City might have to cut $16.8M more from budget

Facing a steep decline in sales tax revenues, Colorado Springs might slash up to $16.8 million from its 2009 budget, City Manager Penelope Culbreth-Graft said Thursday.

The City Council will decide later which services will absorb the cuts. The city government had already cut $23 million from its budget for this year, with the City Council's approval in December. The city's 2009 budget totals $357.5 million.

Although city officials have so far tried to shield public safety agencies from budget cuts, City Councilman Randy Purvis said Wednesday that the financial picture has deteriorated to the point that any department could be affected. Public safety agencies include the Police Department, Fire Department and Office of Emergency Management.

Vice Mayor Larry Small said Thursday that he, too, would consider slicing public safety services.

"If we have to, we'll need to get into the police and fire departments and cut those back to the statutory minimum that we have to maintain in those, which would be pretty substantial," Small said.

Colorado Springs gets tax money from various sources, but it relies heavily on sales tax, which is expected to make up about half of the city's general-fund budget this year. Sales and use taxes in October fell 19 percent from a year earlier to $8.8 million, the biggest percentage drop in 18 years. Officials are expecting more dismal news as November sales tax numbers arrive in the next couple of weeks.

"We're trying to get out ahead of that early in the year, and it will all depend on how the sales tax returns come in," Culbreth-Graft said.

The Colorado Springs sales tax rate is 2.5 percent.

The cuts are projected at $13.6 million, but in a "worst case" they could go as high as $16.8 million, Culbreth-Graft said.

Colorado Springs has already laid off nearly 100 employees and reduced services in most parts of the government to accommodate declining revenue and rising costs. More layoffs are likely with the next round of cuts, and unlike with previous reductions, residents are likely to notice the difference, Small said.

"We're at a point where we have placed a lot of responsibility on a few people that are left, and if we go further we're going to start really impacting performance," he said.

The cuts could also affect parks and recreation services such as senior centers and youth programs, Small said. The city's bus service, Mountain Metropolitan Transit, could be another target.

The cuts are coming even while Colorado Springs is projecting a $1.2 million revenue surplus for 2008. That money might be refunded to taxpayers, but the City Council is considering a measure for the April 7 election asking permission to keep it. Colorado Springs is facing both cuts and excess revenue because of provisions in the Taxpayer's Bill of Rights, Small said. The TABOR amendment to the City Charter limits growth in government spending.

"If we didn't have the spending limitations in TABOR, then of course we could use any surpluses, but with that provision in TABOR we're restricted to not doing it," Small said.

Another challenge comes from $2.3 million in property taxes designated for road and bridge repairs, which the El Paso County government has traditionally transferred to the city. The county is facing its own financial struggles, and this year county commissioners voted to withhold the money from the city.