dip below zero in 2008 isn’t necessarily cause for alarm – if the city can count on a new revenue source when the .25 percent tax ends in 2009.
But if no new influx of money is on the horizon, the negative balances would be a concern.”It would be fiscally inappropriate to let that happen,” Ready said. “Something would have to happen to avoid going into the hole.”For starters, the city wouldn’t lay out the $2 million to repair the garage leak, he said. Although the roof isn’t in danger of collapsing anytime soon, he said “it’s a long-term maintenance issue. The longer it goes, the worse it gets.”
He wouldn’t say it was a certainty, but Ready did say putting off replacing the roof could mean higher costs for repairs in the future.If the transportation fund falls short, the city might have to consider cutting some of the free in-town routes, he said. Rising costs of operations, such as fuel and driver salaries, are outpacing current revenues, but the proposed tax would cover expected shortfalls, Ready said.Abigail Eagye’s e-mail is email@example.com