Thursday, July 25, 2019

Council is moving forward with extending a sales tax for 10-20 years to fund $40 million in deferred maintenance on Boulder’s extensive open space properties — and, depending on public feedback, some of the city’s $375 million in other unfunded projects, programs and services.

Elected officials on Tuesday night discussed the tax in the larger context of Boulder’s budget. The 2019 budget, approved unanimously by council in October, was $353.7 million, with $158.2 million in the general fund. Projections for 2020 anticipate a larger general fund budget of $160.4 million, based on increasing sales tax (an extra $3.3 million, a 2.1% increase over 2018) and property tax (an extra $4.1 million, a 15% increase).

Despite the expectations for additional revenue, Boulder still has more expenses than cash. Sales tax monies, while growing, are failing to keep pace with inflation and thus the rising costs of doing business, including construction and labor. Several departments are facing millions in needed upgrades or repairs with no discernible source of funding in sight.

Open space in particular is in a unique situation due to expiring taxes. A .33% sales tax funding open space was set to expire in 2014; voters in 2013 OK’d extending it to this year. Starting in 2020, one-third of that will be directed to the general fund rather than open space. A further .05% of general fund allocations will cease to go to open space starting next year, and even more diversions to the general fund are planned to begin in 2030, leaving the department with substantially less revenue.

The cuts were planned and approved as open space focused less on acquisitions and more on maintenance. But the analysis didn’t account for growing use of trails and amenities. A 2005 visitation study wasn’t updated until 2018, and it revealed a 34% increase in the number of open space users in those 13 years, from 4.68 million to 6.25 million.

As a result of the increased visitation, “the cost of maintaining the system has outpaced earlier projections,” staff noted in a memo to council.

Council — and the public — will consider three options for extending a .15% sales tax for open space purposes:

All .15% dedicated to open space, generating roughly $5.3 million a year for the department. Council members Sam Weaver, Lisa Morzel and Mirabai Nagle preferred this option.

“I feel like we have to do something for open space,” Weaver said. Given the revenue reductions and increased visitation, “we’re talking about a serious amount of change.”

In light of climate change — which council earlier in the evening declared an emergency — the “most important thing is to protect our environment,” Nagle said.

.10% goes to open space (about $3.5 million), with the remaining .05% to the general fund. Mayor Suzanne Jones supported this option.

“We need to increase our funding of open space,” she said. “We know we need to.”

.10% to open space and the remaining .05% reserved for transportation, which is also facing budget shortfalls and deferred maintenance. Cindy Carlisle proposed this, and councilman Aaron Brockett supported it after initially proposing funds be directed to the general fund.

“I worry about money going into the general fund,” Carlisle said. In looking at the list of unfunded needs from various departments, “I see a lot of wants” versus needs — including from open space.

Mary Young and Bob Yates both said they wouldn’t risk a tax, given how many other things need to be paid for in the city. An open space tax might reduce voters’ willingness to approve taxes in the future for crucial things such as affordable housing, the library and transportation, they argued.

“While open space is great and good,” Yates said, “We have other responsibilities” and may be getting close to “hitting our community’s tax capacity. At some point, we’re going to run out of headroom, and we may regret (it).”

“We’re getting close to that cap,” Young agreed. “I fear that if we go with open space … this is likely going to sabotage any chance of having an affordable housing tax passed … the thing we all talk about that we need more of, constantly.”

Yates suggested waiting until next year, when the countywide affordable housing tax and the library district and tax will be put to voters, along with a possible transportation funding measure.

That’s when the city can have a “comprehensive conversation” about our priorities as a community, he said, “rather than picking one thing now because it’s in front of us.”

Jones countered that the other needs have been discussed for years; the community knows they’re coming, too. “None of it is a surprise,” she said.

The ballot measures for an open space tax will return to council for a second readingThe second opportunity for council to examine an ordinance, and when the public is invited to weigh ... and public hearingScheduled time allocated for the public to testify or share commentary/input on a particular ordinan... on Aug. 20.

To view a Twitter thread of this discussion, click here. 

