Silver linings revealed on 2019 budget

MONTE VISTA— Monte Vista department heads presented a united front during another budget work session with the city council on Tuesday, Nov. 27. The meeting was held to discuss further cuts before councilors again consider the proposed 2019 city budget— despite slashes already made to address a projected deficit of some $37,000 in the general fund that turned into a surplus of more than $1,000.
The 2019 budget has been hotly debated by city staff, councilors and Monte Vista citizens since first being introduced in October. Anticipated costs in maintenance and improvements of the city’s water and sewer infrastructure, as well as the projected deficit in the general fund, made for embittered council sessions thereafter.    
The work session kicked off with suggestions from several citizens on more budget cuts and how to bring the city additional income.
Resident John Camponeschi suggested the city work towards better communication with its citizens to help everyone understand upcoming challenges. “If the city can do a little better job communicating with people, we might be able to do more when it comes time to generating additional revenue,” said Camponeschi. “And let’s be honest, one of those revenue increases is taxes.”
Camponeschi also mentioned the incurred costs to the city caused by people blowing leaves and other debris into the street for public workers to clean up rather than bagging and trashing it.  The litter clogs storm drains, which translates into wear on the water and sewer infrastructure as well as additional cleaning and maintenance by the city’s public works staff. A Monte Vista city ordinance prohibits the blowing or sweeping of leaves into the streets, explained Monte Vista Public Works Director Rob Vance, which means citizens could face fines if caught. Up to now the ordinance has not been enforced, but that could change.
Citizen Zoe Rierson said she feels like the budget situation needs to be infused with more positivity to help with problem solving. Though citing communication with the public as an important issue, she proposed it from a completely different angle. “It’s interesting to see how municipalities have chosen to step more firmly into the millennial age,” she said. “A lot of them have completely done away with public meetings because they were inefficient and taking up time that could have been spent in decision making.”
Rierson suggested more involvement in social media as a way of communicating with the public and looking at a four-day work week as an out-of-the-box strategy for additional budget cuts. “We should also be looking at successful cities, like Denver, and why they are really booming right now, and how we can attract some of that here,” she said. “And I think we need to look at the technology sector in particular to figure out how that could help us grow.”
After citizen comments, Finance Director Jennifer Signs spoke about the reworked 2019 budget that councilors did not passed at the last city council meeting.  
Signs recently attended a Colorado Government Finance Officers Association (CGFOA) conference, and she reviewed with councilors the best practices guidelines provided by CGFOA to government municipalities. “They give us best practices; they give us GAP, which is generally accepted accounting principles to make sure that what we are doing is best practices and financially sound and making sure we are generally responsible in what we are doing,” said Signs.
According to recommended best practices for the general fund, municipalities should have no less than two months of operating expenditures in the general fund and no less than 45 days in the water and sewer funds. After crunching the numbers, Signs said each of those funds are well above the recommended best practice amounts. The general fund, for example, will come in by a projected $77,000 over the best practices model in 2019.  
Water and sewer look even better. The 2018 water funds are projected to come in around $1.5 million above the best practices model and over $1 million in 2019. Sewer should come in above $3.9 million in excess in 2018 and $2.9 million in 2019. “This is even taking into consideration that we have some big projects,” Signs said.
In support of the proposed 2019 budget, Signs reiterated the city’s responsible spending practices. “The city of Monte Vista is operating all funds within and well above the CGFOA best practices model … with appropriate fund balances for both government and enterprise funds, which is water and sewer,” she said. “There were 500 people there from all over Colorado from different municipalitie… and I would say we are sitting better than half of the municipalities on this state.”
Signs said she can’t take credit for the good news, as she is a relatively new city employee. “It’s these folks sitting on my left and right [Forrest Neuerburg, Unita Vance, Annika Valasquez, Jaime Hurtado, Rob Vance and Police Chief Johns Rosecrans]. They know what they are doing and they have the city’s best interests at heart.”
Councilor Kathy Lorenz addressed the elephant in the room, which is the potentially massive cost looming for a new waste-water treatment facility as well as ongoing sewer infrastructure maintenance. “If the improvements that we’ve been doing to the city’s sewer system don’t work and we have to go with a new waste treatment plant, what is that going to cost?” she asked.
 “That’s a hypothetical question that is difficult to answer,” said Rob Vance. “We go through permit cycles with the state every five years and we’re up for a new permit in 2019.”
If the city’s lagoon-style treatment systems don’t comply with a reduction in ammonia levels and groundwater seeping into the sewer system, there’s a distinct possibility that a new system will be required. That could cost anywhere from $13 to $17 million for a mechanical plant for a city our size, Vance said. Ongoing water and sewer infrastructure projects may help defer the inevitable for several years, maybe even decades, he added.
But if worse comes to worst, funding for a new waste water treatment facility could be secured through grants and a low-interest USDA loan. “The end users typically pay that back over time through raised rates,” Vance said.
The possibility of low interest loans and grants added a silver lining to the imminent water and sewer challenges. And so did budget comparisons between 2014 and 2018. “We inherited problems from past years but we are in a much stronger position now, said Neuerburg. “Basically, our general fund cash has increased from $360,000 in 2014 to $570,000 projected in 2018, which is [approximately] $208,000 positive difference.”
Neuerburg harkened back to 2014’s dismal budget. “That year, the city’s general fund exceeded revenue by $370,000, which was huge,” he said. “Part of that had to do with optimistic revenue forecasting.” Rather than hopeful conjecture, the city’s current administration bases projected revenues on the previous year’s tax and other revenues. “We have seen our sales tax increase but didn’t factor that into the projected 2019 budget, though I am confident we will exceed that number.”
Neuerburg recommended the city approve the proposed 2019 budget at the next city council meeting on Dec. 6, 2018. But he also recommended reconvening in the spring to discuss potential service reduction after studies on the impacts of those reductions have been done.  
One financial challenge facing the city continues to be employee healthcare benefits, Neuerburg said, which is slated to increase by 15 percent in 2019. “This is an increasing cost and a discussion we need to have,” he added. “We have some other options that could help save money, like self-funded programs, which we will be investigating.”
Neuerburg also noted that some of the city-owned properties are financially static. “I want to discuss putting those on the market,” he said, “and once they’re sold, we’ll have them on the tax roll. We’ll have cash from the sale and property tax coming in.”
Just before the work session closed, Ellithorpe brought up money that had been cut from the city’s IT department.  “I would like to give some of that back,” she said. “I feel like they are the very heart of what we do here and if they can’t function, then we are in trouble.”
“When we revisit the budget in the spring, that will be my focus as well as maintaining our parks and recreation department,” Ellithorpe added. “I don’t feel like a cut in services will benefit the city at all.”

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