The city imposes no property taxes. In many parts of the country, property taxes provide a more stable source of revenue for municipal governments. The finances of Salida and other Colorado municipalities largely depend on the residents and visitors who buy goods within the city limits.

If you use the roads and public facilities in Salida but don’t shop here, you are passing a financial burden to someone else. Residents who chose to make their purchases on-line in a nearby major city are contributing to leakage from the city budget. Similarly, if you are a local merchant who is not collecting and/or reporting all taxes owed, someone else must make up for that shortfall.

Vendors collect sales tax from residents and visitors and send in the total amount (less a collection fee) to the state. In turn, the state processes the sales tax filing and disburses the local taxes to the counties and municipalities where the sales took place.

Each month, I review a distribution report that shows the amount reported by filing period and vendor. In any given month, the actual amount collected is not a perfect reflection of actual economic activity for that month. “Out of period” collections are noted so we can report the year over year change as a more accurate reflection of the actual economic activity for that period.

In January, collections of $272,373 tax were primarily for sales reported for the month of November 2009. As adjusted, we experienced a revenue decrease of 8% compared to November 2008.

The difference between the amount of funds received by the city and the true economic picture for that month can result from various reporting errors. For example:

• Filing after the deadline
• Reporting less tax than actually collected
• Failing to report the value of “trades” with other vendors
• Registering with a primary location outside of Salida and reporting tax collected here as a sale in another jurisdiction
• Not registering the business with the state and failing to report at all

One argument for a “home rule” charter is that sales tax collections will increase. A primary reason for increase in tax revenue is a perception the city then has greater visibility to local sales activity. However, sales tax collections are reviewed locally today. Although vendors mail their tax payment to Denver, it comes right back here the following month to support the local community.

City staff pays close attention to sales tax. The local review of tax reports also serves as a basis for requesting investigations by state officials into unusual sales tax reporting patterns. State collections officials regularly follow up on missing tax filings. They also seek input from the local government regarding which businesses should be investigated.   

From time to time, residents make statements about businesses that are not paying local taxes. If that is the case, these situations should be reported to me.

We recognize that some businesses that remit sales tax late do so because of financial difficulties. However, the use of sales tax collected from a customer to pay other business expenses is not appropriate. Under reporting of taxes paid by customers for the business owners’ financial gain is clearly not legal or ethical.

We appreciate business owners for many reasons including the significant role they play in supporting the community. The city is striving to work in partnership to keep Salida the vibrant community that residents appreciate so much. The city has a “local vendor” preference policy for its own purchasing needs.

We encourage residents to support local businesses. The success of local businesses is essential to the city’s budget. A 1% decrease in taxable sales equates to approximately a $47,000 budget shortfall. For 2009, the 5% sales tax shortfall equated to approximately $235,000 less in revenue to pay for committed expenditures and capital investments. The 2010 budget assumes sales would be the same as 2009.

Significant investments in infrastructure will benefit the community for years to come, provided sales tax collections remain stable. This week’s City News column provides an overview of some key projects and priorities planned for 2010.

Waste Water Treatment Facility

A preliminary engineering study on the condition of the City’s sewer plant was completed at the end of 2008. It concluded a significant upgrade is necessary. Built in 1956 and renovated in 1985, the plant does not have the components necessary to meet ammonia standards and to supply sufficient capacities for the regional area it serves. Together with the City’s engineers, staff selected the new technology to be implemented. Equipment was purchased in late 2009 using proceeds a $1.35 million Energy Impact Assistance Fund grant from the state. Debt financing necessary to complete the project will be secured in early 2010, and City engineers will prepare a bid package for the construction contract this spring. The start of construction is planned to begin in this summer and will be completed in 2011.

Street Improvements

Sackett Avenue will be the focus of the 2010 streets project. Residents should experience less traffic disruption compared to last year when the City extended the useful life of nearly 12-1/2 miles of streets through either a chip/seal or overlay. The long-term plan for maintaining and upgrading streets encompasses different approaches (chip/seal, overlay or re-build) depending upon their age and condition. Sackett deteriorated beyond the point that a chip/seal or overlay is recommended, requiring a greater investment as a cost per mile of repair.

