When a Fiscal Tree Falls, Do Colorado Springs Citizens Hear It?

Colorado Springs, Colorado is in the throes of a severe and under-reported budget crisis that needs economic triage as soon as possible. Mayor Steve Bach’s recent Town Hall Meeting on August 14, 2013 addressed this looming disaster, but how many people really listened? Although the Springs is a mere two to four years away from utter insolvency, few citizens know the facts. The citizenry must engage in an unavoidable conversation, and denials, skewed ideologies, and tactical evasions should all be set aside as we look for solutions to the problem.

Mayor Bach’s August Town Hall Meeting from City of Colorado Springs on Vimeo.

After viewing the hour-long meeting in its entirety, I sat down and practiced some anger management. According to the numbers and presentations, the City of Colorado Springs faces dire straits indeed. Unless sales tax revenues increase substantially by either economic development or increased taxes, the community will effectively run out of funding sometime between 2016 and 2018. City officials and citizens must take steps to rectify the problem, or we will continue to see our city services, infrastructure, and economy degrade until our town becomes effectively bankrupt.

This isn’t the first time we’ve heard of the issue. The city’s infrastructure has decayed visibly over the past 33 years. In 2003, the Center for Colorado Springs Policy Studies at UCCS produced a study discussing the impact of growth from 1980 to 2000. Developed land grew by 32%, and the city population grew by 68% over this 20-year span.  This influx of development and population created an economic boom for roughly 20 years, but the boom was relatively short-lived. The dot-com bubble burst in 2000, severely damaging our technology industry’s development. Then, in late 2006, the housing market collapsed, and developers struggled to sell or rent recently built homes as they faced bankruptcy.

This map, created at the Bureau of Labor Statistics website, shows the unemployment rates for Colorado Springs and other municipalities in the state.

Unfortunately, Colorado Springs is one of the few cities in the state that has not recovered reasonably well from the economic recession. According to the Bureau of Labor Statistics, Colorado Springs still sat at a 9.1% unemployment rate in June of 2013, and this represents a .8 decrease in unemployment from 9.9% in June of 2012. Colorado Springs has only regained about two-thirds of our jobs from the recession fallout. Whether Bach’s hard-core development would create the same market inconsistencies we’ve seen in the past in the city’s future remains uncertain.

Although the budget funding numbers have increased over the past 20 years, the actual value of the dollar has declined, so city-wide spending has diminished due to both inflation and continual lowered taxes. During the 20-year growth spurt from 1980-2000 and after adjustments for inflation and population increases, total city spending actually decreased an entire 7% per resident. Although the city grew, the percentage of money Colorado Springs spent on services continues this downward trend. This reduction in spending was mainly accomplished by a continual lowering of taxes, but inflation played a key role as well. Our country’s cumulative inflation rate from 1980-2012 is 195.1% . Our city could not keep up with the necessary spending, so even as budgets increased, the actual value of our money waned. Instead of spending more money to make up for the deficit in services, voters and officials alike wanted to keep the taxes low.

This photo originally appeared on Forbes.com.While city funds declined, the only city-funded programs to continue receiving steady and even increasing revenues became our public safety force, and this only occurred because of necessity. Larger populations require stricter controls, especially as city services decrease due to inadequate funding. However, even with the increases for these industries, public safety is not ensured. Both our police and fire departments remain incredibly underfunded. Our police department received only $90.8 million for their total 2012 Budget. Compared to similar cities, such as Mesa, Arizona ($141.9 million), and Long Beach, California ($204 million), we’re at least $50 million short of the needed capital, if not more. Recent fire problems and crime rate averages attest to the inadequacy quite loudly.

Neat $100 Graph

CFO Kara Skinner asked attending citizens to imagine that the entire city budget equaled $100. If that was true, she said that this graph would be the distribution of the budget’s monies. She also asked citizens to share their ideas if they thought that funds should be reallocated into different categories. All citizens can participate in the feedback by clicking the picture, which redirects to the 2014 Budget Survey.

Unfortunately, the problem is only exacerbated by low incoming revenues. The city only had $232.7 million in 2013 General Fund revenue, and the majority of that money went to keep the police and fire departments afloat. 42% of the General Fund goes to the police and courts, and CFO Kara Skinner assured citizens that the majority of that 42%, some $77 million dollars, goes to fund police whereas only $3.6 million funds the municipal courts. In addition to the majority of the General Fund, the police department also receives funds from the Public Safety Sales Tax (PSST) and grants. The fire department receives 21% of the funding. Even with the majority of the General Fund going to these brave men and women, our policemen and firemen struggle to handle public safety issues, and our courts are severely underfunded.

The city currently scrapes by on the remaining monies from the General Fund, and the numbers are worrisome. The Parks receive only 7%, Transportation receives 10%, Storm receives 2%, Planning receives 1%, Capital Projects receive 5%, and the City Council and administrative support receives 12%, which they use to employ over 2,000 people. Our city is operating on a tiny budget, spending only $409.7 million. Cities with comparable populations, such as Portland, Oregon ($2.6 billion budget) and Tucson, Arizona ($1.27 billion budget), spend upwards of three times as much on their cities than we do.

Capital ImprovementsAmazingly, even with the shortfall, government officials and employees still managed to budget money for critical Capital Improvement Projects (CIP). Such a feat certainly required budgetary genius and accounting wizardry. CIPs include projects such as creating / repairing bridges, fixing roads, and constructing new buildings for the city. As is, we can spare a mere $7-9.5 million dollars per year from the General Fund for these projects. This number comes nowhere near the $133 million in funds engineers deem necessary for vital infrastructure upkeep.

Those who compiled our city budget possess truly elite accounting magical abilities, and I was impressed to see how much they accomplish with so little. Still, as Chief of Staff Laura Neumann shared her slides and discussed the few CIP they chose for 2013, citizens sat quiet, dismayed, and possibly outraged to see all the needed projects put on hold due to funding shortfalls. Each speaker stressed how the budget committee had to make many “hard choices” for the 2013 budget, and even tougher choices will come with the 2014 budget. However, Mayor Bach and his team assured the citizenry that they have a plan for economic revitalization and development.

Multinational Retail FolksThe goals and outcomes for Bach’s Economic Development Plan sounded very on task and direct. Our city certainly needs to be more citizen and business friendly, and the city image certainly needs a face lift or three. Bob Cope of the Economic Development Division discussed possibilities for producing Economic Vitality through the plan. Although the city website remains silent regarding actual services this division offers, we can assume they do offer resources to businesses. However, the kinds of businesses our Economic Development Division encourages may prove an interesting investigation. As developers, Bach and his staff / volunteers often champion big businesses like Kum & Go and Wal-Mart, and several citizens do not agree with the Mayor’s economic philosophy. My next article will cover the Economic Development Plan in detail as I analyze the strengths, weaknesses, and viability of the plan.

One Colorado Springs citizen I spoke with, Nicole GuBrath, summed up the causes of our city-wide issues, saying, “We have leadership who want to run our city like it’s a small town, and it isn’t. We have a transient military population who will only be in the area for a few years, so why would they vote up tax increases when they aren’t in for the long haul?  We definitely have a crisis of vision in general.” Lower taxes and smaller government are ideals held dear in the hearts of many in this city, and while I heartily agree with smaller government, I do not condone crippling government by making it too small to govern effectively.