Lone Tree finance officials have proposed $7 million in spending cuts next year, but anticipate sales tax revenue to slightly rebound from this year. The budget will continue to be impacted by …
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Lone Tree finance officials have proposed $7 million in spending cuts next year, but anticipate sales tax revenue to slightly rebound from this year. The budget will continue to be impacted by COVID-19 well into 2021, and sales tax revenue is expected to fall short of the figures from 2019 — the most recent year not impacted by the pandemic.
The spending cuts will come primarily from the city's capital outlay fund. No other departments are projected to cut spending from 2020 estimated totals, and two departments will see slight spending increases.
Lone Tree City Council reviewed the city's proposed operating budget for 2021 during the Nov. 14 city council meeting. The budget proposal was scheduled to be reviewed again and approved Dec. 1.
City officials proposed cutting half of the city's spending — roughly $9.5 million — on capital outlay projects from 2020 estimated totals. The city cut $3.8 million from capital outlay projects this summer in response to the initial wave of the COVID-19 pandemic. Capital outlay, or capital expenditures, is money used to acquire assets or improve the life of existing assets. Capital expenditures can range from land acquisition to roof replacements to office furniture.
The city stated it intends to maintain its level of service for the community.
The city's Nov. 14 staff report states developing the 2021 projected budget was “challenging” due to the continuing impacts of COVID-19.
"With council's focus on maintaining service levels for the community where possible, additional funds were added,” the staff report reads. “Reduced revenue expectation did, however, result in cutting several expenses that were included in prior year budgets.”
The city will start 2021 with $21.4 million in the bank. The city projects total revenue will reach $31 million in 2021 — about half of what the city collected in 2019. Total expenditures are projected to reach $38.1 million.
Lone Tree is more reliant on sales tax than most other cities in the Denver metro area, according to the state. City officials take pride in the city's no additional property tax and the lowest sales tax rate (1.8125% of additional sales tax, 6.8125% total sales tax) in the area. Home to the state's largest indoor mall, Park Meadows, and large employers like Sky Ridge Medical Center and Charles Schwab, Lone Tree has typically enjoyed a daytime population about twice that of its resident population of 15,000.
Park Meadows has operated under a special exemption, called a variance, since May, allowing the mall to open sooner than most places at 50% capacity, providing it adhered to cleaning and safety protocols.
Lone Tree City Council cut an additional $1 million from the city's budget in September. At the time, the “net COVID impact” on the city's budget, as explained during the Sept. 15 city council meeting, totaled $8 million.
One year ago, Lone Tree City Councilmember Cathie Brunnick said she felt good about the state of the city's budget. During a Nov. 19, 2019, city council meeting, Brunnick noted the hard work the finance team put in to rebuild the city's capital reserve. Then, finance officials said the city foresaw 2020 as a “planning year,” placing an emphasis on heavy investment in capital projects.
The city collected $28.3 million in taxes in 2019 and anticipated collecting $28.6 million in 2020. The 2020 estimate now projects the city will finish the year having collected $19.3 million in taxes.
Capital outlay made up one-third of the city's 2020 adopted budget, with 47 projects planned for 2020. The city canceled or postponed most of its major infrastructure and development projects due to COVID-19.
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