$89 million Summit County budget looks to invest in workforce housing, personnel
December 12, 2017
On Tuesday afternoon, the Summit County Board of Commissioners adopted the 2018 budget, which projects an uptick in both expenditures and revenue as the county continues to make major investments in workforce housing, capital projects and personnel, while seeing a significant increase in property tax revenue.
Summit's overall budget is projected to grow to a hair under $89 million in 2018, up from just under $88 million in 2017. Property tax receipts are expected to rise by 7.1 percent, and make up the largest single source of revenue for the county at 32 percent. Projections show sales tax will increase 2 percent and fee revenue will remain relatively flat, with a 1 percent increase over 2017. The county assessor evaluates the projected revenue increases over a two-year period, so these figures will be used to build the 2019 budget as well.
Property tax revenue is seeing a significant increase this year from 2016, which only saw a 1.4 percent increase from 2015. County Manager Scott Vargo attributes the jump to increased property values across Colorado and especially in the mountains and the Front Range.
When it comes to expenditures, notable increases are seen to the general fund, which is projected to increase from $27.3 million to $29.9 million, and the enterprise fund which will increase from $11 million to $13.7 million.
The general-fund increase is attributed to several new staff positions being added to the sheriff's department and the SCRAP landfill, as well as transfer to capital expenditures, nonprofit support, and salary and health care cost increases.
The bulk of the enterprise fund increase is going toward replacing two 4WD ambulances, equipment and system upgrades, as well as construction at the Lake Dillon Fire Rescue headquarters.
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Special revenue expenditure will actually decrease from $40.1 million to $38.2 million, with much of it going toward affordable housing developments such as Lake Hill, as well as $2.9 million going toward road and bridge capital projects.
Vargo is relatively happy with how the budget process turned out, given certain practical and statutory challenges that were presented, such as a major internal software overhaul overseen by finance director Marty Ferris. However, a constant challenge to making the budget comes in the form of constitutional requirements, specifically the Gallagher Amendment and TABOR.
The Gallagher Amendment hamstrings the ability of country government to collect property revenue by enforcing a cap on how much residential assessed values make up the state's overall assessed value. The state caps the assessed value of residential property at 45 percent, with commercial and vacant land taking up the other 55 percent.
In practice, that means if the housing sector sees a boom (as the Front Range is seeing at the moment) then home values go up and homeowners wind up paying more than that 45 percent share of the assessment, unbalancing the ratio and mandating a tax cut for residential property.
"The tax assessment used to be 7.96 percent (of market value) for residential and 29 percent commercial," Vargo explained. "Commercial stays the same at 29 percent, but residential is dropping to 7.2 percent. So that 0.76 percent is just lost."
That 0.76 percent comes out to about $2 million in additional tax revenue that the county loses forever unless there's a tax hike to restore it. But that leads to a problem on the other side of the tax equation: TABOR.
The Taxpayer Bill of Rights makes it difficult to recoup that loss, as any attempt to get back to the previous tax assessment must be approved by voters, or through a capped increase that does not keep up with the dramatic decreases. So even though that projected 7.1 increase in property tax revenue seems significant, it is still causing gaps in funding that can't be filled.
Despite these challenges, Vargo says Summit actually came out even.
"Even though we saw $2 million less in revenue than we would have realized, we didn't see a drop in revenue," he said.
Vargo attributes this relative success by the county's strategy of keeping revenue estimates conservative, and as it turns out the increase in residential values made up that shortfall. Additionally, moderate expenditure estimates might mean the county spends less on budgeted projects in 2018 than anticipated.
As the county implements the proposed budget, Vargo, Ferris and the rest of the staff will turn their attention to the 2019 budget and all the challenges it brings.
County Commissioner Karn Stiegelmeier credited Summit residents for voting in favor of initiatives allowing expansion of several key county programs.
"Voters' support for programs like open space protection, workforce housing and emergency services has been essential to our ability to address community needs and priorities," she said.
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