Craig City Council discusses budget, taxes with citizens
With projected revenue shortfalls that will eat away at the city’s reserve funds in the coming years, Craig City Council is looking for ways to close the gap between income and expenses.
To update residents on the budget situation and to provide information on proposed tax increases, the city hosted a special meeting Wednesday night.
City Finance Director Bruce Nelson said without increasing revenue, the city won’t have funds for new projects and faces the real possibility of a reduction in the services provided to residents.
“We have to either raise revenues or go back and cut more expenses, whether it’s personnel or services,” he said.
Even with the entire capital outlay portion removed from the 2017 budget, listed as a $1.13 million expenditure in the 2016 budget, the city would be $600,000 in the red at the end of next year.
“Right now, we’re facing a crunch where we’re struggling just to provide what we’ve got and we may even have to cut services going into next year,” he said.
To increase revenue, council members have begun to talk about an increase in the city’s number one source of income — sales tax.
A one-and-a-quarter increase in sales tax is projected to drive 2017 revenue up about $2 million, bringing the budget back to equilibrium.
“That makes the city whole,” Nelson said.
Introducing a use tax also was discussed as a compliment to the sales tax. A use tax would require certain goods purchased outside of the city, such as automobiles, to be subject to Craig’s local taxes. At the current city sales tax rate of 2.25 percent, a use tax is projected to collect $180,000.
One of the first concerns brought up by the audience was if raising taxes would drive more people out of town to do their shopping.
But, Councilman Kent Neilson pointed out that sales taxes are currently higher in surrounding communities such as Steamboat Springs, Grand Junction and Rifle.
“A lot of people … they don’t think about that … and they’re not figuring in their travel costs,” he said.
Adding city and county sales taxes together — and not including the state’s 2.9 percent sales tax — shopping in Craig currently comes with a 4.25 percent sales tax while Steamboat is at 5.75 percent, Grand Junction 4.75 percent and Rifle 5.25 percent.
The proposed one-and-a-quarter increase in Craig would bring the rate up to 5.5 percent.
Jennifer Riley, The Memorial Hospital’s chief of marketing and business development, commented in support of the tax increase.
“With your projection of not funding capital, no good is going to come from that,” she said. “Our community is going to fall apart if we stop investing in ourselves.”
Moving forward, the city needs to decide when, and how, it wants to present the proposed taxes to voters.
Moffat County Clerk Lila Herod cautioned council members about putting the question on this November’s already crowded ballot.
“This is a huge ballot already with probably unpopular questions, and I would say there’s going to be a really high percentage that it would fail,” she said.
Councilman Joe Bird said the city is going into budget season before the election and decisions regarding cutting services need to be made now.
“Those decisions are going to be made now whether or not we’re going to do a ballot question,” he said. “That is the conversation.”
Contact Patrick Kelly at 970-875-1795 or Contact Patrick Kelly at 970-875-1795 or pkelly@CraigDailyPress.com or follow him on Twitter @M_PKelly.Contact Patrick Kelly at 970-875-1795 or pkelly@CraigDailyPress.com or follow him on Twitter @M_PKelly.
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