Breaking down Englewood's 2019 budget issues

With 'fiscal cliff' still looming, need for more tax revenue apparent

Posted 10/7/18

For several years, talk of the “fiscal cliff” — where Englewood's spending will consistently outweigh the money it takes in — has colored budget discussions in the city, according to the team …

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Breaking down Englewood's 2019 budget issues

With 'fiscal cliff' still looming, need for more tax revenue apparent

Posted

For several years, talk of the “fiscal cliff” — where Englewood's spending will consistently outweigh the money it takes in — has colored budget discussions in the city, according to the team of citizens who advise the city on its yearly budget.

An aging infrastructure, along with a need to find new sources of cash, put Englewood on track to hit a large gap — to the tune of more than $56 million in public projects like updates to roads, bridges and even items like police radios and parks.

“Until we admit that there isn't enough money to complete updates to the stormwater system, do the projects on the parks master plan, maintain all of our buildings, repair our roads and purchase vehicles for the city's fleet, we will continue to operate in crisis mode, making snap decisions when emergencies arise rather than giving projects the careful consideration that they require,”  said Steve Ward, a member of Englewood's Budget Advisory Committee.

On the heels of the July 24 storm that laid bare the city's inability to withstand a rare flood, along with a homelessness issue that's provoked months of conversation, the city took aim at some issues that may be top of mind for residents.

The Englewood City Council will take the first of two votes on the 2019 city budget Oct. 15, with the second vote set for Nov. 5. Here's a look at notable takeaways.

Budget balance contested

The total budget spends about $127 million while taking in $104 million, according to the proposed budget document.

Councilmembers Rita Russell and Laurett Barrentine argued at the Oct. 1 council meeting that the budget is unbalanced.

Part of the city's funds left over from last year cover the difference, according to the document.

An Englewood resolution dated March 21, 2016, said the city is legally required to balance its budget under the city's charter and under state law and that the balancing can consider reserves or a surplus of funds the city may have.

“If you're using savings to balance the budget, it's not balanced,” Barrentine said.

Post-flood world

Former City Manager Eric Keck, who stepped down Oct. 5, said spending is proposed to increase on stormwater matters.

That's “to better address the aging infrastructure that exists within this realm,” Keck said. “The city's stormwater infrastructure was built in the '50s, '60s and '70s, and now this infrastructure is requiring reinvigoration as well as greater levels of maintenance.” 

The city has acknowledged it was ill-prepared to withstand the July flood that affected several housing units in the city — and took one woman's life — and the proposed budget mentions the goal of developing emergency-management protocol.

Taking mental approach

The budget gives a small nod to Englewood's visible homelessness issue, an aspect of the city that's become more prominent in recent years. It throws about $28,000 toward upping mental health assistance provided alongside police.

In June, Englewood police added a mental health co-responder to their department, who rides along with officers and makes contact with those who may face health issues. The responder can provide assistance if someone needs mental health care and helps determine how best to respond to substance-use issues. The budget would raise the responder's weekly hours from 16 to 32, according to the document.

Englewood is in an “awkward position” with homelessness because it lacks the resources in Denver and Aurora but faces similar problems, Ward said.

“Adding hours for crisis intervention may help to reduce some of the burden on our patrol officers,” he added.

One police officer, a dispatcher and a fire inspector were also added to police services in the budget.

Looking over cliff

Last year, Englewood projected it would need about $77 million from 2018-22 for capital projects — in other words, infrastructure updates — to items like roads and police equipment. Some of these are referred to as public improvements.

At the time, a shortfall of more than $56 million was estimated for that five-year $77 million need. The 2019 budget mentions the same numbers.

Aside from transferring, according to Ward, about $3 million in excess revenue to the capital projects, the budget doesn't make much of a dent in the coming shortage.

“Past and current city councils have left the city in a position where capital maintenance and replacement (are) pushed further and further into the future,” Ward said.

Barrentine, at the Oct. 1 meeting, argued that residents give more and more money to the city each year. In the past, she has said the city just needs to be more responsible with it.

Englewood saw sales tax-revenue growth again this year, Keck said. The sale of recreational pot and the diversity of the Denver-area economy also has aided in raising the city's revenues, he added.

Expenses also go up every year due to employee salary increases and upticks in the price of energy, fuel and supplies, Ward said. And it's problematic that the city depends on sales tax — a source sensitive to the health of the economy — for about 60 percent of its revenue, he added.

“Increased taxes are a part of the solution down the road,” Ward said, adding that relying on bonding and an occupational privilege tax — or “head tax” — on businesses and their employees could be part of the solution. Several surrounding metro cities use such a tax.

The council is traditionally hesitant to ask voters to increase taxes, Ward has said. But until council addresses the dependence on sales tax and delayed infrastructure expenses, “the fiscal cliff will remain a reality,” Ward said.

Sticking points

Two specific funds caught Barrentine's attention at the Oct. 1 meeting: the employee-benefits fund, which allows for providing city workers health and other kinds of insurance, and the risk-management fund, which allows for maintaining property and liability and workers' compensation insurance.

City staff recommended combining those funds, and Barrentine said that would result in the funds losing money. Human Resources Director Maria Gonzalez said it's impossible to talk about deficits because it's unclear how expensive benefits will be on the market year-to-year.

Gonzalez said it's just an administrative task to combine the funds, and Keck later said after the discussion of combining, “staff has separated once again.”

“Quite frankly, we are uncertain where the assertions of a deficit (are) coming from,” Keck said. The funds “typically hit $0 at the end of the year predicated upon the payment of premiums. They do not run a deficit, nor are they in danger of becoming insolvent as it was suggested.”

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