Broomfield City Council Talks Change in Philosophy at Estes Park Retreat – Boulder Daily Camera
Broomfield City Council was introduced to a change in “philosophy” for budgeting at last weekend’s council retreat in Estes Park.
The city and county will strive to move from a historically reactive approach to budgeting based solely on expenditures to a more proactive approach balancing budgets against revenues.
The first meeting on Friday afternoon began with a joint presentation from staff, including City and County Manager Jennifer Hoffman, Chief Financial Officer Brenda Richey and Director of Development Finance and Economist Jeff Romine.
This change will ensure that Broomfield is able to meet its financial and service obligations now and in the future, as outlined in the presentation. The change is expected to take approximately 18 months to fully implement. The presentation indicates that the city will have to “build the internal structure to support the implementation”.
“The decisions you make over the next two years will forever alter the environment in Broomfield,” Hoffman said of Broomfield’s current state.
Friday’s presentation introduced the change in philosophy and gave the board an assessment of the relationship between current revenue and spending requirements based on current service levels.
Richey provided an overview of Broomfield’s funding sources for all departments, including government, corporate and trust funds. Government funds include items such as operating budget funds, special revenue and capital project funds, corporate funds include utility funds such as water and sewer, and trust funds , including pension and healthcare funds.
Richey explained that while the city may have a fixed budget amount, some of that funding is still dedicated to services like those mentioned.
Projected revenues for 2023 to 2027 show fairly stagnant growth. The expected growth in combined sales and property tax revenue is expected to be approximately $7.5 million.
According to the presentation, 35% of the city’s major categories of revenue are fees for services such as water and sewage charges. Sales tax and property taxes, which are the most affected by economic factors, account for about 41% together. Other revenue categories include intergovernmental revenue at 8%, use tax at 5%, and items such as fees, interest revenue, and miscellaneous funding sources at 11%.
The pre-COVID-19 forecast for sales tax was nearly $73 million, while it is currently at $63 million.
The staff summarizes by saying that revenues are currently stable, which presents some challenges and opportunities. Revenue growth will come from grassroots growth, grassroots influence by possibly adding more business opportunities, and slowing or delaying residential and diversification with intentional changes like billing to cover costs , service level adjustments, and levy and sales tax rate adjustments.
Currently, expenses exceed revenues with an expense growth rate of 8% and a revenue growth rate of 3%, Richey presented. Growth in current expenditures from 2023 to 2027 includes large increases in areas such as personnel, an estimated growth of $35 million, and professional services with growth of $21 million. There are smaller increases in maintenance and utilities and supplies and equipment.
Expected outcomes of spend influencers include shifting from understanding true costs, understanding variable control to reallocating and focusing priorities.
Bridging the Financial Gap
The board resumed on Saturday morning with the second part of the philosophy change presentation to discuss the implementation process and closing the current gap between expenses and revenues.
The first slide of Saturday’s presentation states that “Development takes time; change upcoming decisions upfront,” which means adding guidelines for board review, agreement, and direction for staff to then execute.
Hoffman stressed the importance of getting rid of “one-off” decisions and moving away from a piecemeal approach to adopting a more versatile and integrated decision-making process for the board.
“We are not on the edge of the fiscal cliff, but we can clearly see it approaching if we continue with the current approach and decisions,” reads the presentation.
The presentation highlighted key points to improve development decisions for 2022 and beyond, including responding not to demand but to needs and priorities, and providing a higher level of stability for desired developments, thus creating a more expedited process. Shifting the focus to business development was a common theme throughout the presentation, which will help fund service level gap costs due to population growth. According to staff, the current business development review process is 10-13 weeks, which many good business developments “won’t wait for”.
From recently approved residential units, a population increase of 13% is expected over the next three years, or between 8,000 and 10,000 new residents. Staff pointed to the cost of affordable housing, which typically produces no revenue other than sales tax generation, but by shifting the responsibility of having units included in part of the development, Broomfield saves approximately $35,000 to $45,000 per unit.
The presentation ended by reminding the board of the importance of creating a sustainable future by executing this change in philosophy. The last slide read, “Intentional decision-making now impacts the future of Broomfield.
At the end of the presentation, council members and staff had a brief question-and-answer session and discussion on council’s current priorities, which include hot topics in Broomfield such as affordable housing, vitality economics, sustainability, oil and gas, transportation and mental health. Several topics under these umbrellas were covered during the short discussion. Council and staff agreed that taking a proactive approach to establishing ordinances that will lead proponents down the path Council would like to chart will be the best way to achieve the goals set for the years to come.