Denver Mayor John Hickenlooper on Friday released a proposal for the largest budget expansion of his administration, but Denver and other Front Range cities remain cautious about the long-term outlook amid moderate revenue gains.
“After emerging from one of the worst recessions in local history, the Denver and State of Colorado economies have outperformed the national economy in the first half of 2006,” Hickenlooper wrote in presenting the budget.
He noted, however, that the growth “is expected to moderate somewhat in the second half of 2006 and into 2007,” when the national economy and housing markets are expected to cool.
Hickenlooper’s proposed budget would expand city spending by 7.5 percent. It calls for the city to spend $837.6 million in 2007, up from the $778.8 million in 2006.
But Denver’s director of finance, Margaret Browne, said a good deal of that expansion will go to one-time expenditures and accounting.
“There is $5 million in the accounting change,” she said. “You can take that right off the top.”
The city also is making a one-time expenditure of $3 million to buy six new firetrucks.
Despite the expanded budget, Denver officials are assuming only moderate growth in the economy, with a 3.9 percent increase in sales-tax revenue.
The mayor’s office expects total general fund revenues to go up 5.3 percent from 2006 for a total of about $831 million.
While the projections come as good fiscal news for city revenues, there are significant cost increases forecast, including $3.6 million for utility costs, $3 million in fuel and $5.5 million to restore the vehicle fleet replacement program.
So Denver and other cities are looking ahead with caution.
In many of Colorado’s other large municipalities, sales-tax revenues increased only modestly – in most cases, barely enough to cover the 4 percent to 6 percent annual increases necessary to keep up with expenses.
That provided little opportunity for expanding budgets.
Shelli Morgan, sales-tax manager for Colorado Springs, said she’s seen a fairly stable 8 percent growth in sales-tax revenue throughout the year, but that only allowed the city to project a balanced budget in 2007.
Plus, Colorado Springs has assumed the cost of streetlights that used to be billed to homeowners, “so that’s additional revenue we have to find in ’07,” she said.
Greeley saw a 3.95 percent increase in sales-tax revenues through August.
“We’re looking at holding vacant positions open until we see sales tax rebound fully,” said Tim Nash, the city’s director of finance. “We’d like to see at least 4 percent to maintain the same level.”
After three straight months of falling sales-tax receipts, Pueblo was sitting on a wafer-thin 0.4 percent increase for the year. Boulder reported a 4.55 percent increase and Arvada only 2.3 percent growth.
In Aurora, economic development along the E-470 corridor boosted sales-tax receipts, but the city also benefited from increases in fees and fines in the court system as part of an estimated $3.2 million boost to revenues that will reverse some of the cuts from five years of lean budget times.
The city projected no cuts in 2007, restored some programs and added 14 positions, including six police officers.
“In a short-term period here, we’re doing well because of strong economic growth and strategy,” said city budget officer Mike Trevithick. “But the long-term trend looks like we’re in a situation where we do face gaps in most years. We may be more in a neutral situation in 2008. It tends to vacillate.”
Denver’s Browne said the city’s budget is right in line with the rest of the metro area, but she said she was pleased to budget such things as expanded library hours rather than make the cuts the city has made in recent years.
“The city continues to look at how we are going to find efficiencies,” she said. “Compared to what we have seen in the past, it still looks pretty good to me.”
Staff writer Kevin Simpson contributed to this report.
Staff writer George Merritt can be reached at 303-954-1657 or gmerritt@denverpost.com.