Trails and Recreation Amenities

The narrative in the approved budget included a statement from the City’s Parks, Recreation, Trails and Open Space Master Plan recognizing the “growing trend in the United States for public leaders to recognize… “Quality of Life” amenities are not secondary services provided by governmental agencies, but that they are integral to creating communities where people want to live. These services should be seen as investments in the long-term vitality and economic sustainability of any vibrant and attractive community.”

Salida’s economy clearly benefits from tourism. Recreation and cultural amenities are important not only for the benefit of residents but also for attracting visitors.

The 2B tax helps fund these projects. And, generally, the City does not undertake trails or recreation improvements unless significant grant funding is secured to leverage local dollars.

A $162,050 Great Outdoors Colorado (GOCO) grant and private contributions will pay two-thirds of the cost for improvements at the Riverside Park area. The project encompasses new white water park features, an extension of trail through Riverside Park to D Street and a climbing wall in the park.

The “Milk Run” trail is the name given the project to extend the Monarch Spur trail behind the former Starbuck Dairy to the parking lot shared by Wal-Mart and Checker Auto Parts. The trail extension will also provide a connection to CR 111 along Highway 50. This project was awarded a $156,400 grant from Colorado State Parks, which will cover 75% of the cost.

Highly anticipated repairs to the water line that delivers hot springs water to the aquatic center will be completed within a few months! Staff is optimistic that remaining grant funds will be available to also complete enhancements or new features at the facility itself. The City was awarded a $442,000 Energy Impact Assistance Fund grant to pay half the project costs.

City & County Community Services Complex

City hall, the police department and the council chambers / municipal court will be relocated into the completely renovated old hospital building this spring. The portion of the building that will be used for City Hall is designated as a local landmark. This status enabled the City to secure a $190,000 State Historic Funds grant to pay nearly three-quarters of the cost to restore the original building’s exterior.

Employees

In addition to investing in physical assets to serve the community for years to come, the City Council also expressed a commitment to employees. At a time when many communities are laying off large numbers of employees, we are thankful for the support of a governing body that recognizes and appreciates that none of these capital projects or daily maintenance and operating functions could be accomplished without qualified workers. Salary freezes are now in place, but no plans have been implemented to reduce the existing work force.

Staff continues to implement changes to operate as efficiently as possible. For example, Salida residents will notice a different look for their water and sewer bill next week. A new “press and seal” machine is saving the City printing costs and many hours of staff time with each quarterly bill.

Sales tax provides most of the City’s money to pay for the general fund projects and operations. The budget assumption was for sales tax to remain at the 2009 level. 

The decline in City sales tax collections worsened in October, the latest date information is available from the state. The City will continue to monitor sales tax trends and will make budget cuts, if necessary, to maintain adequate reserves.

We are fortunate that the decline in revenue has been less significant than in many communities. But, even with a comparably modest revenue decline, a shortfall from the budget affects the City’s ability to deliver services and complete capital projects. Our community’s commitment to support local businesses is appreciated by the City as well as business owners. It is essential to ensure capital improvements can continue as planned.

The contractor promises to turn over the keys to the old hospital on March 1st. We plan to relocate city hall, the police department and the council chambers / municipal court into the facility shortly thereafter.

Tenants are being sought to lease uncommitted space in the building. The city’s portion of the building has over 3,000 square feet of office space in excess of what the city needs for its current operations. The second floor of the east section of the building and an individual office suite on the first floor are available for lease from the city. Other government or not-for-profit organizations are the preferred tenants for the space.

The vision for the old hospital building is to create a single location for a variety of community services. One example is that city residents will be able to pay for a VIN inspection at City Hall and walk down the corridor for the service rather than getting back into their car to drive to the police station as they do now. We are seeking tenants for the extra space that fit into this concept of “one-stop shopping” for government or community services. We will, however, consider any potential tenants.

