Breaking down Englewood’s 2021 budget

City weathers pandemic’s effects on tax revenue, tackles flood readiness

Ellis Arnold
earnold@coloradocommunitymedia.com
Posted 1/18/21

Englewood’s city budget affects everything from how safe your home is from stormwater to how your drinking water tastes. In its 2021 budget, the city tackles needs that are decades in the making …

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Breaking down Englewood’s 2021 budget

City weathers pandemic’s effects on tax revenue, tackles flood readiness

Posted

Englewood’s city budget affects everything from how safe your home is from stormwater to how your drinking water tastes.

In its 2021 budget, the city tackles needs that are decades in the making regarding Englewood’s infrastructure — items such as its stormwater drainage system, how well the city processes the water that flows in residents’ homes, and even the quality of the sidewalks and curbs along city streets.

The city also made some key financial decisions to absorb the impact of the COVID-19 pandemic on city finances.

But despite the heavy blow that the pandemic delivered to local economies, Englewood may emerge relatively unscathed in terms of the revenue it received in 2020.

“This year, we’re doing better than our five-year average” for revenue, said Tim Dodd, Englewood’s interim finance director.

As of around November, the city’s revenue — money it takes in from taxes, fees and other sources — sat at 8.4% above average for that time of the year, Dodd said. The figure includes the impact of money from the federal CARES Act — a relief bill Congress passed in response to the pandemic. Without that, the city’s revenues would have stood about 5.8% above average, Dodd said.

Compared to the previous year, Englewood’s sales- and use-tax revenue was “relatively flat,” said Jennifer Nolan, the city's budget administrator. Englewood may not have a fuller picture of the pandemic’s economic impact until March, Nolan added.

“The one area we did (take) a major hit was in our recreation services area, and that’s to be expected,” Nolan said, noting that recreation facilities were closed amid coronavirus restrictions in Colorado.

Englewood’s ability to weather the pandemic likely lies in its unique features, city officials explained. For example, Englewood isn’t dependent on tourism dollars because it doesn’t have a large hotel and thus is “not a destination place where (many) people would stop and stay,” Nolan said — so the city didn’t have to take a hit on tourism amid the pandemic.

The city created a few grants and assistance programs to help businesses through the pandemic’s challenges, and Englewood residents supported local businesses, Dodd said. That’s reflected in the city’s relatively high sales-and-use tax revenues through restaurants, Nolan added.

Also a factor: “The diversity of our economy, which includes a lot of ‘essential’ businesses that remained open,” said Chris Harguth, city spokesman.

Some cuts necessary

The city did make some maneuvers to adjust to the pandemic’s effects, identifying “significant” budget cuts and adjustments that totaled $1.7 million, according to the winter issue of the Englewood Citizen magazine, a city-produced publication.

The cuts included a recommendation to city council for four furlough days for all city employees during 2021, amounting to a $360,000 cost reduction.

The first furlough day is scheduled for mid-February, and depending on how the city’s revenue looks as the year unfolds, it may not need to move forward with all four days, Dodd said.

Some unspecified program cuts or deferrals made for a modest savings — roughly $150,000 — and a reduction in “other operating expenses” netted the city nearly $452,000, according to the magazine.

Englewood also reached into its “fund balance” — essentially money the city has saved up over the years — partly to cover the shortfall in its parks and recreation department.

“But we also made the conscious decision to dip into our fund balance for (infrastructure) projects for parks and recreation for parks improvement and irrigation projects,” which total $3 million, Nolan said.

Weighing need for more tax revenue

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.

Englewood’s 2021 budget notes that “sales and use tax represents approximately 61% of the general fund’s total sources of funds.” The city’s general fund supports a wide range of items such as police and fire response, parks and recreation, the library and others.

The problem is that sales and use tax “is volatile and tends to expand when the economy is growing and contracts as the economy slows,” the budget says.

Meanwhile, property tax is approximately 9% of the general fund’s sources. “The general fund’s mill levy rate of 5.88 was last changed in 1992,” the budget adds. A mill levy is a term for a tax rate.

On top of that, “the delay of infrastructure projects is also looming,” the budget says. “The city has been in ‘maintenance mode’ for several years, but eventually, the replacement of major structures will need to be addressed.”

Decades ago, Englewood’s financial success largely rested on Cinderella City, a shopping mall of more than 1 million square feet that had been built on Englewood’s former city park. It opened in 1968 amid much media hype, and in 1974, it raked in just over half of Englewood’s total sales tax revenue. But competition from new malls like Southwest Plaza led to a decline, and after a late-1990s demolition, the site was redeveloped into today’s CityCenter Englewood shopping site — the area around city hall and Walmart.

“Cinderella City mall was the cash cow for the city, and many of our services were built based on that sales revenue generation,” Nolan said. Although the city took a hit with the loss of the mall, the onset of businesses making sales over the internet has also provided the city some sales tax revenue, she added.

Still, the need for new revenue remains, and the city plans to have discussions on how to fill the gaps.

Officials plan to take “a deep dive into our revenues with a goal of evaluating them and looking at what the long-term plan can and should be,” Dodd said. He added that Englewood wants to look at best practices from other cities.

“Eventually, we will be bumping up against our main source of revenue and will need to look for other revenue sources or ask citizens to contribute more via property tax or sales and use tax,” Nolan said.

One big step the city has taken is raising its fees for utilities.

Stormwater, other utility rates increase

The city’s revenue from all sources “is estimated to grow in 2021 by 31.7% over current 2020 estimates due in large part to utility increases to fund badly needed infrastructure upgrades,” the budget says.

That may be welcome news to those who remember the summer 2018 flood that took a woman’s life in a storm the city at the time acknowledged it was ill-prepared to withstand.

The new rates include the following:

• The water utility rate will see a 4% increase on the 2020 rates, along with a new $15 per month infrastructure "investment" fee;

• A 4.5% rate increase is anticipated for the 2021 Sewer Fund budget;

• The stormwater utility fee, which is quarterly, increases by $10.68, from $20.13 to $30.81;

• And the concrete utility rate increases by $.0375, from $.1225 to $.1600, per square foot of sidewalk or curb and gutter.

For Englewood families, that means that taken together, the utility rate increases for 2021 will cost roughly $22 more per month or $262 per year compared to 2020, on average, Nolan said.

From a city’s standpoint, “if you delay projects, they will cost you more in the future the longer you delay them,” Nolan added.

The spotlight fell on Englewood’s storm-drain system after the July 2018 flood that displaced several and affected at least 25 housing units in the city. Englewood’s storm-drain system was built in the 1950s to 1970s, according to a city staff report at the time.

One of the city’s goals is to “reduce the number of structures at risk of flooding in a 25-year storm event by 20%,” the budget said, using a term for a storm that has a 4% chance of occurring in any given year. Those are more common that a “100-year” storm, meaning a storm that has a 1% chance of occurring in any given year.

The city has said the July 2018 storm’s severity was associated with a 50- to 100-year event, meaning a storm of that magnitude has a 1% to 2% chance of happening in any given year.

On another aspect of water issues, the city writes of “a formal evaluation” of its Allen Water Treatment Plant “to assess and optimize current processes (and) assess taste and odor issues,” the budget says.

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