To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Title
Ordinance Adopting the 2022 Budget for the Town of Castle Rock, Colorado and Providing for the Emergency Adoption of this Ordinance on Second and Final Reading (Second Reading - Approved on First Reading on September 21, 2021, by a vote 7-0)
Body
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Executive Summary
The purpose of this memo is to present to Town Council and the community a revised 2022 Budget as recommended by the Town Manager. The budget presented tonight is different than the one Council adopted on first reading in September, in that it follows through on the outcomes of the November 2021 election. Specifically, staffing plans for the Fire and Police departments have been adjusted to reflect anticipated revenues. These adjustments also required reductions in planned staffing and associated expenses in other Town service areas. Further details are included in this memo.
Staff requests Council’s approval of the revised budget as presented. This will allow the Town to meet the State’s requirement to adopt a budget by December 15.
History of Past Town Council, Boards & Commissions, or Other Discussions
Town staff provided an overview of the Proposed 2022 Budget to Town Council and the community at the September 7, 2021, Council meeting. At this meeting, an overview of strategic budget priorities was addressed, along with a review of departments’ requests and emerging issues that affect the Town’s long-term planning. Additionally, individual meetings occurred between the Town Manager and Councilmembers to review funding requests included in the Proposed 2022 Budget.
On August 31, 2021, Town staff held an open house to discuss Proposed 2022 Budget considerations with Castle Rock residents. Feedback received was consistent with the Town’s budget priorities, with public safety, roads, parks, and long-term water being identified by attendees as their funding priorities. Council placed four measures on the November election ballot in attempt to provide additional resources for certain Town services.
As Council knows, a majority of voters in the November election did not support the proposed new housing construction tax, nor the open space sales tax. Voters did approve a 10-year TABOR timeout, allowing for surplus revenue to be expended on police, fire and roads. Additionally, voters approved a 6% lodging tax, providing additional funds for Parks and Recreation purposes.
Discussion
On second reading, the 2022 Budget and 2022-2026 Balanced Financial Plan reflect the November 2021 election results, including the removal of the New Housing Construction and Open Space Tax funds. Because additional funding for the Police and Fire departments remains a priority, adjustments were made to both the 2022 Budget and the five-year balanced financial plan, to allow for positions to be added in those departments. To provide funds for these public safety positions, reductions to proposed positions were necessary in other areas in out-year budgets. These include: removal of a position in the Finance Department, two positions in the Town Attorney’s Office, a position to assist with technology needs and a position to assist with maintenance of Town facilities. Additionally, staff recommends reducing Town funding to the Employee Benefits Fund, which provides resources for Town employees’ health plan. (The Town self-funds health insurance.) Staff plans to manage Town operations and resources around these reductions, while maintaining future opportunities to reinstate positions as funding resources allow.
The revised 2022 Budget is proposing four new positions for the Police Department as sworn Patrol positions and four new positions for the Fire and Rescue Department as firefighter/paramedics, with one of the firefighters planned to work in a training capacity. The Fire and Rescue positions are planned to be deployed to the future fire station in northeast Castle Rock after its construction in the mid part of the decade.
These eight new positions will be of great benefit to the community. However, this one-time addition of positions does not answer the long-term funding needs for personnel in these departments going forward. With voters’ approval of the TABOR timeout, the Town will likely have a one-time revenue surplus from 2021 that it can devote - consistent with voters’ approval - to funding police and fire needs. With this “excess” TABOR revenue and continued strong sales tax performance, staff expects to have some - but not all - of the resources needed to meet future police and fire staffing needs. Because of this, staff recommends continuing to reach out to the public to better understand their views on how the Town might come closer to fully funding its important police and fire personnel needs. Public open houses and listening sessions are being planned during 2022 to assist discussion on this vital topic and further work by staff and Council on this issue.
Also changed in the 2022 Budget from first reading of the adopting ordinance are the system development charges for Castle Rock Water. Staff is recommending setting these charges at the levels fully justified to meet the community’s needs beginning in 2022, rather than phasing them in as had been planned. This is necessary due to increased costs and continuing strong demand; additional details on this are provided in a separate item on tonight’s agenda.
Staff is also recommending that a portion of the sales tax increment ($50,000) generated within the boundaries of the Downtown Development Authority be devoted to Town expenses associated with providing in-kind Town services for Downtown Merchants Association, Chamber of Commerce and Town events. The 2022 Budget already has $150,000 from this sales tax “increment” - which otherwise would remain in the Downtown “Special Fund” going into the Town’s Transportation Fund for maintenance of the parking garage adjacent to the Encore development. The additional $50,000 in increment would help provide for police, fire, parks and Public Works in-kind services. Staff memoranda detailing the details surrounding this increment recommendation as well as the Town’s in-kind contributions to Downtown events are included in Attachments D and E, respectively. Further, staff has developed a diagram to explain the three funds associated with Downtown Alliance activities, for Council and the community’s understanding (Attachment F).
The rest of the 2022 Budget remains unaltered from the budget unanimously adopted on first reading. As Council knows from previous briefings, the 2022 Budget continues to strongly reflect community priorities. Attached to this memo are the ordinance to adopt the budget (Attachment A), the Revised 2022 Budget Message (Attachment B) and the Proposed 2022 Budget in Brief (Attachment C). The entire proposed budget, along with revenue and expenditure details, is available online at <https://CRgov.com/2022Budget>.
Budget Impact
This ordinance will appropriate by fund maximum-allowed expenditure amounts for 2022. Council later can - and is likely to - amend these amounts as needs evolve throughout the year.
Staff Recommendation
Staff recommends approving the ordinance as presented.
Possible Motions
“I move to approve the Ordinance as introduced by title and provide for its emergency adoption on second and final reading.”
“I move to approve the ordinance as introduced by title and provide for its emergency adoption on second and final reading, with the following conditions: (list conditions).”
“I move to continue this item to the Town Council meeting on (date) to allow additional time to (list information needed).”
Attachments
Attachment A: Ordinance
Attachment B: Revised 2022 Budget Message
Attachment C: Proposed 2022 Budget in Brief
Attachment D: Downtown Development Authority Tax Increment Fund (Special Fund) - 2022 Budget
Attachment E: In-Kind Town Support for Chamber and Downtown Alliance Events
Attachment F: Downtown Alliance Finance Structure