Mayor Steve Bach's opening line at town hall meetings for the past two years has been "the city is going broke."
Colorado Springs is down $20 million in cash flow from the heydays before the recession, he said. That's a lot of money for a city with a $232 million general operating budget.
But that isn't the worst of it, he said.
The city needs to spend $1.3 billion on its roads, bridges and aging buildings. Bach has consultants reviewing a list of estimated stormwater and drainage needs that could cost more than $500 million.
"The reality is we have stepped into a situation where we are in great jeopardy as a city if we don't change the way we operate," Bach said during an August town hall meeting.
In October, Bach will unveil the 2014 proposed city budget, expected to be about $243 million. Until then, the line item details will remain under wraps. It will be the third budget prepared under the new form of city government, in which the mayor is the city's CEO.
The proposed budget will set aside about 20 percent in a reserve account, add public safety positions and pump up spending from $2 million to about $7 million on capital improvement projects, such as roads and bridges.
The cuts to pay for the programs have not yet been revealed.
"We are going to come out with some really tough recommendations," said Chief of Staff Laura Neumann.
Last year, the city eliminated 32 positions and was not quick to restore all the city services cut in 2010. The city socked away $46 million, or 23 percent, in its rainy day fund and projected that it would need to find as much as $3.5 million in the 2014 to cut in order to balance the budget.
But the city's Chief Finance Officer Kara Skinner said the 2014 budget priorities reflect what residents asked for in the recent town hall meetings. She asked residents to complete a funding pie chart, placing a percentage or dollar amount in the areas most important to them. For example, in the 2013 budget, police and courts received $42 out of every $100, while stormwater projects received $2.
"We've seen a lot of people wanting to add funding to police and fire," Skinner said. "What I think is valuable and interesting, is that they are also communicating to us the importance of stormwater and transportation and planning."
The proposed 2014 budget will be presented to City Council over four days in October. Meanwhile, the council is awaiting a city attorney's opinion on its budget authority. For example, can the City Council reject a single expenditure? Can the council overturn a mayor's veto on a council proposed expenditure? The answer could change this year's budget process.
Council member Val Snider said, during a recent council work session, that the executive branch and legislative branch need to be on the same page when defining core services. For example, some council members believe parks are a core service. Parks receive $7 out of every $100.
But funding parks, as it has in recent years, could be a sticking point between the mayor and council. Bach has said in town hall meetings that the city can't afford to maintain the parks it has now.
"It's a philosophical difference that I would have with the mayor when it comes to this," said council member Jan Martin.
Martin said she does not consider the city on its way to going broke. She was on council when the economy took a nosedive and the city was forced to turn off streetlights and stop cutting the grass in city parks. To her, the budget issues are more about priorities.
"The truth is the news is good," she said. "We've seen an increase in revenue."
The 2013 budget was up $4 million over the 2012 budget. And so far this year, revenue is up. For the year to date, sales tax collections are up 8.02 percent to $61.1 million. Sales and use tax make up 56 percent of the city's general fund budget. Combined sales and use tax collections are up 8.55 percent to $65.5 million from the same period a year ago. When adjusted for inflation, combined sales and use tax collections are the highest since 2007, city officials said.
But expenses are headed up too, said Barry Baum, a retired manufacturing company president and member of the City Committee, a group of business men and women who volunteer to look at city finances. The committee first looked into the city's budget in 2010.
"What we uncovered was that many elements of expenditures were running higher than revenue streams," Baum said. "By mid-2016, the city will be broke."
Revenue, which was up 1.8 percent this year over last year, needs to grow 3.4 percent every year to keep the city solvent, Baum said. This year the city was lucky with its increase in sales tax revenue, he said. But the city can't rely on luck forever, he said.
"We need to grow our economic base by focusing on industry growth," Baum said. "Spending (Lodgers and Automobile Rental Tax) on things like the balloon festival is good for tourism. But we need to find a way to promote conventions in the city and target industry groups that have a technical advantage in Colorado Springs."
Bach said he worries about other liabilities that are out of the city's control, including the city's responsibilities for the Public Employee Retirement Association. Last year the city's payments were about $26 million.
"We are better off than other cities nationally," Neumann said. "We recognized it much sooner than they did and have taken action earlier so that we don't have to be so desperate."