Colorado Springs budget better but still not great for 2020, 2021 due to pandemic

COLORADO SPRINGS, Colo. (KRDO) -- The city's chief financial officer told the City Council that despite the impacts of the COVID-19 pandemic, the city's budget is in better shape than it was early in the worldwide outbreak.

But Charae McDaniel told the council during its Monday work session that several factors could change the status of the budget for this year and next year.

McDaniel said the city remains on track to have a 5% decrease in city revenue this year, but that could be offset by a strong Christmas shopping season, and the city collecting online sales tax revenue for the first time.

"We collected some before but we only let online retailers volunteer to pay it to us," she said. "That has changed now,"

Next year's budget, McDaniel said, is projected to show a 6% increase in city revenue -- which was expected this year before the pandemic -- and the city will continue some financial measures taken this year to balance the budget.

"At first, we had a hiring freeze and have now switched to a four-month delay in new hires," she said. "We've also had some cost reductions in our city departments."

However, Councilman David Geislinger expressed concern about whether the city's financial numbers have been aided by the federal government providing stimulus checks to citizens and recovery funding to local governments and businesses.

"If we don't get any of that next year, I want to know what the true financial impact will be to us," he said. "Sooner or later, we're going to have to come to grips with the fact that we can't keep mortgaging our future in order to pay for the needs of the present."

Hopes for strong Christmas sales, however may have been dashed by McDaniel's staff, who revealed a consumer sentiment index showing spending confidence is at around 75% compared to 100% just before the onset of the pandemic.

"It means that people may be less likely to have big holiday celebrations, do Christmas shopping or travel for the holidays," said Council President Richard Skorman. "We also don't know how well restaurants and retail shops will bounce back."

Another complicating factor is that the budget approval process starts a month before Election Day -- when voters will decide on Issue 2A, a strategy to help speed the city's financial recovery.

"We'll have to start without it and then factor in the impacts depending on whether it passes or fails," McDaniel said.

The 2021 budget process officially begins with its release Oct. 5, including a public hearing Oct. 26 and final council approval on Dec.8.

McDaniel said continued strong construction and housing markets during the pandemic bodes well for city budgets.

In related matters, the council proceeded with a plan to reduce allocations from the city's Lodging and Auto Rental tax because hotel and motel occupancy fell to a low of 18% during the pandemic. The occupancy rate has rebounded strongly and was at 66% in July.

LART tax allocations usually benefit city events such as the Festival of Lights parade, contracted agreements with entities such as the Convention & Visitors Bureau, capital improvement projects and community event organizers who request funding.

Because of the city's financial situation, only 4 contracted entities and 12 city events will receive funding this year.

"The amount of available funding decreased from around $8.8 million to $5.8 million," McDaniel said. "We told the other groups to not even bother submitting requests because we knew the money wouldn't be there."

Interestingly, the council moved forward with a request from a city department -- the Parking Enterprise -- to receive an additional allocation of $1.1 million for continued replacement of 3,000 older parking meters with newer versions.

Each new meter requires a sensor and a device that allows a meter to communicate with a central location. Replacement of the old meters, located downtown and in Old Colorado City, began earlier this year and should be finished early next year.

Scott Lee, the Parking Enterprise director, said that continuing the meter upgrade this year will save money repairing the less dependable older meters.

"The old meters also don't include the mobile pay option that we can offer to drivers," he said. "The new sensors don't work with the old meters. The cost of a new meter is around $600 and has a life expectancy of ten years. Trying to repair and keep using the old meters costs between $700 and $800. The sensors have a lifetime warranty. We've had a significant revenue increase from the new smart meters."

The council also gave its blessing to increasing the cost of licensing fees for dogs and cats, and of redemption fees for impounded animals considered dangerous. The additional revenue will be used by the local Humane Society to pay for part the growing cost of providing animal law enforcement.

The dog and cat licensing fee would increase by $5 for most pet owners and $3 for senior citizens. The fee retained by veterinary clinics that license pets for the Humane Society would increase from $1 to $2. The dangerous animal impound fee was not revealed, but is increasing by a higher amount because it's more labor-intensive for the Humane Society and requires an on-site visit.

In other matters, the council fell short of having enough votes to proceed with deciding whether to allow medical marijuana dispensaries to deliver to private citizens. Mayor John Suthers has said he would veto any vote allowing delivery.

"We may be open to it in the future when more cities do it and we have more of a track record to go by," Skorman said. "We did agree to (consider) letting dispensaries sell CBD products, which isn't allowed now."

Conversely, the council reached a consensus to proceed with amending ordinances and establishing penalties to ban the sale of tobacco products in vending machines and in most public places, as well as prohibit unlawful transfer of tobacco products.

Skorman said he wants to bring the city ordinances in line with state law and wants to avoid duplication of state law, as well as see how the state implements and enforces its law.