HomeMy WebLinkAboutMemo - Mail Packet - 10/10/2023 - Memorandum From Travis Storin Re: Requested Memo Regarding City BudgetFinancial Services
215 N. Mason St
PO Box 580, Fort Collins, CO 80522
970-416-2367
tstorin@fcgov.com
MEMORANDUM
Date: 10/5/2023
To: Mayor and City Councilmembers
Through: Kelly DiMartino, City Manager
From: Travis Storin, Chief Financial Officer
Subject: Requested Memo regarding City Budget
Staff received a councilmember request to respond to a constituent inquiry regarding the City Budget,
specifically within the context of the two tax initiatives that are on the November 2023 ballot. The
questions are reproduced immediately below:
1. Expense Overrun - why?
1. Is it true the city had a cost overrun last fiscal year of about $30m? I’m not sure what this
represents as a percentage of City Budget. (Can your staff send me a link?)
2. In what areas and how did this occur, ie who was responsible for not managing their
budget? However, if the city income is fluid, ie depends on sales tax, then was the
problem with the revenue side? So, that is a bit different than a department(s) spending
more than allocated/budgeted. However, wouldn’t revenue projections be adjusted
throughout the fiscal year and department budgets be adjusted accordingly? Overall,
having a cost overrun of that magnitude shakes my confidence in city budgeting -
revenue forecasting and expense management.
2. Revenue History & Projections
1. Where is this shown? (Staff link?) Referring to the previous comments, how was the
actual fiscal year revenue compared to projected revenue for last fiscal year (year with
the shortage)? And how does the current fiscal year and the next three years line up?
3. Growth & Revenue
1. What I fail to understand is how with new home, new jobs and new people coming into
Fort Collins, the increased property and sales taxes from new homes, businesses and
people don’t keep up with the increased city expenses? Is the city and council approving
budget increases beyond the increase in revenue? This is a major issue to discuss. One
view: growth (and its affects) does not pay its own way and needs to be subsidized by
increased funding by existing citizens, property owners and businesses. If this is true,
then why do we encourage new businesses and housing developement…to what
end? Second view:
4. Sales Tax Increase
1. The 1/2 cent increase is about a 13% increase in sales tax revenue for the city. This
seems excessive to me in an era with high inflation exceeding wage growth.
2. Climate Change Allocation - even though I am very green personally and professionally,
I’m not sure about the governments role in collecting taxes to fund activities. If the
climate portion of the increased sales tax funds specific infrastructure or building
improvements for better energy efficiency and reduced carbon emissions, I am in
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support. If the revenue is used to fund ‘programs’ that provide awareness, I am a bit
uncertain. If the revenue is used to subsidize personal investments in improved
efficiency and carbon emission reductions…I am probably for this. So how will the
climate program/department allocation be split among these various areas? The news
articles suggest this is undetermined at this point. If so, I don’t like this.
3. Parks Allocation - Again, referring to my comments on Growth & Revenue…how come
new neighborhoods don’t fund local parks - either with fees or with the new property tax
revenue? Seems like the city/county/state revenues must be increasing year -to-year with
more people and building price escalations.
Under C.R.S. Section 1-45-117 of Colorado’s Fair Campaign Practices Act (Act), once the ballot
measures’ language was submitted to the Council for its consideration, staff has not been permitted to
comment on or editorialize on the contents of the ballot measures themselves. However, the Act does
allow staff to respond to unsolicited questions from the public, like the ones above. Thus, the remainder
of this memo will be composed of staff’s factual responses to those questions based on 1) facts, figures,
and trends directly sourced from audited financial statements , 2) forward-looking estimates and
assumptions consistent with that used in the 2023-2024 Adopted Budget and the associated Long-term
Financial Plan, and 3) publicly available project materials utilized in the development of the ballot
language. Links to these documents are listed in the body of the memo below.
The two ballot measures for new taxes are proposed in large part to fund increased/expanded levels of
service, rather than existing City services. The exception to this is the proposed amount for Parks and
Recreation asset management, which is appropriate to characterize as a budget deficit in the classical
sense – this represents current a service level that is not currently resourced fully through the budget.
The remaining priority areas of Transit, Climate, and Housing are not shortfalls within the current budget,
but a proposed means to progress against objectives that the community has shared with Council and
Staff through a variety of means.
The most thorough and efficient resource for learning about each of the community priority areas and the
proposed tax measures is at: https://ourcity.fcgov.com/sustainable-funding-2023.
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Expense Overrun
It is untrue and inaccurate that the City had a cost overrun for fiscal year 2022 of $30 million. Section 8 in
Article V of the City Charter specifies, in summary, at least two key legal requirements for how the City
moves forward with a balanced budget:
1) No appropriation shall be made that exceeds revenues, reserves, or other funds anticipated or
available.
2) It is unlawful to contract for, incur any liability, or otherwise make any expenditure unless an
appropriation has been made by the City Council.
The combined effect of these two requirements is that a) the City is legally prohibited from deficit
spending except in very narrow, emergency-driven circumstance and b) the City is legally prohibited from
spending in excess of the budget.
Indeed, if reviewing the audited financial statements for fiscal year 2022 at
https://www.fcgov.com/finance/files/2022-city-of-fort-collins-acfr.pdf a reader may conclude that the City
did not exceed its budget in any amount for any Fund nor for any Capital Project.
To answer the requestor’s hypothetical question: if there were a revenue-side issue during the fiscal year.
It is correct that staff adjusts revenue projections throughout the year, and more over that if those
projections were lagging the budget, that department’s expense budgets would be adjusted accordingly.