Building occupants will include a number of county-funded health and human services organizations in addition to certain city offices.

City Hall will occupy the downstairs section of the original hospital, constructed in 1900. Visitors to City Hall will enter the building from the parking lot just to the east of the building or from the old main entrance on First Street. A drop box for utility bill payments will be located at the east entrance.

The portion of the building that will be used for City Hall is designated as a local landmark. This status enabled the city to secure a State Historic Funds grant to renovate the exterior of the original building. This $190,000 grant will pay nearly three-quarters of the costs for the renovation project, which will be started in early 2010. The remaining costs will be split between the city and county.

The Police Department will move from the two buildings on East Third Street to the upstairs portion of the west side of the old hospital. The Municipal Court Clerk, who currently works at City Hall, will be located just next to the Police Department in the new space.

Municipal court and city council meetings will take place in a large meeting room on the ground floor of the west end of the building. For anyone who has attended a standing room only meeting or waited outside in the cold at the current Third Street location, the larger space will be a welcome change.

An emergency operations center is also being established at the west end of the building upstairs. This room can also serve as a large training or conference room. The building will have two additional meeting rooms for use by city staff, elected officials and building tenants.  

The center section of the building will be occupied by health and human services organizations.

A building management committee is in charge of operational decisions regarding the facility. This committee consists of representatives from the county and the city. Currently, we are working on final details to ready the building for occupancy, discussing an official building name and determining the signage for the building. Signs will be installed at entrances to the parking lot and floor plan maps to be located inside the building entrances to direct visitors.

City staff is looking forward to a better work environment. But, we are particularly pleased with the way this is being achieved. At a cost less than “building new” we were able to preserve an historic building, turning it into a publicly-owned facility to serve the citizens.

All members of the community are also given a chance to speak up and let the council know what is important to them. Some citizens attended the public hearings and spoke in favor of projects for which they had requested city funds. We encourage public discussion that helps council make well informed decisions. We appreciated the positive attitudes and understanding expressed by members of the community who participated in the budget process.

In addition, City staff has begun updating the Comprehensive Plan, the guiding document for the future of our community. Surveys were mailed to all registered voters in Salida; however, we encourage everyone to take the on-line version.

Information received from the surveys will help council understand what is most important to our citizens. In turn, this information will help set priorities for allocating budget dollars in the future.

Top priorities set by council during the 2010 budget process are upgrading streets and other infrastructure, meeting health and safety requirements, and completing recreation amenities that enhance the quality of life for residents and attract tourists. The budget reflects the City’s execution of committed projects both in the government and enterprise funds. Relatively little discretionary spending was possible due to commitments to projects already underway, grant agreements, financing obligations and regulatory or health and safety demands.

General operating funds are constrained due to the expectation that taxable sales will remain lower than historic levels due to the overall economic downturn. Over two-thirds of the City’s general fund revenue is provided through sales tax collections. Additional tax revenue collected by the 1% increase that became effective in 2009 is helping to offset reduced sales, the repeal of property taxes together with a loss in the City’s allocation of specific ownership taxes, a shortfall in expectations for occupation taxes, and significantly reduced interest income.

Another priority of the council was to ensure that city workers would keep their jobs. Salary freezes were implemented to hold personnel costs flat at least until the mid-year increase in health insurance costs. However, no employee layoffs are planned.

Finally, this was the first year for a new process to evaluate requests from citizens seeking funds for community projects. Back in July, we announced through this column that we expected to have a small amount of funding available to support community initiatives. A new application form was introduced to assist city staff and council to fairly evaluate and prioritize the requests. Several non profit organizations and individuals took the time to complete an application and submit a request to the City. We received requests for twenty projects, totaling $383,000. Only a small portion of that amount could be funded in 2010. However, we want to thank the members of the community who took the initiative to bring forward good projects and initiatives. Involved citizens are a very important reason why Salida is such a great community. Requests can be revisited during 2010 if additional funding becomes available to the City.