— Shay Castle, boulderbeatnews@gmail.com, @shayshinecastle

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Departments with unfunded needs

Technology: $18 million for total system replacement across 300 applications. Because of the pace of change and consolidation of vendors, products become unsupported and may need to be replaced more quickly: every 2-4 years rather than the typical 5-7 year lifecycle of the technology.  The city is changing the way it budgets for technology upgrades.

Library: To maintain service, $461,000 extra is needed annually on top of 2018’s $11.4 million budget, plus $4.7 million in capital and one-time funding, mostly for a facilities maintenance backlog.

To meet demand: $1.9 million extra each year (on top of “maintain services” budget) and $6.3 million in capital expenditures. Total: $2.4 million above 2018 budget annually, plus $11 million in capital expenses.

To expand: $824,000 extra annually, plus $586,000 in capital expenditures on top of “meet demand” budget. Total: $3.2 million more than 2018 budget, plus $11.6 million in capital expenditures

Also, the North Boulder library branch still needs $1.5 million for construction; fundraising is ongoing. Operations will be covered in the 2021 budget and beyond.

Transportation: $22.7 million for annual essential maintenance and operations, plus $20.8 million for capital projects.

Staff on some of the funding challenges:

“The Transportation Division is highly dependent on sales tax, which represents 80 percent of non-federal funds, or $26.0 million of the $32.8 million budget excluding federal funds ($11.8 million) in 2018. Revenue from Transportation’s dedicated sales tax (0.75 percent) is not keeping up with inflation, resulting in declining purchasing power. Even with approximately 88% of the expenditures going to essential services versus enhancements, the department is still deferring maintenance, and is unable to complete the list of projects in the Capital Improvement Program (CIP). This can this can be attributed to the cost of concrete and asphalt increasing by 5 to 7 percent annually while sales taxes have generally increased by 1 to 2 percent.”

The city is currently seeking funding for more than $41 million in projects and was recently awarded $5.75 million in state and federal funding for four projects:

Downtown Boulder bus station improvements: $392,800

HOP expansion: $2.4 million

Arapahoe multi-use path and bus stops: $760,000

TablePostponement of a motion, or a vote Mesa multi-use path improvements: $2.2 million

Total: $5,752,800

Open space: $36-$46 million in deferred trail maintenance. 95 of 150 miles of trail need improvements beyond yearly routine maintenance.

Departments with long-term unfunded needs:

Fire: $29-$35 million ($22-$25 million to replace fire stations 2 and 4; $5-$6 million to replace fire training center in 5-10 years; $2-$4 million for a storage facility for gear)

Plus $2-$3 million a year for to bring advanced EMS in-house, and $6.25 million for fire station No. 3 relocation

Facilities: $15.3 million in deferred maintenance, $6.4 million of which is unfunded. The city is currently undergoing its first facilities master plan. More information will be available in late August.

Police: $1-$2.5 million extra annually for ~25 extra officers over the next 5-7 years; $25-$30 million for a 25,000-square-foot expansion at the Public Safety building; $400,000-$650,000 per robot for response to bomb threats and other hazardous events.

Parks and Recreation: No particular cost info on unfunded needs, but last year reported a $16.6 million backlog in its capital improvement plan. The department is currently receiving $4.6 million annually, on average, for that CIP.

Two major needs for investment mentioned Tuesday were recreation centers and ballfields. Per the memo:

“The last major renovation was completed 18 years ago and the youngest recreation center (East Boulder) is 27 years old. Collectively the three centers average 1,132 visitors per center per day. This was an increase in attendance of 5% from 2017 visits. The cost to operate the centers has increased faster than CPI and direct expenses are up 19.8% from 2015 through 2018.”

“New residential units are increasing, and new neighborhoods are being built that require the department to increase park land provisions through development of new neighborhood parks. Ballfields continue to be a priority for the community and growth continues in sports leagues and programs. Pleasantview’s 13 fields have been reserved an average of 11,600 hours over the past 2 years, with 4 fields being programmed over 1,000 hours per year in the past 2 years. Stazio diamonds have been programmed an average of 717 hours per diamond over the past 2 years, with a 7.8% increase in total hours reserved between 2017 and 2018.”

Author’s note: This does not represent a comprehensive look at unfunded needs. For more comprehensive understanding, see source documents below.

Source: Council meeting packet for July 23, 2019. See also: Staff presentation.

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