Economic indicators like the nation’s gross domestic product and the number of new jobs created are down this year, said Don Taylor, the city’s finance director, in a work session on Tuesday.
The meeting was called to establish the parameters for next year’s proposed municipal budget, which will be developed in the coming months, and which council members will go over in detail in the fall. Council has the ultimate say on budgeting decisions, and will pass a plan for 2013 by November.
The signs of a sluggish economy could eventually have consequences for the city’s tax revenues, Taylor said.
“I think there’s uncertainty in the national economy,” Taylor said. “And we don’t know how that will affect us here.”
Fiscal conservatism is a theme the finance department is going to preach until things turn around, said Steve Barwick, city manager.
“This is not like your normal recovery,” Barwick said. “We have to continue to be cautious.”
The city can maintain its operations based on current tax revenues, but it needs to be careful in adding additional expenditures, Barwick said.
“Right now there’s just a lot of uncertainty,” he reiterated.
The city is budgeting a 4 percent increase in 2013 sales tax and a 14 percent increase in the lodging tax.
The city’s sales tax, which is a major revenue source for the city, is currently up about 6 percent this year and lodging is up as well, Taylor said.
“I think we’ve seen a pricing power return,” he said.
Still, property transfer taxes — formally called real estate transfer taxes (RETT) — are estimated to be down 4.4 percent this year and there is no certainty that they will go up anytime soon, Taylor said. The RETT funds the Wheeler Opera House and affordable housing.
“We’ve been slow to come out of this,” Taylor said on RETT recovery. “It’s hard to say when this will turn the corner.”
Meanwhile, the city has brought projected health insurance cost increases down from 14 percent to 8 percent through wellness initiatives and encouraging employees to switch to higher-deductible health plans, Taylor said.
The finance department has spent a lot of time trying to manage health care costs, because they are predicted to increase each year, Taylor said.
“I’d say it’s a high priority for the management staff,” Taylor said.
The city is also budgeting to give a 4 percent raise to some employees. The city instituted a pay freeze in 2009, and it has been in place since.
All city jobs have a prescribed pay range; new employees start on the lower end and typically work their way up as they receive raises over time. However, the 2009 pay freeze put a stop to that process.
Next year, employees who have been stuck in the lower end of their pay range will be eligible for a raise based on performance. Overall, raises will be targeted, so city employees who have already worked their way up to the top of their pay range will not receive a raise, Barwick said.
In other city news, City Council approved $16,000 Tuesday for an outdoor concert held during the two-day USA Pro Cycling Challenge event in Aspen. The concert will happen on Aug. 22, about 30 minutes after Wednesday’s stage race finish in an effort to keep people in town, said Nancy Lesley, the city’s special events director and head of the local organizing committee.
Although it hasn’t been chosen yet, the band will be “family friendly” and will play a 90-minute-to-two-hour set, said Joe Lang of Tumbleweed Productions, who is producing the show.