City residents could be charged about $15 in new or increased monthly fees next year depending on the outcome of the November election and the City Councils adoption of a proposed 2013 budget of $54.8 million.
Fee increases would include a new $3 recycling charge to pay for an expanded service that requires no sorting, a $8.12 increase in the sewer rate based on 2,000 gallons and an estimated average of $3.64 for the franchise fee for La Plata Electric Association. Property and sales taxes would not change.
City Manager Ron LeBlanc said his proposal is a conservative, maintain what we have budget that assumes sales-tax revenue will increase by only 2.5 percent next year. It compares to spending about $54.7 million this year. He is not assuming a second go-round for the franchise agreement for LPEA will be approved by the voters, either.
If it does, the city could restore about $918,950 for infrastructure and street maintenance as well as aid to local charities, nonprofits and economic development. Its human-services grant for United Way, for example, would be increased by an additional $39,450. It is currently budgeted at $150,000.
Because income from the franchise fee is used to pay for ongoing expenses, LeBlanc warned that street repairs will become only more expensive the longer they are deferred because problems are compounded over time.
The franchise fee is technically charged to LPEA, but the cooperative passes it along to consumers on their monthly bills.
Residents have paid the fee for decades but have been off the hook since May because the voters rejected a 20-year renewal this spring by 41 votes.
If the franchise is approved, the city will have time to make budget revisions because the formal adoption of the 2013 budget wont be until the Dec. 4 council meeting.
Officials justify the $3 fee on recycling to pay for $1.6 million in improvements to the recycling center and a new truck.
The sewer rate would increase from $7.82 to $15.64 per 2,000 gallons for residential property and proportional increases for commercial property. The increase is to pay for improvements that were deferred during the recession.
Durangos current sewer fees look low when compared with neighboring communities. Farmington charges about $20 and Pagosa Springs charges $35 in fees based on 2,000 gallons of water, officials said.
When the citys sales-tax revenue dropped to less than $12 million annually for 2009 and 2010, the city was forced to make cuts totalling $4.87 million over those two years, requiring employees to take furloughs and reduced hours of service at the library, municipal court and City Hall.
Sales-tax revenues are currently up about 6 percent for the year, but the city is expecting the revenue to level out and increase by only 2 percent by the end of year.
After years of cuts, LeBlanc said he wants to maintain existing services as much as possible with notable exception of the development of Lake Nighthorse into a public recreation area. The city would pay for two new employees and a new truck. Their funding would come out of a dedicated sales tax for recreation.
Because of new mandates of the Patient Protection and Affordable Care Act, the city also wants to promote a municipal clerk to full-time rather than keep her as a part-time employee and pay for new health insurance.
The city thinks it more cost-effective to pay her to work more hours. She flags people on their vehicle codes who dont pay their traffic tickets on time. So if theyre stopped in traffic by police, the officers will see the outstanding fines.
All total, the city would add 6½ positions, including new engineers, a paralegal and a 911 dispatcher.
While the city is feeling more confident about the future, LeBlanc remains cautious.
The city is doing well financially, said LeBlanc in a letter to the City Council. But please do not take for granted that the revenue increases we enjoy in 2012 will continue forever.
Some members of the public have expressed the view that the city does not need the electric franchise revenues because we are doing so well. Keep in mind that one-time revenues such as permit fees and use tax generated from the construction of the Holiday Inn and Suites, Mercury Village and the new hotel in Bodo will not be available on an ongoing basis. We are vulnerable because of our dependency on sales-tax revenue.
LeBlanc also notes that the city leans on its sales tax to pay for 57 percent of its expenses.
He said the worst financial catastrophe to beset Durango would be for Walmart to suddenly stop sales.
When a no-fly zone was suggested for the air space for Walmart, LeBlanc said, Ive thought about it.