The Park City Council has jumped into the annual budget process – and like every year – they saw the 10-year projections that paint a picture that don’t appear to reflect reality.
The Fiscal Year 2020 budget was presented to the council Thursday by the budget team. The $76 million-dollar budget does not include a tax increase or the capital budget – which will add millions more to the bottom line.
Council member Steve Joyce was quick to note that the projections for the next 10 years don’t look good – when after next year, the expenditures outpace the revenues. But that happens every year -- and he’d like the budget managers to provide projections that represent reality.
“My complaint is that every year we have this tool called I think it's pronounced FEAR- it's the Financial Impact Assessment Report and it looks out 10 years,” Joyce explained. “It's our long-term forecast and I guess from back in the Tom Bakaly days before my time, they kind of took a very conservative approach that said OK, let's take where we are today, draw out very conservative revenue growth and pretty medium to high expense growth and see where that puts us. Guess where that puts you every time? The answer is you're going to be in the red.”
Joyce notes that the city is in great financial health – for now - so the city should either use the graph, which shows a serious long-term problem or throw it out. He’s hopeful the budget staff will come back to them with a better long-range outlook – because the moment of doom, Joyce says, starts next year.
“This tool, which is really our only long-term forecasting tool is just being kind of wasted,” Joyce continued. “I just think it may be a good tool and we’re just using the wrong data we're not using realistic or historical data. And I think that's what we're going to see from [our budget managers] Nate [Rockwood] and Jed [Briggs] coming back - is something more compelling and useful to lookout into the future and figure out where we really are.”
At Thursday’s meeting, council member Tim Henney noted he had a similar response when he first looked at the graph after being elected to office. The problem says Joyce is caused because there’s not an inflationary component attached to the property tax. And it’s not there, because no one wants to raise taxes.
“For property tax a lot of people don't realize it if you don't add houses or commercial into a city then property text doesn't go up at all,” Joyce said. “There's no inflation adjustment so overtime, if you only get $1,000,000 in property tax a million dollars 10 years from now isn't going to be worth what a 1,000,000 dollars is today and so theoretically you'd really kind of expect to have an inflation adjustment as part of property taxes but nobody does that.”
He’s also concerned that the budget needs to be sustainable. The council says it wants to have serious and ongoing conversations about property tax. Joyce wants to see how the city will change its behavior to plan for the bad years.
“At the same time, I think we really do need to be looking out and trying to do better projections and make sure we understand where we're going,” Joyce explained. “What I never want to see us get to the point of is all of a sudden, we were ramping up hiring or something we hit a recession and now we're at the point of having to lay people off. You know the problem is you don't have a crystal ball where you know exactly what's going to happen. But I think we need some better tools than what we’re getting out of the financial impact report.”
Budget manager Nate Rockwood told council the general fund is strained every year and if the council is serious about fixing it – the answer isn’t difficult – the council either cuts services or increases property taxes.
The council will spend a portion of every meeting reviewing the budget over the coming weeks. A final budget is scheduled for adoption June 20th.