Our View: Optimism may bring more cuts
November 23, 2008
Steamboat Springs — The Steamboat Springs City Council gave final approval last week to a $56 million budget for 2009. The budget included more than $2 million in cuts compared with one originally proposed by city staff.
Although city department heads and the council deserve credit for passing a balanced budget that’s not expected to dip into Steamboat Springs’ modest reserves, we share the concern expressed by some council members that the budget is premised on optimistic revenue projections, particularly in regard to sales tax. And although we support an effort underway to prioritize all city services, we wonder whether such a critical process would have been more useful before adoption of the 2009 budget when city departments were searching for ways to cut expenses.
As is stands, the city will enter the new year guided by revenue projections indicating a decline of about 5 percent. This includes a projected 4 percent decrease in sales tax revenues, which make up almost 75 percent of the general operating fund.
City officials have repeatedly expressed confidence in those projections, even as the national and local economic pictures continue to deteriorate. In Steamboat, sales tax revenues decreased by 3.8 percent in September. Companies including Steamboat Ski and Resort Corp. have been forced to lay off workers, with Ski Corp. President Chris Diamond acknowledging that “the current business climate is unlike anything we have experienced in recent years.” Not only are there likely to be fewer visitors contributing to our sales tax coffers next year – ski-season vacation bookings have been estimated to be down between 20 and 35 percent – but residents also will be looking to cut down on expenses. In contrast to the city’s projections, Routt County government has forecast a 12 percent reduction in sales tax revenues in 2009.
The council and city leaders said last week they’ll revisit the budget in January when they’ll have a better feel for the success of the ski season and the greater economic climate. As part of that process, the council wisely will prioritize every service provided by the city. If additional cuts need to be made, they’ll start from the bottom and move up.
We can’t help but wonder if such prioritization would have more appropriate this past summer, when the economy began to sour and city staff started to piece together the 2009 budget. Some of the subsequent cuts to nonessential city services seem fair enough, but we can’t say with assurance that other cuts, including personnel, may have been more appropriate given the changing demands for certain services.
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The city has instituted a hiring freeze and will reduce staffing by an estimated 18 full-time employees. Budget cuts are never easy, particularly when they involve people. But reducing staff by leaving open positions unfilled is often the easy way out. More prudent would be a thorough analysis of staffing in all departments, and a determination of where demand or need for services is likely to decrease in the coming year. Tight budgets and falling revenues are never welcomed, but they do provide an opportunity, if taken, to make cuts where they’re needed for a more efficient, responsive government.
The city spent aggressively in recent years, adding amenities such as the new Community Center, a permanent clubhouse at Haymaker Golf Course, and a renovated Tennis Center. It’s OK for government to invest during the good years, just as it’s important for it to reduce its spending responsibly in the lean ones. Staff and council have taken some important first steps, but we expect there may be more painful and necessary cuts to make before a stable economic picture returns to our community.