Creation of a public utilities impact fee, an increase in the property tax mill levy, and an increase in sales tax rates are all on the table as the Town of Paonia heads into 2018 budget season. At the first of several scheduled budget work sessions, trustees and staff were presented last week with an intentionally out-of-balance draft budget by town administrator Ken Knight.
This may be a slightly different budget process than in the past, said Knight. The draft estimates a general fund income of $652,522 and expenses of $736,222 (administration - $167,063, public safety/police - $303,794, streets - $181,830, parks - $83,535), for a deficit of $83,700.
The draft also includes an entire "wish list" of funding requests from the public works, parks, administration and the police departments. The budget is the No. 1 policy document for the town, said Knight. With this draft, "project requests don't fit with "the reality of the budget." Since state statue requires passage of a balanced budget, between now and December, "We will have to make hard decisions" on where to cut projects or consider them for funding in future years.
The town is not seeing the increases in sales taxes that the rest of the state or the region is seeing, said Knight. The budget conservatively estimates sales tax income of $132,000, or about $7,000 less than 2017 estimates. "We are being very cautious in our revenue projections" for 2018, said Knight. "The last thing you want to do is be over-ambitious."
The town water fund projects income of $831,325 and expenditures of $925,029 for 2018, a deficit of $93,704. The sanitation fund (sewer and trash) estimates revenues of $217,650, and expenses of $658,549, for a deficit of $440,899 and an ending reserve of $1,270,809.
Following rate increases in 2016 and 2017, no increases in water, sewer and trash rates are scheduled in 2018. Knight asked the board to consider whether to institute small increases annually, or to make larger, less frequent increases in order to maintain services and reserves.
General fund income is estimated to increase about $30,000 over 2017. Much of that increase would come from a suggested 3-percent impact fee reimbursed from the public utilities funds, "similar to the franchise fee the town charges private utilities for the use of the town's rights-of-way." Knight called the fee a "major change" for the board to consider.
Activity from water, wastewater and trash activity has an impact on town streets and alleyways, said Knight. If approved, the impact fee would generate about $24,000 annually from the water fund, $12,000 from sewer, and $6,150 from trash for the general fund to be used for street and alleyway repairs. Those funds would be paid either out of existing revenues or added onto customer utility bills. One of the priorities included in the budget letter is completion of the multi-phase $5.7 million water distribution project. The out-of-town phases are complete, and the second of five phases of work on the in-town distribution system is slated for completion this fall. Engineering for all projects was completed in 2016.
Under the 1982 Gallagher Amendment, Paonia's property tax revenue will decrease by $1,810 in 2018 to $100,7000. The amendment caps the state's total property tax revenue at 45 percent of the state budget. The adjustment was necessary due largely to increasing property valuations on the Front Range, said Knight.
"We are being very cautious in our revenue projections," said Knight. The town will continue to explore ways to increase revenue, including an increase in the mill levy or sales tax rate. Both require voter approval.
The town anticipates $20,000 in building permit fee revenues for 2018. Due to increases in construction and improvement projects, in 2017 the town estimates an annualized $51,509 in building permit revenues, or about $38,500 over original budget estimates. The valuation from those projects won't be reflected in property tax revenues until 2019 or 2020, said Knight.
Declines in mineral leasing and severance tax revenues related to declines in coal mining operations are expected to continue. Severance taxes are projected to decrease from $10,063 in 2017 to an estimated $5,000 in 2018, while mineral leasing payments are expected to drop from $12,496 to $10,000. In 2015, the town received a total of $73,032 in mineral-related revenues, down from $102,023 in 2014.
The budget recommends $132,000 in new capital improvement projects along with 2017 carry-over projects totaling $507,232.
Weekly public budget meetings will be held at 6 p.m. Tuesdays, Oct. 17 and Nov. 7. On Tuesday, Oct. 24, the budget meeting will begin at 5 p.m., followed by the bi-monthly board meeting beginning at 6:30 p.m.