Staff takes a number of steps throughout the budget planning process to ensure appropriate
conservatism in revenue estimates so as to mitigate the probability of having to cut budgets mid-year and
affect services to the community.
Growth & Revenue; History & Projections
Historically and generally speaking, for a static basket of City services, cost and revenue trends have
paralleled one another closely. One exception to this historical trend was in 2009 when, in the face of the
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recession, City Council was faced with a decision to cut services or ask the voters to consider the Keep
Fort Collins Great 0.85% sales tax in order to preserve the existing level of service and position the
organization for the population growth anticipated to come.
One way staff monitors the management of the budget’s growth is by comparing budget growth rates
against the composite growth of population-plus-inflation. This composite is, in essence, a proxy for the
growth in the size of the community and thus the demand for the current level of service. If the budget is
growing at a rate equal to or less than the sum-total of population-plus-inflation, then for a fixed bundle of
services, the associated operating costs are increasing at a sustainable rate.
Below is the graph displaying a 3-year rolling average of budget growth vs. composite population-plus-
inflation for the period of 2006-2022, and the results indicate that generally the community grows at a rate
faster than the budget.
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In addition, the City measures the Price of Government using U.S. Bureau of Economic Analysis Data
going back to 2007. This is a measure of how much residents pay for City services compared to the
estimated income in the community (i.e., a proxy for a City gross domestic product, or local GDP). Below
is the table that was published with the adopted 2023-2024 budget:
As mentioned in the previous section, the Council is legally prohibited from approving a budget that
exceeds the anticipated increase in revenue. In displaying revenue history, some of the better resources
available for the public would include the following reports:
The City’s Adopted 2023-2024 Budget represents some of the most thorough staff work on
revenue over time, population, household income, commercial vacancy rates, and more. See
https://www.fcgov.com/citymanager/files/2023-24-adopted-budget-document.pdf; suggested
pages 9-26.
Additional Reading:
The City’s Annual Comprehensive Financial Report at: https://www.fcgov.com/finance/files/2022-
city-of-fort-collins-acfr.pdf; Suggested pages include Exhibit A-4 on page 183 and Exhibit A-2 on
page 181 for the 10-year historical displays.
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The City’s Monthly Sales and Use Tax Report at:
https://www.fcgov.com/salestax/salesreport.php ; which displays comparisons to budget
projections along with analysis by industry sector
The City’s 2022 Strategic Plan at: https://www.fcgov.com/citymanager/files/22-24167-2022-
strategic-plan-web.pdf?1657127490). Suggested pages include Appendix B for the Long-Term
Financial Plan, starting on page 60
The Budget-in-Brief document at: https://www.fcgov.com/citymanager/files/2023-2024-budget-in-
brief-adopted-web.pdf; Suggested pages for revenue from 6-7
Tax Increase Proposals
Each of the priority areas and their proposed spend options (Sales Tax for Transit, Parks/Recreation, and
Climate; Property Tax for Housing) are supported by an associated Master Plan or Strategic Plan.
Suggested Reading:
The project page that resulted in the two ballot measures is located at
https://ourcity.fcgov.com/sustainable-funding-2023 and provides information extracted from each
Master Plan or Strategic Plan on the options for how the proposed taxes would be spent. Below
will summarize each of the four areas:
Climate Allocation:
The specific ballot language references: “programs and projects advancing greenhouse gas and air
pollution reduction; the city’s 2030 goal of 100% renewable energy, and the city’s 2050 goal of
community-wide carbon neutrality”.
The full array of proposed uses are housed within the City’s Our Climate Future Plan, located at
https://ourcity.fcgov.com/3636/widgets/11586/documents/21612. By way of example, uses include
Electric Cars and Fleets (e.g. support of home panel service upgrades and a public charging
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strategy), Efficient or Emission Free Buildings (e.g. expanded programs and incentives for
electrification of space and water heating), Transportation Active Modes (e.g. rebates for e-bikes,
added protected bike lanes, and/or matching funds for grade-separated crossings), and/or Zero
Waste programming (e.g. increasing recycling services, and improving recycling education).
Transit Allocation:
The specific ballot language references the City’s transit system, including, without limitation,
construction of infrastructure, purchase of equipment, and upgraded and expanded services.
The full array of proposed uses are housed within the City’s Transit Master Plan at
https://www.fcgov.com/fcmoves/tmp. By way of example, uses include construction of the West
Elizabeth Bus Rapid Transit (BRT) line (MAX-like service), remaining fare-free, a north transit
maintenance facility, and/or new fixed route service lines.
Parks and Recreation:
The specific ballot language references the replacement, upgrade, maintenance, and accessibility of
parks facilities and for the replacement and construction of indoor and outdoor recreation and pool
facilities.
While the full Parks and Recreation Master Plan is located at
https://www.fcgov.com/parksandrecplan/, this ballot language is specific toward 1) asset management
of equipment and infrastructure within existing facilities and 2) construction of a new aquatics facility,
likely at either the future Southeast Community Center or to replace the Mulberry Pool facility once
decommissioned. The detailed plan of asset management is located in the Parks Infrastructure
Replacement Program at https://www.fcgov.com/parks/life-cycle-program, and this document would
serve as a guide to budget recommendations to the Council.
Conclusion
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Staff appreciates the opportunity to respond to these resident questions, and would emphasize the
information located at https://ourcity.fcgov.com/sustainable-funding-2023 for voters to get educated on
the specific proposals and the state of the current City budget.
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