Streets, sidewalks and city buildings won’t see many improvements next year because of recent erratic sales tax collections.
Annual sales tax collections increased 6.6 percent in 2015 and 1.9 percent in 2016. This year, through August, the city has seen 2.1 percent sales tax increase.
However, the city projects zero percent sales tax growth in 2018, City Manager Ron LeBlanc told the Durango city councilors on Tuesday.
Retail sales have likely been hurt by internet sales, declines in oil and gas and corresponding population declines in Farmington, he said, in an interview.
He encouraged councilors to start thinking about a possible long-term solutions to bolster the sales tax-reliant general fund, which pays for basic city services such as police and streets, and involving residents in that conversation.
“We all have to come to an understanding that we are all here to solve the problem,” he said.
LeBlanc presented a balanced budget. But the city doesn’t have adequate funding for future spending on buildings, streets, sidewalks and storm drainage projects, all of which will require millions of dollars in investment, LeBlanc said.
A solution could likely include a new funding source, such as an increase in sales or property taxes, he said in an interview. The city could also cut services if the public was open to that.
In the absence of strong sales tax growth, the city is planning to reconstruct only a single road – Thomas Drive – in 2018. The city also expects to spend 2.9 percent less on operating expenses in 2018 compared with 2017, LeBlanc said.
The city used much of its savings in recent years to catch up on maintenance deferred during the recession. In 2018, it expects to have $153,000 in city savings that could be used for basic services. The city also has about $7 million set aside in reserve for emergencies.
Far more public outreach and engagement will be needed to determine how to pay for infrastructure, he said.
“We don’t have a budget problem, we have an opportunity to improve the public decision-making process,” he said.
Utilities, such as water and sewer, are insulated from the sales tax fluctuations because residents are billed directly for those services.
The city is proposing a 3 percent rate increases for both water and sewer services and a 6 percent increase for trash and recycling.
The average resident’s utility bill is expected to increase from $110 per month to about $114 per month, according to city manager’s presentation. In addition to the ongoing work on the Santa Rita Water Reclamation Facility, the city may set aside $3.4 million for other water and sewer construction projects.
The city also plans to hire a new project manager to direct the 64 ongoing water and sewer construction projects, LeBlanc said. It’s one of 4½ new positions proposed in the budget.